# Science and Technology Reinvention Laboratory Demonstration Project at the U. S. Army Research Laboratory (ARL)

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A98-5426

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** March 4, 1998
- **Citation:** 63 FR 10680

## Text

SUMMARY: The National Defense Authorization Act for Fiscal Year 1995
authorizes the Secretary of Defense, with Office of Personnel
Management (OPM) approval, to conduct personnel demonstration projects
at DoD laboratories designated as Science and Technology (S&T)
Reinvention Laboratories. 5 U.S.C. 4703 authorizes OPM to conduct
demonstration projects that experiment with new and different personnel
management concepts to determine whether such changes in personnel
policy or procedures would result in improved Federal personnel
management.

DATES: This demonstration project may be implemented at the Army
Research Laboratory on June 3, 1998.

FOR FURTHER INFORMATION CONTACT: ARL: Mr. Jack R. Wilson, II, U.S. Army
Research Laboratory Building 202, 2800 Powder Mill Road, Adelphi, MD
20783-1197, 301-394-1105; OPM: Fidelma A. Donahue, U.S. Office of
Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC
20415, 202-606-1138.

SUPPLEMENTARY INFORMATION:

1. Overview

On March 12, 1997, [62 FR 11646] OPM published this proposed
demonstration plan and received comments from nineteen employees, both
oral and written, including four speakers at the two public hearings.
In addition, questions were received from approximately 45 Army
Research Laboratory (ARL) employees who asked for clarifying
information. This information was provided to the ARL workforce via
mail posted to an electronic bulletin board. The following is a summary
of written and oral comments by topical area and a response to each:

A. Management Concerns

Comments: A number of employees who commented were greatly
concerned that the demonstration project gives more authority and
responsibility to laboratory supervisors and managers. It appears that
many believe supervisors do not properly execute supervisory
responsibilities under the current personnel management system and are
not held accountable for their actions. These employees question the
ability of ARL supervisors to competently and fairly implement their
new authorities, and fear a new system that gives supervisors
additional authority over their career and pay. Some also expressed
concern over the absence of language in the proposal regarding
diversity in the selection of representatives for various panels. For
instance, one commenter indicated the demonstration project and
specifically, the performance management system, would be used to
discriminate against African American employees.
Response: The text of the project proposal has been modified in
several places to clearly state the laboratory's commitment to
implement supervisory and managerial accountability processes and
emphasize that sensitivity to diversity issues is an important goal in
all phases of personnel management. The laboratory acknowledges
concerns expressed by employees and has attempted to build a number of
checks and balances in the new personnel system to ensure a fair and
equitably-administered program. These features include a Personnel
Management Board which will provide oversight for the project,
including specific responsibility for developing internal controls and
accountability processes. Other balances in the plan include a pay for
performance system which features a reconciliation process designed to
balance high and low rating profiles; expanded use of panels to provide
input and advice to supervisors in making personnel decisions regarding
training and promotion; enhanced use of Alternative Dispute Resolution
procedures and Last Chance Agreements in resolving conflict situations;
and a commitment to develop a mechanism for employees to provide
feedback to supervisors in an effort to further develop and improve
supervisory skills and abilities. The laboratory also plans a thorough
training program for all supervisors in the added responsibilities and
accountabilities associated with the personnel demonstration
interventions.

B. Broadbanding

Comments: The three comments received covered three distinct
concerns. First, one comment stated that capping pay at the top of the
highest grade in the pay band was discriminatory against older workers.
Another reviewer recommended that GS-1102 Contract Specialists be
deleted from the Administrative Occupational Family and be placed
instead in either a ``professional'' family or in a separate family.
Finally, one comment recommended that Installation Support Engineers
and Scientists be moved into the Administrative Occupational Family and
that the Engineer and Scientist Occupational Family be renamed
``Research Engineers and Scientists.''
Response: Salary caps outlined in the plan are essentially
identical to the current pay caps inherent in Step 10 of each GS grade.
Since traditional GS grades are combined into fewer pay bands under the
plan, the effects of pay capping in the current system are somewhat
diminished by the demonstration project. The Administrative
Occupational Family in which GS-1102 positions have been placed already
contains other professional occupational series such as Accountants and
Attorneys. Placement of occupations within job families was based on
similarity of qualification requirements, and the traditional OPM
method of grouping work into professional, administrative, technical,
clerical, and other (PATCO) categories, and with the understanding that
under the demonstration competitive areas for reduction in force
purposes have been defined in terms of occupational families. As a
result we did not change the plan to place Research Engineers and
Scientists in an occupational family apart from other engineering
positions.

C. Engineer and Scientist Pay Band V

Comments: Two comments objected to wording which stated that
employees in this band required primarily technical knowledges and
skills and that managerial skills were secondary. Another observed that
because of the current make-up of the workforce, women and minorities
would not be represented on selection panels for Band V positions. And
finally, a question was raised as to how Band V employees convert out
of the Demo plan.
Response: Based on the comments received, the text concerning
scientific and managerial skills and knowledges has been reworded to
clearly state that Band V positions require expert scientific technical
knowledges as well as strong managerial abilities. With regard to women
and minority representation on the Band V panels, the commenter has
raised an excellent point, and wording has been added to reflect the
laboratory's commitment to constructing panel membership so that
diversity of membership is ensured. The comment regarding how Band V
employees convert out of the plan identified a serious oversight and
wording has been added to describe

[[Page 10681]]

how this conversion will be handled. Revisions to this section also
included technical changes to better describe how Pay Band V will
function.

D. Pay for Performance

Comments: A total of twenty-three different points were made under
this general heading. These included the opinion that objectives should
not change during the rating period, particularly in the last 120 days;
that the new system did not appear to link organizational goals to
individual performance objectives; that objectives are not
quantitative; and that there was not enough space on the evaluation
form for the employee to adequately address yearly achievements. One
comment pointed out an error in a sentence dealing with Performance
Improvement Plans (PIPs) and Last Chance Agreements (LCAs), another
pointed out an inconsistency in the designation of Elements 7 and 8 as
mandatory/critical elements, and another suggested adding EEO to
Element 7. In addition, there were three suggested changes on how
employees could rate their supervisors (delink it from the appraisal,
create standardized criteria, and make it mandatory) and one reviewer
suggested the use of forced distribution to ensure an incentivized pay
pool. One reviewer commented that this new system is too subjective and
that the Total Army Performance Evaluation System (TAPES) should be
improved instead of creating a new system; that Civilian Intelligence
Personnel Management System (CIPMS) employees should be excluded from
the plan; and that the benchmark point fixing was such that meaningful
distinction could not be justified. This was accompanied by the
suggestion that benchmark points be in 5 point increments rather than
in the one point increment outlined in the plan. One reviewer stated
that the new Pay for Performance (PFP) system conflicted with teaming
and that all Labs should use the same wording to describe their
performance elements. ARL also received one comment which suggested
that career interns will lose money under the new plan when compared to
what would have been received under the current system. One commenter
suggested clarifying language changes to the Performance Conference
Form. Finally one commenter was concerned that Installation Support
Engineers and Scientists would be treated unfairly if competing in the
same pay pool as Research Engineers and Scientists.
Response: Objectives and Performance Elements: Rather than having
performance objectives remain fixed during the rating cycle, the
ability to change objectives as work assignments change is considered
an important flexibility in any performance management system. This
flexibility prevents an employee from being rated against objectives
that are no longer applicable or have changed due to fluctuations in
the work. This ensures employees are properly recognized for the tasks
they are actually performing. The proposed demonstration plan stated
that the plan was designed to tie individual performance to
organizational goals, and the description of the objective setting
process clearly stated that objectives were ``to be based on the work
unit's mission and goals.'' Regarding the comment that the objectives
were not quantitative, there is nothing in the demonstration project
that would prohibit wording objectives in quantitative terms. Training
on the performance evaluation system will suggest that quantitative
measures of objectives be incorporated wherever possible. As each of
the five Army demonstration projects will operate in discrete
environments, standardizing element titles serves no useful purpose.
The only changes made to this section of the plan relate to the
designation of Elements 7 & 8 as mandatory and/or critical and to the
expansion of Element 7 to reflect sensitivity to diversity and to
assure equity and fairness.
Appraisal Form: The appraisal forms were included in the proposed
plan as examples of the tools available for raters during the
performance evaluation process. As with all forms, they can be improved
upon and the commenter has several good suggestions that will be
adopted before implementation.
Employees Rating Supervisors: ARL has decided to delete the entire
paragraph dealing with employees rating supervisors. More benefit would
be derived by both the employee and the laboratory if employee feedback
were given in a more informal setting and if the feedback were delinked
from the performance appraisal process. A new provision has been
included under Section F. ``Employee Development'' which calls for
informal feedback to the supervisor which in turn will be used for
developmental purposes.
Forced Distribution of Ratings: During the development of the
project, many town hall meetings with employees were held and the
question of forced distribution arose. It was clear that the majority
of the work force was against such a policy. Therefore, the plan, in
conformance with existing DoD policy, specifically prohibits such a
practice; to alter that position would break faith with what was
promised to laboratory employees.
Subjective System: The laboratory believes the proposed system
improves on the current process. The use of benchmark standards in
conjunction with the ability to weight performance elements to the
exact requirements of each position provides the rater with a more
quantitative way to rate performance than exists today. On the
suggestion that benchmark point-fixing be in 5 point increments, there
is nothing in the plan that would prohibit the rater from operating in
5 point increments if he/she so desired. However, it was decided to
maintain the flexibility of the 1 point increment so that close shading
and distinctions can be made during the evaluation process.
Intern Pay: With regard to the comments on intern pay, the twice
annual appraisal process should provide ample opportunity for intern
pay to be reviewed and adjusted as appropriate. The plan has been
revised to reflect that procedures will be developed which will ensure
comparability of the pay and promotion practices for interns.
LCAs and PIPs: Finally, the laboratory appreciates being informed
of an error in wording in the section dealing with Last Chance
Agreements and Performance Improvement Plans. The original wording
indicated that two conditions had to be met before the supervisor could
take appropriate follow-on action after instituting a PIP. This
situation has been corrected.
Other: Language has been added to the Performance Conference Form
for clarification. Since pay pools are based on organizational units,
it is unlikely that Installation Support Engineers and Scientists would
be in the same pay pool as Researchers. However, even if they were, the
system is designed so that each is rated according to benchmark
standards and objectives for his or her own job. As a result, no
changes were made to the plan regarding the last two suggestions.

E. Pay Pools

Comments: There were nine comments/suggestions on this topic. One
suggested that pay pool size be specifically limited, i.e., between 10
and 50; one suggested that specific penalties be levied on supervisors
when appraisals were late; one suggested that the annual pay increase
be added to the pay pool and that the Director have the ability to
reward high performing pay pools. One reviewer wanted team leaders to
be added to supervisory pay pools; another comment suggested that when
team awards were granted that distribution be based on a unanimous

[[Page 10682]]

vote. One reviewer wanted the pay pool reconciliation process deleted.
Finally, one reviewer wanted clarification of awards program language
and wanted all pay pools to work under a single ARL-wide policy.
Response: One of the philosophical underpinnings of the plan is to
ensure pay pools are created along organizational lines. Constructing
pay pools in this manner allows the use of existing managerial
authorities and relationships to facilitate various aspects of the
plan. It is also believed that organizationally focused pay pools will
facilitate teaming. The Personnel Management Board will make
recommendations to the ARL Director about the size of pay pools, but
conventional thinking is that a size of approximately 50 is necessary
to have a properly funded pool.
The Personnel Management Board will develop methods to ensure
performance appraisals are done on time. The Director's policy
decisions will be published in the laboratory's implementing
instructions for the demonstration.
From the beginning of the plan's development the laboratory has
promised that all employees would receive annual pay increases and
locality pay (as applicable) as provided by law and Presidential
authority. To alter the plan on this point would break faith with the
ARL workforce.
Team leaders within ARL function primarily as non-supervisory
employees and are technically oriented, focused primarily on non-
managerial issues. Therefore, team leaders are more appropriately
placed in non-supervisory pay pools rather than in supervisory pay
pools where the duties and responsibilities of the work are materially
different.
The reviewer's suggestion that the distribution of team awards be
based on a unanimous vote was considered, but the laboratory decided to
maximize team autonomy and leave such decisions up to the individual
teams.
A cornerstone of the pay for performance system is that raters in a
pay pool meet to reconcile preliminary ratings. This reconciliation
process is considered vital to achieving equity and fairness within the
pool. Reconciling scoring between raters is one of several checks and
balances built into the demonstration project to ensure that
supervisors execute their new authorities in a responsible manner.
Based on these analyses, no changes were made to the plan.
The project plan has been modified to permit the laboratory
director to adjust the amount of funds in each pay pool as necessary to
recognize exemplary performance of individuals or teams/groups. The
plan also includes the provision that the Director may divert funds
from other pay pools for this purpose.
The confusing language regarding the awards program has been
deleted. The issue is clearly stated elsewhere in the plan. Language
was also added to the plan to indicate that pay pools would operate
within the guidelines of the Personnel Management Board.

F. Employee Development and Training

Comments: ARL received four comments generally related to employee
development or training. One employee wanted to know whether managers
would be tested for proficiency after demonstration program training
was accomplished. One reviewer observed that encouraging rapid turnover
of employees argued against the Laboratory's ability to develop its
workforce and perform new mission work. One observed that the amount of
money set aside for training employees on the plan's provisions was too
small and finally, one suggested that some Cooperative Education
Program (COOP) students be paid living expenses as an incentive to work
at ARL.
Response: There are no plans to test supervisor proficiency as part
of the implementation process; however, wording has been added on
enhanced supervisory accountability which should strengthen this
concept throughout the plan.
The Army Research Laboratory does not currently, or in any of the
goals in this demonstration project, encourage rapid turnover in any
form. In fact, it is believed that the demonstration project's
provisions for correcting critical skills imbalances will indeed permit
valued employees to be retrained to accomplish new mission work.
The amount of money projected for training the workforce and
supervisors on the new personnel system was too small. A revised
estimate has been developed and the language describing demonstration
project costs has been clarified.
Regarding paying living expenses for COOPs, initiatives in this
area do not fall within the purview of this demonstration authority
which is limited to the rules and regulations contained in Title 5.

G. Reduction in Force

Comments: ARL received two suggestions that years of extra credit
for RIF be averaged as in the current system and not added as is
provided for in the plan. A third reviewer observed that the reliance
on weighting performance in RIF was inconsistent with Congressional
intent. Finally, one commenter stated the number of years allowed was
too high (should be divided by a factor of 2) and suggested that all
employees enter the demonstration with no additional years of credit
for RIF and begin the new system on a level playing field.
Response: One of the basic foundations of the plan is to place
increased emphasis on performance. One method of achieving this goal is
to add and not average RIF retention years. In other words, one of the
experimental ideas is that performance is more important than seniority
by itself. Another goal of the demonstration project is to design a RIF
system that will improve the retention of high performers.
The legislative proposal referred to by the commenter (the Omnibus
Civil Service Reform Bill of 1996) was never adopted, and no evidence
has been presented to indicate that the majority of Congress preferred
to alter current rules which permit performance to be a factor in
reduction in force. In fact, the legislation which permits this
personnel demonstration project charges DoD to implement plans which
are similar in nature to China Lake. One of the foundations in the Navy
China Lake demonstration is a performance-based reduction in force
system. Since the emphasis in this plan is on pay-for-performance it
was decided to maintain the technique of adding, rather than averaging
the years of RIF service credit.

H. Miscellaneous Comments

Comments: There were fifteen miscellaneous comments, suggestions
and recommendations dealing with various aspects of the plan. One
reviewer wanted all changes, not just major ones, to be published in
the Federal Register, and suggested that requests for salary increases
in excess of $5,000 be sent to higher headquarters. One reviewer
observed that the current system should not be changed and did not want
to participate. There were several suggestions that changes be made to
the composition and operation of the Personnel Management Board. One
employee wanted to know whether under the plan movement into the ``high
grade'' category (old GS-14 and GS-15) was going to be as difficult as
under the current system and another suggested that supervisors be
placed under a three-year probationary period. One commenter suggested
the Distinguished Scholar Program be considered as an addition to the
project. Still another indicated that the plan was without

[[Page 10683]]

evaluation or internal controls and that an alternative way to convert
employees out of the plan should be considered: Under this alternative
arrangement, the comment suggests that the duties actually being
performed be evaluated before pay is set prior to converting employees
out of the plan. One reviewer suggested adding the recent laboratory
initiatives in Alternative Dispute Resolution. Finally, one commenter
questioned whether a conflict of interest would exist for industry
employed people eligible for the Voluntary Emeritus Corps; suggested
that conversion out of the demonstration should use step 2 rather than
step 4 salary; and recommended that the pro-rated within grade increase
buy-ins should be rounded up to the next pay period rather than the
nearest week as described.
One commenter asked for an explanation of ``culturally relevant
criteria'' used in Section II.B. ``Problems with the Current System''.
Response: Several of the suggestions would result in increasing
administrative burdens on the laboratory. This is in conflict with one
of the basic goals of the demonstration project. Therefore, it was
decided not to publish all changes since that would be both costly and
a significant administrative workload. Similarly, forwarding proposed
promotions exceeding $5,000 to higher headquarters imposes an
additional review level in the process and reduces rather than
increases laboratory flexibility. Finally, to conduct classification
reviews for each employee leaving the laboratory places an unacceptable
workload burden on the personnel offices administering the plan.
Promotions from Pay Band 3 to Band 4 under this plan are expected
to remain as difficult as promotions from GS-13 to GS-14 are under the
current system for as long as controls on the number of high grade
positions remain in place. The laboratory decided against changing the
supervisory probationary period to three years because supervisory
performance, unlike certain engineers and scientists can be adequately
evaluated in a one-year period. Wording on Distinguished Scholar is not
added as the current plan provides the full range of flexibilities
necessary to recruit college graduates to the laboratory.
Enhanced accountability is a central concept of this proposal and
the Personnel Management Board will be one of several groups that will
be involved in the oversight of the demonstration. Other oversight will
come from the Office of Personnel Management as well as elements with
DoD and DA.
It was decided not to include the recent laboratory initiatives in
the area of Alternate Dispute Resolution because they do not involve
any waivers to law. Language was added to clarify that the
demonstration project will enhance the use of Alternative Dispute
Resolution for all conflict resolution to include grievances,
disciplinary actions and EEO matters.
The question regarding potential conflicts of interest for
industry-employed personnel eligible for the laboratory's new Voluntary
Emeritus Corps is a good one and has been discussed by the Personnel
Management Board. The suggestion will be considered for inclusion in
the operating instructions to be developed prior to implementation of
the project. The conversion out method was carefully crafted by experts
in the field of compensation and represents a joint agreement among the
five Army laboratories who published proposed demonstration projects in
March 1997; therefore, the suggestion was not adopted. Finally, the
method of pro-rating the amount of within-grade increases using weeks
of the waiting period completed is consistent with the definition of
waiting periods in the existing law and offers the employee the full
amount earned. To round up as suggested would add unnecessary costs.
The statement regarding culturally relevant criteria is only part
of the introductory material which attempts to explain why the
cumbersome government-wide system is counterproductive to management in
a changing environment. In particular, the culture of a research
laboratory is considerably different from a typical bureau or agency,
and the demonstration project attempts to tailor the personnel system
to the laboratory environment.

2. Demonstration Project Changes

The following is a summary of substantive changes and
clarifications which have been made to the project proposal. While not
specifically listed, the laboratory also made a number of technical
changes to correct errors or omissions or to meet other regulatory
requirements.
(1) II. Introduction A. Purpose--Added wording to enhance
supervisory accountability under the improved personnel management
system.
(2) II. Introduction E. Participating Employees and Union
Representation--Added wording to clarify that CIPMS employees will not
be covered by the plan, but will follow the same performance appraisal
and employee development provisions of the plan except where found to
be in conflict with CIPMS.
(3) III. Personnel System Changes A. Broadbanding, Figure 1--An
asterisk was added to the plan to more directly tie it to the text
which follows.
(4) III. Personnel System Changes A. Broadbanding--Changed wording
from January pay increase to periodic pay increases to reflect that pay
increases may not always occur in January.
(5) III. Personnel System Changes A. Broadbanding--Clarified the
requirement for significant managerial and supervisory expertise, and
made several technical changes to reflect how Pay Band V will function.
(6) III. Personnel System Changes A. Broadbanding--Revised the
description of the Pay Band V selection panel to ensure diversity of
membership.
(7) III. Personnel System Changes B. Classification 8.
Classification Appeals--Revised classification appeal rights to reflect
that all appeals must go to the DoD appellate level before going to
OPM.
(8) III. Personnel System Changes C. Pay for Performance 1.
Overview--Revised language to read ``a performance payout'' rather than
``pay increases.''
(9) III. Personnel System Changes, C. Pay for Performance, 1.
Overview--Deleted paragraph 2, line 8, column 3 (under the chart) as it
was redundant, because issue was already explained clearer in another
section of the plan.
(10) III. Personnel System Changes C. Pay for Performance 1.
Overview--Changed the words ``base pay adjustment'' to ``performance
payout.''
(11) III. Personnel System Changes C. Pay for Performance 1.
Overview--Revised the description of the Director's authority to adjust
the amount of funds assigned to pay pools. The authority has been
expanded to include adjustments needed to recognize exemplary
performance of individuals or teams/groups and contains the provision
that the director may divert funds from other pay pools for this
purpose.
(12) III. Personnel System Changes C. Pay for Performance 1.
Overview--Added a sentence providing for the development of procedures
which will ensure that intern salaries under the project will be
comparable with current pay and promotion practices.
(13) III. Personnel System Changes C. Pay for Performance 2. The
PFP Assessment Process--Clarified language concerning employees current
grievance rights.
(14) III. Personnel System Changes C. Pay for Performance 2. The
PFP

[[Page 10684]]

Assessment Process--Revised language to read ``performance payout''
rather than ``salary increases.''
(15) III. Personnel System Changes C. Pay for Performance 2. The
PFP Assessment Process--Clarified definition of a critical element.
(16) III. Personnel System Changes C. Pay for Performance 2. The
PFP Assessment Process--Revised the definition of performance element 7
``Management/Leadership'' to specifically include sensitivity to
diversity and to ensure equity and fairness.
(17) III. Personnel System Changes C. Pay for Performance 2. The
PFP Assessment Process--Clarified internal inconsistency dealing with
elements 7 & 8 being critical and/or mandatory for supervisors.
(18) III. Personnel System Changes C. Pay for Performance 2. The
PFP Assessment Process--Deleted provision for employees to provide
input to supervisors appraisals.
(19) III. Personnel System Changes C. Pay for Performance 3.
Performance Which Fails to Meet Expectations C. Improving Performance--
Reworded the sentence describing a PIP and LCA to remove unnecessary
restriction.
(20) III. Personnel System Changes C. Pay for Performance 4. Pay
Pools--Revised the wording describing the size of pay pools which will
permit pay pool size to be greater than or less than 50.
(21) III. Personnel System Changes C. Pay for Performance 4. Pay
Pools--Added the provision that reconciliation panels will work within
operating procedures established by the Personnel Management Board.
(22) III. Personnel System Changes D. Hiring and Appointment
Authorities 4. Voluntary Emeritus Corps--Removed the restriction which
limited Voluntary Emeritus Corps to Engineers, Scientists and
Technicians.
(23) III. Personnel System Changes E. Internal Placement and Pay
Setting 1. Promotions--Revised the amount of money to be reviewed by
the PMB for promotions, permitting the PMB to adjust the amounts of
money they review.
(24) III. Personnel System Changes E. Internal Placement and Pay
Setting 4. Staffing Supplements--Revised the wording concerning
adjusting special rate schedules and the need to recompute the staffing
supplement.
(25) III. Personnel System Changes F. Employee Development 2.
Employee Development Panels--Revised the provision that a Continued
Service Agreement will be a commitment to ARL rather than the
government for ARL Sponsored Training.
(26) III. Personnel System Changes F. Employee Development--Added a
new paragraph 4. Employee Feedback to Supervisors, which permits
employees to provide feedback to their supervisors on their supervisory
and managerial skills.
(27) III. Personnel System Changes H. Grievances, Disciplinary
Actions and EEO--Revised the section on grievances and disciplinary
actions to include reference to EEO issues and specifically encourage
the use of ADR for grievance, disciplinary and EEO matters.
(28) V. Conversion B. Conversion or Movement From a Project
Position to a General Schedule Position 2. Pay-Setting Provisions--
Added a new paragraph to provide for converting an employee out of the
demo from Pay Band V.
(29) V. Conversion B. Conversion or Movement From a Project
Position to a General Schedule Position 2. Pay-Setting Provisions--
Added new paragraph d. to describe certain pay retention events and
renumbered the remaining paragraphs.
(30) VIII. Demonstration Project Costs C. Personnel Management
Board--Revised overall responsibility of the Personnel Management Board
to include: fair and equitable implementation; responsibility to
establish internal controls and accountability; clarify description of
membership; allow the Director to adjust membership on the board, and
to clarify that the board's listed duties are examples. Made
consistency changes to item VIII C. Personnel Management Board (f.).
(31) VIII. Demonstration Project Costs D. Developmental Costs--
Revised wording to show that money reflected in Figure 4 is additional
incremental projected annual expense.
(32) VIII. Demonstration Project Costs D. Developmental Costs
Figure 4--Changed to reflect additional incremental training costs for
FY98 of $30K and revised FY98 total.
(33) IX. Required Waivers to Law and Regulation--Changed waiver
language to make it consistent with the plan.
(34) Appendix D Performance Management Forms--Revised the personnel
management forms to reflect changes made in the text of the plan and to
provide clarifying instructions.

Dated: February 26, 1998.

Office of Personnel Management.
Janice R. Lachance,
Director.

Table of Contents

I. Executive Summary
II. Introduction
A. Purpose
B. Problems with the Present System
C. Changes Required/Expected Benefits
D. Participating Organizations
E. Participating Employees and Union Representation
F. Project Design
G. Experimentation and Revision
III. Personnel System Changes
A. Broadbanding
B. Classification
C. Pay for Performance (PFP)
D. Hiring and Appointment Authorities
E. Internal Placements and Pay Setting
F. Employee Development
G. Reduction in Force (RIF)
H. Grievances, Disciplinary Actions, and EEO Matters
IV. Implementation Training
V. Conversion
VI. Project Duration
VII. Evaluation Plan
VIII. Demonstration Project Costs
IX. Required Waivers to Law and Regulation
Appendix A--ARL Employee Duty Locations
Appendix B--Occupational Series by Occupational Family
Appendix C--Demographics and Union Representation
Appendix D--Performance Management Forms
Appendix E--Project Evaluation

I. Executive Summary

The project was designed by the Army Research Laboratory (ARL) with
participation and review by the Department of Defense (DoD) and the
Office of Personnel Management (OPM). The purpose of the project is to
achieve the best workforce for the laboratory mission, adjust the
workforce for change, and improve workforce quality. The project
framework addresses all aspects of the human resources life cycle
model. There are six major areas of change: (a) enhanced hiring
flexibilities; (b) broadbanding; (c) automated classification; (d) a
pay for performance system; (e) modified reduction in force procedures;
and (f) expanded developmental opportunities.
ARL managers will exercise cost discipline in the development and
execution of this project, which will be tied to in-house costs and
consistent with the Department of the Army (DA) plan to downsize
laboratories. ARL will manage and control its personnel costs to remain
within established in-house budgets. An in-house budget is a
compilation of costs of the many diverse components required to fund
the day-to-day operations of a laboratory. These components generally
include pay of people (labor, benefits, overtime, awards), training,
travel, supplies, non-capital equipment, and other costs depending on
the specific function of the activity.
Extensive evaluation of the project will be performed by OPM, OSD,
and Department of the Army. The Army has

[[Page 10685]]

programmed a decision point 5 years into the project for continuance,
modification, or rejection of the demonstration initiatives.
This plan represents a general description of the major
interventions of the demonstration project. Specific procedures and
regulations will provide details on how the personnel demonstration
project will be implemented.

II. Introduction

A. Purpose

The purpose of the project is to demonstrate that the effectiveness
of Department of Defense (DoD) laboratories can be enhanced by allowing
greater managerial control over personnel functions and, at the same
time, expanding the opportunities available to employees through a more
responsive and flexible personnel system. The quality of DoD
laboratories, their people, and products have been under intense
scrutiny in recent years. The perceived deterioration of quality is
believed to be due, in substantial part, to the erosion of control
which line managers have over their human resources. This demonstration
project, in its entirety, attempts to provide managers, at the lowest
practical level, the authority, control, and flexibility needed to
achieve a quality laboratory and hold them accountable for the proper
exercise of this authority within the framework of an improved
personnel management system.

B. Problems With the Present System

The ARL mission is to execute fundamental and applied research to
provide the Army the key technologies and analytical support necessary
to assure supremacy in future land warfare. The ARL vision is a
laboratory preeminent in key areas of science, engineering, and
analysis relevant to land warfare; a staff widely recognized as
outstanding; a laboratory seen by Army users as essential to their
missions; and an intellectual crossroads for the technical community.
ARL products contribute to the readiness of U.S. forces. To achieve
this vision, ARL must hire and retain enthusiastic, innovative, highly-
educated scientists and engineers to meet mission needs; also required
is the ability to hire and retain dynamic, committed technical,
clerical and administrative support personnel.
ARL finds the current Federal personnel system to be cumbersome,
confusing, and unable to provide the flexibility necessary to respond
to the current mandates of downsizing, restructuring, and possible
closure while trying to maintain a high level of mission excellence.
The present system--a patchwork of laws, regulations, and policies--
often inhibits rather than supports the goals of developing,
recognizing, and retaining the employees needed to realign the
organization with its changing fiscal and production requirements.
The current Civil Service General Schedule (GS) system has 15
grades with 10 levels each and involves lengthy, narrative, individual
position descriptions, which have to be classified by complex title 5
classification standards. Because these standards have to meet the
needs of the entire federal government, they are frequently obsolete
and often not relevant to the needs of ARL. Distinctions between levels
are often not meaningful. Currently, standards do not provide for a
clear progression beyond the full performance level, especially for
scientific/engineering occupations where career progression through
technical as well as managerial occupational families is important.
Performance management systems require additional emphasis on
continuous, career-long development in a work environment characterized
by an ever-increasing rate of change. Since past performance and/or
longevity are the factors on which pay raises are currently assessed,
there is often no positive correlation between compensation and
performance contributions nor value to the organization. These limited
criteria do not take into account the future needs of the organization
nor other culturally relevant criteria which an organization may wish
to use as incentives.
Finally, current rules on training, retraining and otherwise
developing employee competencies make it difficult to correct skills
imbalances and to prepare current employees for new lines of work to
meet changing mission needs.

C. Changes Required/Expected Benefits

The demonstration project responds to problems in the
classification system with a broadbanding classification system for GS
employees; to problems in the current performance management system
with a pay for performance system; to problems associated with
downsizing with slightly modified reduction in force processes; and to
problems of skills imbalances and rapidly changing missions with an
enhanced developmental opportunities program.

D. Participating Organizations

The Army Research Laboratory (ARL) Director is located in Adelphi,
Maryland. ARL employees assigned to the various laboratory directorates
work at the locations shown in Appendix A.

E. Participating Employees and Union Representation

In determining the scope of the demonstration project, primary
considerations were given to the number and diversity of occupations
within the laboratory and the need for adequate development and testing
of the Pay for Performance (PFP) System. Additionally, current DoD
human resource management design goals and priorities for the entire
civilian workforce were considered. While the intent of this project is
to provide the Laboratory Director with increased control and
accountability for the total workforce, the decision was made to
initially restrict development efforts to General Schedule (GS/GM)
positions.
To this end, the project will cover all ARL civilian employees
under Title 5, United States Code except members of the Senior
Executive Service (SES), employees classified in the Scientific and
Professional (ST) pay plan, and Federal Wage System (FWS) employees. A
decision point has been programmed for the end of two and one half
years of the demonstration project to expand coverage to include FWS.
In the event of expansion to FWS employees, full approval of the
expansion plan will be obtained from the Department of the Army, DoD,
and OPM. Civilian Intelligence Personnel Management System (CIPMS)
employees covered by Title 10 are not covered but will follow the same
performance appraisal and employee development provisions of this plan
except where they are found to be in conflict with CIPMS. They will not
be eligible for performance payouts because they are not contributing
funds to the pay pools.
Performance awards for CIPMS employees will follow the procedures
currently in place. Department of the Army and Major Subordinate
Command centrally-funded interns are covered by the plan except for
reduction in force (RIF) purposes. They will compete in a separate
competitive area in the event of RIF. The series to be included in the
project are identified in Appendix B.
The American Federation of Government Employees (AFGE), the
National Federation of Federal Employees (NFFE), the International
Association of Machinists and Aerospace Workers (IAM/AW), and the
Fraternal Order of Police (FOP)

[[Page 10686]]

represent many ARL employees. The laboratory continues to fulfill its
obligation to consult or negotiate with the unions who represent both
professional and nonprofessional employees in accordance with 5 U.S.C.
4703(f) and 7117. Union representatives have been separately notified
about the project. Of the more than 2600 employees assigned to the
laboratory, approximately 600 are represented by labor unions.

F. Project Design

In December 1993, the ARL Director decided the laboratory needed a
personnel system more like the personnel demonstration project then in
effect at the National Institute for Science and Technology (NIST). A
preliminary plan patterned after the NIST Personnel Demonstration Plan
was developed and shared with the Commanding General, Army Materiel
Command and the Deputy Assistant Secretary of the Army for Research and
Technology where it received conceptual approval. The ARL Personnel
Demonstration Project Office was then created and became the focal
point for subsequent development efforts. In October 1994, the concept
was briefed to representatives of DoD and other federal agencies. In
November 1994 an Army Personnel Demonstration Team was formed with ARL
designated as the lead. The team's charter was to develop the Army's
Personnel Demonstration Concept Plan. In December 1994, this plan was
approved by the Secretary of the Army.
In January 1995, ARL established a management structure designed to
oversee the development of the demonstration proposal and to
incorporate the workforce in the design efforts. This was accomplished
by appointing an Executive Steering Committee, establishing a Staff
Members Committee and discussing the project with unions. For most of
1995 various revisions were made to the ARL plan, many of which
resulted from further DA and OSD staffing and coordination. In the
Spring of 1996, the plan was ready for joint DoD and OPM review, which
resulted in additional refinements. During this time, feedback was
provided to ARL employees, through town hall meetings, electronic mail
messages and memoranda, union briefings, and peer group review of draft
implementing documents. The opinions and comments of the workforce have
had a significant impact in the overall design of the demonstration
project.

G. Experimentation and Revision

Many aspects of a demonstration project are experimental.
Modifications may be made from time to time as experience is gained,
results are analyzed, and conclusions are reached on how the system is
working. ARL will make minor modifications without further notice;
major changes will be published in the Federal Register pursuant to OPM
approval.

III. Personnel System Changes

A. Broadbanding

The ARL demonstration project will use a broadbanding approach to
compensation and classification. Such an approach overcomes some of the
problems experienced with the current system. A broadbanding system
will simplify the classification system by reducing the number of
distinctions between levels of work which will facilitate delegating
classification authority and responsibility to line managers.
The project's broadbanding scheme will replace the current General
Schedule (GS) grading structure. The broadband levels are designed to
enhance pay progression and to allow for more competitive recruitment
of quality candidates at differing rates within the appropriate pay
band level(s). Competitive promotions will be less frequent and
movement through the pay bands will be a more seamless process than
today's procedure. Like the broadbanding systems used at China Lake and
NIST, advancement within each pay band is based upon performance.
Occupational Families
Occupations at ARL have been grouped into four occupational
families according to similarities in type of work and customary
requirements for formal training or credentials. The common patterns of
advancement within the occupations as practiced at ARL and in the
private sector were also considered. The current occupations and grades
have been examined, and their characteristics and distribution were
used to develop the four occupational families described below:
1. Engineers and Scientists. This path includes all technical
professional positions, such as engineers, physicists, chemists,
psychologists, metallurgists, mathematicians, and computer scientists.
Ordinarily, specific course work or educational degrees are required
for these occupations. (Pay Plan DB)
2. E&S Technicians. This path consists of positions that directly
support the various scientific and engineering activities of the
laboratory. Employees in these positions are not required to have
college course work. However, practical, quasi-professional training
and skills in the various aspects of electronic, electrical,
mechanical, chemical or computer engineering are generally required.
(Pay Plan DE)
3. Administrative. This occupational family contains specialized
functions in such fields as finance, procurement, personnel, public
information, computing, supply, library science, and management
analysis. Special skills in specific administrative fields or special
degrees are normally required. (Pay Plan DJ)
4. General Support. This occupational family is composed of
positions for which minimal formal education is needed, but for which
special skills, such as office automation, typing, or shorthand may be
required. Clerical work usually involves the processing and maintenance
of records. Assistant work requires knowledge of methods and procedures
within a specific administrative area. Other support functions include
the work of secretaries, guards, and mail clerks. (Pay Plan DK)
Each occupational family will be composed of discrete pay bands
(levels) corresponding to recognized advancement within the
occupations. These pay bands will replace grades. They will not be the
same for all occupational families. Each occupational family will be
divided into three to five pay bands, each pay band covering the same
pay range now covered by one or more GS grades. A salary overlap,
similar to the current overlap between GS grades, will be maintained.
The salary range of each band begins with step 1 of the lowest grade in
that band and ends with step 10 of the highest grade in the band.
The specific grouping of GS grades into a particular pay band was
based on a careful examination of grade levels that have proven
difficult for managers, employees and classifiers to distinguish;
current performance levels within occupations; and traditional
laboratory training and career development practices.

[[Page 10687]]

Figure 1.--Broadbanding
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Corresponding GS grades
-----------------------------------------------------------------------------------------------------------------------------------------------
Occupational families Above
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(15)Bands
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Engineers and Scientists........................
(3)I
(6)II
(1)III
(1)IV V
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
E&S Technicians.................................
(7)I
(2)II
(1)III
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Administrative..................................
(3)I
(5)II
(2)III
(1)IV

(3)
(5)
(2)(*)
(1)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
General Support.................................
(3)I
(2)II
(2)III
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
*Administrative Pay Band III includes two full performance levels because not all work.

The pay bands for the occupational families and how they relate to
the current GS framework are shown in Figure 1. assignments in band III
will support movement to the top of the band. Positions that typically
support the higher salaries perform non-supervisory work associated
with formulating programs and policies with laboratory-wide scope and
impact. Other positions perform supervision of operating level programs
in one or more administrative fields. In order to move beyond the
equivalent of the GS-12 Step 10 salary, duty and work assignments must
satisfy the highest level of the criteria in the classification
standard for this pay band.
Employees will be converted into the occupational family and pay
band which correspond to their GS/GM series and grade. Each employee is
assured an initial place in the system without loss of pay. As the
rates of the General Schedule are increased due to general pay
increases, the minimum and maximum salaries of the pay band levels will
also move up. All employees will receive the general pay increases as
the increases are approved, except for some employees in pay band V.
Since the maximum rate for payband V is linked to ES-4, employees at or
near the top of the band may not receive the full general increase if
it is not authorized for SES employees. In addition, all employees will
be eligible for future locality pay increases of their geographic area.
(See Section III.E.4. for special provisions for employees in special
rate categories.) Employees can receive additional pay increases based
on their evaluations under the Pay for Performance Management System.
Since pay progression through the pay bands is based on performance,
there will be no scheduled Within-Grade Increases (WGIs) or Quality
Step Increases (QSIs) for employees once the broadbanding system is in
place.
There are several advantages to broadbanding. It is simpler, less
time consuming, and less costly to maintain. In addition, such a system
is more easily understood by managers and employees, is easily
delegated to managers, coincides with recognized occupational families,
and complements the other personnel management aspects of the
demonstration project.
The ARL broadbanding plan expands the broadbanding concept used at
China Lake and NIST by creating Pay Band V of the Engineers and
Scientists occupational family. This pay band is designed for Senior
Scientific Technical Managers.
Current legal definitions of Senior Executive Service (SES) and
Scientific and Professional (ST) positions do not fully meet the needs
of ARL. The SES designation is appropriate for executive level
managerial positions whose classification exceeds the GS-15 grade
level. The primary knowledges and abilities of SES positions relate to
supervisory and managerial responsibilities. Positions classified as ST
are reserved for bench research scientists and engineers; these
positions require a very high level of technical expertise and they
have little or no supervisory responsibility.
ARL currently has several positions, typically division chiefs,
that have characteristics of both SES and ST classifications. Most
division chiefs in ARL are responsible for supervising other GS-15
positions, including branch chiefs, non-supervisory research engineers
and scientists and, in some cases ST positions. Most division chief
positions are classified at the GS-15 level, although their technical
expertise warrants classification beyond GS-15. Because of their
management responsibilities, these individuals are excluded from the ST
system. Because of management considerations, they cannot be placed in
the SES. ARL management considers the primary requirement for division
chiefs to be knowledge of and expertise in the specific scientific and
technology areas related to the mission of their divisions.
Historically, incumbents of these positions have been recognized within
the community as scientific and engineering leaders, who possess
primarily scientific/engineering credentials, and are considered
experts in their field. However, they must also possess strong
managerial and supervisory abilities. Therefore, although some of these
employees have scientific credentials that might compare favorably with
ST criteria, classification of these positions as STs is not an option,
because the managerial and supervisory responsibilities inherent in the
positions cannot be ignored.
The purpose of Pay Band V (which will reinforce the equal pay for
equal work principle) is to solve a critical classification problem. It
will also contribute to an SES ``corporate culture'' by excluding from
the SES positions for which technical expertise is paramount. Pay Band
V attempts to overcome the difficulties identified above by creating a
new category of positions, the Senior Scientific Technical Manager,
which has both scientific/technical expertise and full managerial and
supervisory authority.
Current GS-15 division chiefs will convert into the demonstration
project at Pay Band IV. After conversion they will be reviewed against
established criteria to determine if they should be reclassified to Pay
Band V. Other positions possibly meeting criteria for classification to
Pay Band V will be reviewed on a case by case basis. The salary range
is a minimum of 120% of the minimum rate of basic pay for GS-15 with a
maximum rate of basic pay established at the rate of basic pay
(excluding locality pay) for SES level 4 (ES-4). Vacant positions in
Pay Band V will be competitively filled to ensure that selectees are
preeminent researchers and technical leaders in the specialty fields
who also possess substantial managerial and supervisory

[[Page 10688]]

abilities. ARL will capitalize on the efficiencies that can accrue from
central recruiting by continuing to use the expertise of the Army
Materiel Command SES Office as the recruitment agent. Panels will be
created to assist in filling Pay Band V positions. Panel members will
be selected from a pool of current ARL SES members, ST employees and,
later, those in Pay Band V, and an equal number of individuals of
equivalent stature from outside the laboratory to ensure impartiality,
diversity, breadth of technical expertise, and a rigorous and demanding
review. The panel will apply criteria developed largely from the
current OPM Research Grade Evaluation Guide for positions exceeding the
GS-15 level.
DoD will test the establishment of Pay Band V for a five-year
period. Positions established in Pay Band V will be subject to
limitations imposed by OPM and DoD. Pay Band V positions will be
established only in an S&T Reinvention Laboratory which employs
scientists, engineers, or both. Incumbents of Pay Band V positions will
work primarily in their professional capacity on basic or applied
research and secondarily perform managerial or supervisory duties. The
number of Pay Band V positions within the Department of Defense will
not exceed 40. These 40 positions will be allocated by ASD (FMP), DoD,
and administered by the respective Services. The number of Pay Band V
positions will be reviewed periodically to determine appropriate
position requirements. Pay Band V position allocations will be managed
separately from SES, ST, and SL positions. An evaluation of the Pay
Band V concept will be performed during the fifth year of the
demonstration project.
The final component of Pay Band V is the management of all Pay Band
V assets. Specifically, this authority will be exercised within DA and
includes the following: authority to classify, create, or abolish
positions within the limitations imposed by OPM and DoD; recruit and
reassign employees in this pay band; set pay and appraise performance
under this project's Pay for Performance System. The laboratory wants
to demonstrate increased effectiveness by gaining greater managerial
control and authority, consistent with merit, affirmative action, and
equal employment opportunity principles.

B. Classification

1. Occupational Series
The present General Schedule classification system has 434
occupational series which are divided into 22 occupational families.
ARL currently has positions in 119 series which fall into 20 families.
The occupational series, which frequently provide well-recognized
disciplines with which employees wish to be identified, will be
maintained. This will facilitate movement of personnel into and out of
the demonstration project. New series, established by OPM, may be added
as needed to reflect new occupations in the workforce.
2. Classification Standards
The present system of OPM classification standards will be used for
the identification of proper series and occupational titles of
positions within the demonstration project. Current OPM Position
Classification Standards will not be used to grade positions in this
project. However, the grading criteria in those standards will be used
as a framework to develop new and simplified standards for the purpose
of occupational family and pay band determinations. The objective is to
record the essential criteria for each pay band within each
occupational family by stating the characteristics of the work, the
responsibilities of the position, and the knowledges, skills, and
abilities required. ARL will continue its current practice of using
peer reviews to facilitate the classification process and in some cases
will expand its use to meet the needs of the laboratory.
3. Classification Authority
The ARL Director will have delegated classification authority and
may, in turn, re-delegate this authority to subordinate management
levels, and ultimately to the lowest level of full supervision in each
organizational segment. Personnel specialists will provide ongoing
consultation and guidance to managers and supervisors throughout the
classification process.
4. Position Descriptions
Under the project's classification system, a new position
description will replace the current DA Form 374, Department of the
Army Job Description. The classification standard for each pay band
will serve as an important component in the new position description,
which will also include position-specific information, and provide data
element information pertinent to the job. Laboratory supervisors will
follow a computer-assisted process to produce position descriptions.
The objectives in developing the new descriptions are to: (1) simplify
the descriptions and the preparation process through automation; (2)
minimize the amount of writing and time required to create new position
descriptions; and (3) make the position descriptions more useful and
accurate tools for other functions of personnel management, such as
recruitment, reduction in force, performance assessment, and employee
development. Because there is little writing required in the automated
system, supervisory writing style and ability as a hidden consideration
in position classification are eliminated.
5. Specialty Work Codes
Specialty work codes will be used to further differentiate types of
work and the skills and knowledges required for particular positions
within an occupational family and pay band. Each code represents a
specialization or type of work within the occupation. Supervisors will
select appropriate specialty work codes to describe the work of each
employee through the automated classification process.
6. Automated Classification Process
Writing the position description is accomplished by completion of
the following steps using an automated system.
(a) The supervisor enters, by typing free-form, the organizational
location and the employees name. From the menu, the supervisor selects
the appropriate occupational series and title, occupational family, and
pay band corresponding to the level of duties and responsibilities
desired. The user will then select whether the position is a non-
supervisor, team leader or supervisor.
(b) The supervisor enters a brief description of the primary
purpose of the position by typing free-form at the appropriate point.
From a menu, the supervisor will choose statements pertaining to
operation of a motor vehicle; any unusual physical and travel
requirements; required financial disclosure statements; and the
position's sensitivity. The system will produce standardized statements
of supervisory or team leader duties and responsibilities. The system
will also produce a statement pertaining to positive education
requirements, or their equivalencies, based on the occupational series
selected.
(c) From a menu, the supervisor selects up to three specialty work
codes which are appropriate to the job. The specialty work codes are
subsets of the disciplines and describe particular skills and
knowledges related to the kinds of work performed at ARL.

[[Page 10689]]

(d) The supervisor has the option of providing additional position
information by typing free-form at an appropriate point at the end of
the document. This area is to be used when the information addressed by
the purpose of the position, specialty work codes, and functional
classification codes are not completely adequate. The information will
be used primarily to supplement skill and knowledge requirements and to
refine competitive level decisions.
7. Fair Labor Standards Act (FLSA)
Fair Labor Standards Act exemption and nonexemption determinations
will be made consistent with criteria found in 5 CFR (Code of Federal
Regulations) part 551. All employees are covered by the FLSA unless
they meet the criteria for exemption. The duties and responsibilities
outlined in the classification standards for each pay band will be
compared to the FLSA criteria and the tentative conclusions programmed
into the automated classification system so that the system will be
able to generate the FLSA coverage based upon the user's selection of
occupational family, pay band, and supervisory responsibility.
As a general rule, the FLSA status can be matched to occupational
family and pay band. For example, positions classified in Pay Band I of
any occupational family are typically nonexempt, meaning they are
covered by the overtime entitlements prescribed by the FLSA. An
exception to this guideline includes supervisors/managers who meet the
definitions outlined in the OPM General Schedule Supervisory Guide and
who spend 80% or more of the work week on supervisory duties.
Therefore, supervisors/managers in any of the pay bands who meet the
foregoing criteria are exempt from the FLSA.
The generic position descriptions will not be the sole basis for
the FLSA determination. Each position will be evaluated on a case-by-
case basis by comparing the duties and responsibilities assigned, the
classification standards for each pay band, and the 5 CFR part 551 FLSA
criteria. The final review of the FLSA status will be made by the
Civilian Personnel Operations Center (CPOC) based upon the above-
mentioned material and any supplemental information such as that
contained in established performance objectives.
The automated classification system will annotate the position
description with a preliminary FLSA determination in accordance with
Figure 2 below.

Figure 2.--FLSA
----------------------------------------------------------------------------------------------------------------
Occupational family I II III IV V
----------------------------------------------------------------------------------------------------------------
E&S................................................................ N N E E E
E&S Technicians.................................................... N N E
Administrative..................................................... N N E E
General Support.................................................... N N N
----------------------------------------------------------------------------------------------------------------

8. Classification Appeals
An employee may appeal the occupational series, position title, and
pay band of his or her position at any time. An employee must formally
raise the area of concern to supervisors in the immediate chain of
command, either verbally or in writing. If the employee is not
satisfied with the supervisory response, he or she may then appeal to
the DoD appellate level. If the employee is not satisfied with the DoD
response, he or she may then appeal to the Office of Personnel
Management only after DoD has rendered a decision under the provisions
of this demonstration project. Since OPM does not accept classification
appeals on positions which exceed the equivalent of a GS-15 level,
appeal decisions involving Pay Band V will be rendered by DoD and will
be final. Appellate decisions from OPM are final and binding on all
administrative, certifying, payroll, disbursing, and accounting
officials of the Government. Time periods for case processing under
Title 5 apply.
An employee may not appeal the accuracy of the position
description, the demonstration project classification criteria, or the
pay-setting criteria; the assignment of occupational series to the
occupational family; the propriety of a salary schedule; or matters
grievable under an administrative or negotiated grievance procedure or
an alternative dispute resolution procedure.
The evaluation of classification appeals under this demonstration
project are based upon the demonstration project classification
criteria. Case files will be forwarded for adjudication through the
CPOC providing personnel service and will include copies of appropriate
demonstration project criteria.

C. Pay for Performance

1. Overview
The purpose of the Pay For Performance (PFP) System is to provide
an effective, efficient, and flexible method for assessing,
compensating, and managing the laboratory workforce. It is essential
for the development of a highly productive workforce and to provide
management, at the lowest practical level, the authority, control, and
flexibility needed to achieve a quality laboratory and quality
products. PFP allows for more employee involvement in the assessment
process, increases communication between supervisor and employee,
promotes a clear accountability of performance, facilitates employee
career progression, and provides an understandable basis for salary
changes.
PFP also creates a method to more directly link pay and
performance. The system combines goal setting, tied to corporate
objectives, with a letter grading system. The performance evaluations
made under the demonstration project will ensure that top performers
receive a performance payout commensurate with their achievements. The
PFP System uses a four level summary pattern (Pattern E) under 5 CFR
430.208 (d) where a rating of C is equivalent to fully successful.
Employees within the laboratory will be placed into pay pools.
Decisions regarding the amount of the performance payout are based on
the relationship between performance ratings and present salaries. The
maximum base pay rate under this demonstration project will be the
unadjusted base pay rate of GS-15/Step 10, except for employees in Pay
Band V of the E&S Occupational Family. In this case, the salary range
is a minimum of 120% of the minimum rate of basic pay for GS-15 with a
maximum rate of basic pay established at the rate of basic pay
(excluding locality pay) for ES-4.
Cost discipline is assured within each pay pool by limiting the
total base pay increases to the funds available in the base pay fund in
the pay pool, based on what would have been available in the General
Schedule system from within-grade increases, quality step increases and
within-band promotions. The ARL

[[Page 10690]]

Director may adjust the amount of funds assigned to each pay pool as
necessary to recognize exemplary performance of individuals or teams/
groups, to ensure equity and to meet unusual circumstances. The ARL
Director may divert funds from other pay pools for this purpose. No
changes will be made to locality pay under the demonstration project
and all employees continue to receive general pay increases.
The PFP system differs from the current system in that all the
supervisors in a pay pool will meet to reconcile the scores given to
each employee in the pay pool, with the purpose being to reach
consensus on the type of achievements that warrant particular scores.
After this reconciliation process is completed, final letter grades are
assigned and payout proceeds according to each employee's final letter
rating, score, and current salary.
The PFP System eliminates within-grade increases, quality step
increases, in band promotions and performance awards, and replaces them
with pay for performance payouts described above. Other awards such as
special acts will continue to be awarded. The new system also provides
the ability to give bonuses to employees who are at the top of the
range in their pay band. Bonuses differ from pay increases in that they
are not added to base salary but rather are given as a lump sum
payment.
Interns in recognized DA career programs will be appraised semi-
annually until they complete their internships. The second appraisal in
each annual cycle will be considered the rating of record.
Procedures will be developed which will provide intern salary
increases so as to ensure comparability with current pay promotion
practices.
2. The PFP Assessment Process
At the beginning of the assessment cycle, the employee and rater
will collaborate on the development of the employee's performance
objectives, designation of the performance elements and which of these
elements are critical, and their associated weights. An objective is
defined as a statement of specific job responsibilities expected of the
employee during the rating period. These are to be based on the work
unit's mission and goals and should be consistent with the employee's
job description. Performance objectives may be modified and/or changed
as appropriate during the rating cycle. As a general rule, performance
objectives should only be changed when circumstances outside the
employee's control prevent or hamper the accomplishment of the original
objectives. It is also appropriate to change objectives when mission or
workload changes occur. Performance objectives will be tailored to each
individual employee. Use of generic one size fits all objectives will
be avoided.
The supervisor and employee will discuss the performance
objectives, which elements are critical, and what weight each carries
in an attempt to reach agreement whenever possible. Disagreements will
be handled through the normal chain of command. Management retains the
right to establish objectives, identify which elements are critical,
and their relative weights. Employees retain their current grievance
rights. Use of Alternative Dispute Resolution is recommended. It is
encouraged that disagreements be resolved at the beginning of the
appraisal period.
How well work objectives are performed will be measured by a series
of weighted performance elements, at least one of which must be
identified as critical. A critical performance element is defined as a
generic attribute of job performance that is of sufficient importance
that performance below the minimum standard requires remedial action
and may be the basis for removing the employee from the position.
Specific information on the interrelationships between objectives and
elements will be included in the implementing procedures for this plan.
Eight elements have been developed for evaluating the yearly
performance of all laboratory personnel covered by this initiative:
Technical Competence, Cooperation, Communication, Management of Time
and Resources, Customer Relations, Technology Transition, Management/
Leadership, and Supervision/EEO.
All employees will be rated against the first five performance
elements. Element 6 is optional and is intended for those positions
involving technology transition. Element 7 is optional and is intended
for non-supervisory team leaders or program managers. Elements 7 and 8
are required for all supervisory positions. These eight elements are
described below.
(1) Technical Competence. Exhibits and maintains current technical
knowledge, skills, and abilities to produce timely and quality work
with the appropriate level of supervision. Makes prompt, technically
sound decisions and recommendations that add value to mission
priorities and needs. For appropriate occupational families, seeks and
accepts developmental and/or special assignments. Adaptive to
technological/organizational change. (Weight range: 15 to 50)
(2) Cooperation. Accepts personal responsibility for assigned
tasks. Considerate of others views and open to compromise on areas of
difference. Exercises tact and diplomacy and maintains effective
relationships, particularly in immediate work environment and teaming
situations. Readily/willingly gives assistance. Shows appropriate
respect and courtesy. (Weight Range: 5 to 25)
(3) Communication. Provides or exchanges oral/written ideas and
information in a manner that is timely, accurate and easily understood.
Listens effectively so that resultant actions show understanding of
what was said. Coordinates so that all relevant individuals and
functions are included in, and informed of, decisions and actions.
(Weight Range: 5 to 25)
(4) Management of Time and Resources. Meets schedules and
deadlines, and accomplishes work in order of priority; generates and
accepts new ideas and methods for increasing work efficiency;
effectively utilizes and properly controls available resources;
supports organization's resource development and conservation goals.
(Weight Range: 15 to 50)
(5) Customer Relations. Demonstrates care for customers through
respectful, courteous, reliable and conscientious actions. Seeks out,
develops and/or maintains solid working relationships with customers to
identify their needs, quantifies those needs, and develops practical
solutions. Keeps customer informed. Within the scope of job
responsibility, seeks out and develops new programs and/or reimbursable
customer work. (Weight Range: 10 to 50)
(6) Technology Transition. Seeks out and incorporates outside
technology within internal projects. Implements partnerships for
transition or transfer of technology to other internal working groups,
other government agencies, and/or commercial activities. (Weight Range:
5 to 50)
(7) Management/Leadership. Actively furthers the mission of the
organization. As appropriate, participates in the development and
implementation of strategic and operational plans of the organization.
Exercises leadership skills within the environment to include
sensitivity to diversity and to assure equity and fairness. Mentors
junior personnel in career development, technical competence, and
interpersonal skills. Exercises appropriate responsibility for
positions assigned. (Weight Range: 5 to 50)
(8) Supervision/EEO. Works toward recruiting, developing,
motivating, and

[[Page 10691]]

retaining quality employees; initiates timely/appropriate personnel
actions, applies EEO/merit principles; communicates mission and
organizational goals; by example, creates a positive, safe, and
challenging work environment; distributes work and empowers employees.
(Weight Range: 25 to 50)
The performance element titled Technical Competence is a mandatory
critical element for all employees. In addition, all supervisors must
be evaluated against both Management/Leadership and Supervision/EEO
elements, Elements 7 and 8 respectively. Element 8, Supervision/EEO,
will be identified as critical.
Other elements may be identified as critical as agreed upon between
the rater and the employee. Generally any performance element that has
been given a weight of 25 or higher should be identified as critical.
Some elements weighted less than 25 (e.g., Communication or
Cooperation) may also be critical; for instance, those that are
considered so important to a particular job that failure to perform at
an acceptable level would result in an overall performance evaluation
of unsatisfactory. Weights on elements must add up to 100.
Appendix D contains the Performance Objective Worksheet and the
Performance Appraisal form accompanied by a guidance form entitled,
Point Ranges and Performance Element Benchmarks.
Pay pool managers will review objectives, critical element
designations and weights prior to their implementation to ensure these
are reasonable and fair and in keeping with expectations for each
employee. As a general rule, essentially identical positions will have
the same critical elements and the same weights.
The rater will provide periodic feedback to the employee on how
well he/she is performing. If the rater judges that the employee is not
performing at an acceptable level on one or more elements, the rater
must alert the employee and document the problem. This feedback will be
provided any time during the rating cycle especially if there is a
problem. A mid-point counseling session is required. Deficiencies
identified will be accompanied by a plan to correct them.
Employees will provide information on their accomplishments to the
rater at both the mid-point and end of the rating period, similar to
the current Army process. Employees may self-rate their performance
elements and/or they may solicit input from team members, customers,
peers, supervisors in other units, subordinates and other sources which
will permit the rater to fully evaluate the contributions during the
rating period. As a minimum, employees will provide the rater with an
itemized list of their accomplishments during the rating period.
At the end of the rating period, the rater will score each of the
performance elements by assigning a value between 0 and 100 percent of
the weighted value assigned to each of the elements. The rater arrives
at this score by referring to the performance element benchmarks found
on the reverse of the performance appraisal form. The benchmark
performance standards are written so they describe performance at 100
percent of the element; 70 percent; 50 percent and the Unsatisfactory
level of performance. Using these benchmarks, the rater decides where
on a continuum the performance of the employee fits and assigns a point
value according to that determination. The chart to the right of the
performance element benchmarks will be used to assign the specific
point value. Scores will be summed and a letter rating assigned; i.e.,
85-100=A, 70-84=B, 50-69=C. This rating will become the rating of
record. A total score of 49 or below will result in an unsatisfactory
rating. Failure to achieve at least the 50% level of any critical
element will also result in an overall unsatisfactory rating.
The letter ratings will be used to determine pay or bonus values
and to award additional RIF retention years as shown in Figure 3 below.

Figure 3.--RIF Retention and Compensation
------------------------------------------------------------------------
RIF
Retention
Rating Compensation years
added
------------------------------------------------------------------------
A................................. 3 or 4 shares............ 10
B................................. 2 or 3 shares............ 7
C................................. 0 or 1 share............. 3
U................................. 0 shares................. 0
------------------------------------------------------------------------

After a rating has been assigned, the rater recommends the number
of shares that should be granted. This decision is based on an
evaluation of the employee's current salary and level of performance
(e.g., high B or low A) in comparison to similarly situated employees
within the pay pool and overall funding availability. For example, an
employee who receives a score of 84 and a final rating of B, but whose
current salary is at the lower end of his/her pay band might receive
the maximum number of shares (3) permitted for a B rating. In contrast,
an employee who received a score of 85 which warrants a final rating of
A, but whose salary is comparable to or above similar positions in the
pay pool might receive 3 rather than 4 shares. A third example is that
an employee who receives a score of 84 might receive the maximum number
of shares based on the fact that it is a very high B or one point away
from an A. The methods available for determining shares will allow ARL
managers to adjust basic pay by considering differences in performance
levels among employees in terms of comparability within ARL and the pay
pool for similarly situated employees.
Upon approval of this plan, implementing procedures and regulations
will provide details on this process to employees and supervisors.
3. Performance Which Fails to Meet Expectations
a. Continuing Performance Evaluation
Informal employee performance reviews will be a continuous process
so that corrective action, to include a Performance Improvement Plan
(PIP), may be taken at any time during the rating cycle. At least one
review will be documented as a formal progress review. Whenever a
supervisor recognizes that an employee's performance is at a level that
could put him/her in danger of receiving an unsatisfactory rating, the
supervisor will discuss the situation with the employee in an effort to
identify the possible reasons for the poor performance, and may
consider initiating the process for performance improvement in c. below
if circumstances warrant.
b. End of Rating Cycle Performance Evaluation
Employee performance will be formally reviewed at the end of the
rating cycle. If an employee's summary rating score is below 50 points,
or if the employee fails a critical element, the employee will receive
an unsatisfactory rating. Immediately upon assigning an unsatisfactory
rating, the supervisor will take steps to correct the problem.
c. Improving Performance
In recognition that personality conflicts sometimes occur between a
supervisor and an employee, or that an employee might be better suited
to another type of work, the supervisor and employee may explore a
temporary assignment to another unit in the organization. The
supervisor is under no obligation to explore this option prior to
taking more formal action.

[[Page 10692]]

If the temporary assignment is not possible or has not worked out,
and the employee continues to perform at an unsatisfactory level or has
received an unsatisfactory rating, written notification will be
provided of the unsatisfactory performance in the element(s) at issue,
and an opportunity to improve will be structured in a Performance
Improvement Plan (PIP). The supervisor will identify the items/actions
which need to be corrected or improved; will outline required time
frames for such improvement; and will provide the employee with any
available assistance, references, training and the like which might
facilitate needed improvements. Progress will be intensively monitored
during this PIP period; all counseling sessions will be documented.
If the PIP results in a score of 50 or above and/or the critical
element which was failed is now acceptable, no further action is
necessary. If the PIP does not improve performance to an acceptable
level, the supervisor may propose to institute a Last Chance Agreement
(LCA) with the employee. A Last Chance Agreement stipulates that if
performance does not rise to the required level within a specified time
frame the employee will be changed to a lower pay band, reduced in
salary, or released from Federal service. The employee agrees to this
last chance arrangement with the understanding that there are no
grievance or appeal rights if the adverse action eventually has to be
taken. The decision to enter into a last chance agreement is entirely
voluntary on the part of the employee.
If the PIP does not improve performance to the acceptable level
(and the employee elects not to enter into the LCA, if offered), the
supervisor will take the appropriate follow-on action, such as change
to lower pay band/occupational family, reduction in pay within the same
pay band, or removal, as indicated by the circumstances of the
situation. For the most part, employees with an unsatisfactory rating
will not be permitted to remain at their current pay band or salary.
Reductions in salary within the same pay band or changes to a lower pay
band will be accomplished with a minimum of a 5% decrease in employee
base pay. If the employee is reduced to a lower pay band, the salary
will not exceed the highest level in that pay band.
4. Pay Pools
Pay pool structure is under the authority of the laboratory
director. A pay pool must be large enough to allow for a range of
ratings to encompass a reasonable distribution of ratings, typically
50. A pay pool manager's final yearly pay adjustment decisions may
still be subject to higher management review. Supervisors will be
placed in a pay pool separate from their employees.
The pay pool manager makes final decisions on pay increases and/or
bonuses to individuals based on rater recommendation, the final score
and letter rating, the value of the pay pool resources available, and
the individual's current salary within a given pay band. Pay pool
managers will not prescribe a distribution of rating levels. A pay pool
manager may request approval from the Personnel Management Board (PMB)
(described in VIII.C.) or its designee to grant a pay increase to an
employee that is higher than the one generated by the compensation
formula for that employee. Examples of employees who might warrant such
consideration are those making extraordinary achievements or those
serving as interns.
The amount of money available for performance payouts is divided
into two components, base pay increases and bonuses. The amount of
money which can be used for base pay increases within a pool is based
upon the money that would have been available for within-grade
increases, quality step increases, and grade level promotions that are
now within the band. In the first year of the project, this amount will
be set at 2.4% of the total of base salaries in the pay pool. The
amount of money to be used for bonus payments is separately funded
within the constraints of the overall awards budget. In the first year
of the project, this amount will be set at 1.1% of the total of base
salaries in the pay pool which reflects the funds previously available
for performance awards. The sum of these two factors is referred to as
the pay pool percentage factor. The Personnel Management Board will
annually review the pay pool funding formula and recommend adjustments
to the Director, to ensure cost discipline over the life of the
demonstration project.
Performance pay increases (i.e., base pay increases) will not be
granted to employees at the top of their pay band or in a pay retention
status. In these cases, payouts earned as a function of performance
will be paid as a bonus. In addition, a portion of the projected pay
increase may be paid as bonus instead of base pay if required to keep
the base pay portion of the pay pool from exceeding its maximum value
(initially 2.4%).
In making the annual performance payouts under the PFP system, it
will be necessary to determine the amount of that year's pay pool and
share value. As explained above, the amount of the pay pool is the pay
pool percentage (initially 3.5 percent) multiplied by the sum of the
combined base salaries of covered employees. The share value will be
calculated so that a pay pool manager will not exceed the resources
that are available in the pay pool. The value of a share cannot be
exactly determined until the rating and reconciliation process
described below is complete. The estimated share value is about 1% of
salary, but inflated ratings (if they occur) will reduce the value of
the share. (Conversely, lower average ratings will increase the value
of a share.) The share value is expressed as a percentage of base
salary. It is computed by dividing the amount of the pay pool by the
sum of each pay pool member's salary multiplied by his/her earned
shares, or

Share value = (pay pool value)/(sum of (salary * shares) for each
member).

Each individual's performance payout is calculated by multiplying
the individual's base salary by the total value of his/her earned
shares expressed as a percentage of base salary, or

Individual performance payout=salary * (earned shares * share value).
In summary, an individual's performance payout is computed as follows:
Individual performance payout = SALi * Ni * SV,

Where: SV = share value = (pay pool value) / SUM (SALk * Nk); k = 1 to
n
Pay pool value = (pay pool percentage factor) * SUM (SALk), k = 1 to n
n = number of employees in pay pool
i = an individual employee
N = Number of shares earned by an employee based on his/her performance
rating (0 to 4)
SAL = An individual's base salary and
SUM = The summation of the entities in parentheses over the range
indicated.

This formula ensures that a share represents a fixed percentage
salary increase for all employees in a pay pool.
After the payout and share value calculations have been completed,
the pay pool manager must calculate the proportion of payouts to be
paid as base pay vs bonus. If base pay increases would exceed the
authorized percentage, shares must be paid out as base pay increases
only up to the limit, and the remainder paid as a bonus. This base/
bonus proportion will be constant for all uncapped employees. This
process will preserve the principle that all shares maintain equal
(percentage) value, and will ensure that all of the

[[Page 10693]]

allocated funds are disbursed as intended.
Pay pool managers will establish and chair a panel to review
supervisors preliminary ratings and make any necessary adjustments. The
panel will comprise all rating supervisors below the pay pool manager.
The reconciliation process gives raters the opportunity to verify that
their preliminary evaluations and approach to scoring conform with that
of other raters within the pay pool and assures that performance
assessments of employees are comparable and equitable across
organizational lines. In this step, each employee's preliminary
performance element scores are compared and through discussion and
consensus building, final ratings are determined. The reconciliation
process is aimed at determining the relative worth of employee
accomplishments.
The rationale behind reconciliation is that supervisors within a
pay pool will reach a consensus on the types of achievements that
warrant particular scores. Each panel will develop operating procedures
that will provide for fair and equitable conclusions within the
guidance provided by the Personnel Management Board. If the panel
cannot reach consensus, the pay pool manager makes final decisions.
A midpoint principle will be used to determine performance pay
increases. This principle is that employees must receive a B rating or
higher in order to cross the midpoint of the pay band range and, once
the midpoint is crossed, the employee must receive a B or better rating
in order to receive a base pay increase. This applies to all employees
in every occupational family and pay band. Any amount of an employee's
performance payout not paid in the form of a base pay increase because
of the midpoint principle will be paid as a bonus.
5. Awards
While not linked to the pay for performance system, awards will
continue to be given for special acts and other categories as they
occur. Awards may include, but are not limited to, special acts,
patents, suggestions, on-the-spot, and time-off.
In an effort to foster and encourage team work among its employees,
ARL often gives group awards for special acts or significant
achievement. Under the demonstration project, if such an award is given
a team may elect to distribute the award among themselves. Thus, a team
leader or supervisor may allocate a sum of money to a team for
outstanding completion of a special task, and the team may decide the
individual distribution of the total dollars among themselves.

D. Hiring and Appointment Authorities

1. Qualifications
The qualifications required for placement into a position in a pay
band within an occupational family will be determined using the OPM
Qualification Standards Handbook for General Schedule Positions. Since
the pay bands are anchored to the General Schedule grade levels, the
minimum qualification requirements for a position will be the
requirements corresponding to the lowest General Schedule grade
incorporated into that pay band. For example, the minimum eligibility
requirements for a position in Pay Band II in the Engineers and
Scientist Occupational Family will be the GS-5 qualification
requirements for the series.
Selective factors may be established for a position in accordance
with the OPM Qualification Standards Handbook when determined to be
critical to successful job performance. These factors become part of
the minimum requirements for the position and applicants must meet them
in order to be eligible. If used, selective factors will be clearly
stated as part of the qualification requirements in vacancy
announcements and recruiting bulletins.
2. Competitive Examining
Current OPM regulations state that appointment registers will list
the names of eligibles in accordance with their numerical ratings.
However, preference eligibles with a compensable service-connected
disability of 10 percent or more shall be entered at the top of the
register ahead of all others unless the register is for professional
and scientific positions GS-9 and above.
ARL professional and scientific positions in the demonstration
project have been placed into two occupational families, the Engineers
and Scientists Occupational Family and the Administrative Occupational
Family. The broadbanding concept adopted by ARL groups scientific
positions in grades GS-5 through GS-11 into one pay band (DB-II).
Similarly, GS-5 through GS-10 positions in the Administrative
Occupational Family (DJ-II) have been grouped into one pay band.
Because the ARL broadbanding plan places GS-9 and GS-11 scientific
and professional positions in a band with lower-graded positions, the
procedures for applying veterans' preference to Scientific and
Professional positions in grades GS-9 or higher (5 U.S.C. 3313) shall
only apply to Scientific and Professional positions in bands that
exclusively include grades GS-12 and above.
3. Revisions to Term Appointments
The laboratory conducts many research and development projects that
range from three to six years. The current four-year limitation on term
appointments imposes a burden on the laboratory by forcing the
termination of some term employees prior to completion of projects they
were hired to support. This disrupts the research and development
process and reduces the laboratory's ability to serve its customers.
Under the demonstration project, ARL will have the authority to
hire individuals under modified term appointments. These appointments
will be used to fill positions for a period of more than one year but
not more than five years when the need for an employee's services is
not permanent. The modified term appointments differ from term
employment as described in 5 CFR part 316 in that they may be made for
a period not to exceed five, rather than four years. The ARL Director
is authorized to extend a term appointment one additional year.
Employees hired under the modified term appointment authority may
be eligible for conversion to career-conditional appointments. To be
converted, the employee must (1) have been selected for the term
position under competitive procedures, with the announcement
specifically stating that the individual(s) selected for the term
position(s) may be eligible for conversion to career-conditional
appointment at a later date; (2) served two years of continuous service
in the term position; (3) be selected under merit promotion procedures
for the permanent position; and (4) have a current rating of B or
better.
Employees serving under regular term appointments at the time of
conversion to the demonstration project will be converted to the new
modified term appointments provided they were hired for their current
positions under competitive procedures. These employees will be
eligible for conversion to career-conditional appointment if they have
a current rating of B or better and are selected under merit promotion
procedures for the permanent position after having completed two years
of continuous service. Time served in term positions prior to
conversion to the modified term appointment is creditable, provided the
service was continuous. Employees serving under modified term
appointments under this plan will be

[[Page 10694]]

covered by the plan's pay for performance system.
4. Voluntary Emeritus Corps
Under the demonstration project, the laboratory director will have
the authority to offer retired or separated employees voluntary
positions in the laboratory. Voluntary Emeritus Program assignments are
not considered employment by the Federal Government (except for
purposes of injury compensation). Thus, such assignments do not affect
an employee's entitlement to buy-outs or severance payments based on an
earlier separation from Federal Service. The Voluntary Emeritus Corps
will ensure continued quality research while reducing the overall
salary line by allowing higher paid employees to accept retirement
incentives with the opportunity to retain a presence in the scientific
and technical communities. The program will be beneficial during
manpower reductions as employees accept retirement and return to
provide a continuing source of corporate knowledge and valuable on-the-
job training or mentoring to less-experienced employees.
To be accepted into the emeritus corps, a volunteer must be
recommended by laboratory managers to the directorate director.
Everyone who applies is not entitled to an emeritus position. The
directorate director must clearly document the decision process for
each applicant (whether accepted or rejected) and retain the
documentation throughout the assignment. Documentation of rejections
will be maintained for two years.
To ensure success and encourage participation, the volunteer's
federal retirement pay (whether military or civilian) will not be
affected while serving in a voluntary capacity. Retired or separated
federal employees may accept an emeritus position without a break or
mandatory waiting period.
Voluntary Emeritus Corps volunteers will not be permitted to
monitor contracts on behalf of the government. The volunteers may be
required to submit a financial disclosure form annually and will not be
permitted to participate on any contracts where a conflict of interest
exists. The same rules that currently apply to source selection members
will apply to volunteers.
An agreement will be established between the volunteer, the
directorate director, and the Civilian Personnel Operations Center. The
agreement must be finalized before the assumption of duties and shall
include:
(a) A statement that the voluntary assignment does not constitute
an appointment in the Civil Service, is without compensation, and any
and all claims against the Government because of the voluntary
assignment are waived by the volunteer;
(b) A statement that the volunteer will be considered a federal
employee for the purpose of injury compensation;
(c) Volunteer's work schedule;
(d) Length of agreement (defined by length of project or time
defined by weeks, months, or years);
(e) Support provided by the laboratory (travel, administrative,
office space, supplies);
(f) A one page statement of duties and experience;
(g) A statement providing that no additional time will be added to
a volunteer's service credit for such purposes as retirement, severance
pay, and leave as a result of being a member of the voluntary emeritus
corps;
(h) A provision allowing either party to void the agreement with
ten working days written notice; and
(i) The level of security access required (any security clearance
required by the position will be managed by the laboratory while the
volunteer is a member of the emeritus corps).
5. Extended Probationary Period
A new employee appointed to a nonsupervisory/non-managerial
position in the Engineers and Scientists occupational family must
demonstrate adequate contribution during all cycles of a research
effort for a laboratory manager to render a thorough evaluation. The
current one year probationary period will be extended to three years
for all newly hired permanent career-conditional employees appointed to
positions in that occupational family. The purpose of extending the
probationary period is to allow supervisors an adequate period of time
to fully evaluate an employee's contributions and conduct. The three
year probationary period will apply only to new hires subject to a
probationary period.
If a probationary employee's performance is determined to be
satisfactory at a point prior to the end of the three year probationary
period, a supervisor has the option of ending the probationary period
at an earlier date, but not before the employee has completed one year
of continuous service. If the probationary period for an employee is
terminated before the end of the three year period, the supervisor will
develop written rationale for his/her decision and will elevate it at
least one level for review prior to implementing the action.
All other existing provisions pertaining to probationary periods
are retained, including limited notice and appeal rights and crediting
prior service. Prior Federal civilian service (including NAF service
and service in temporary or term positions) counts toward completion of
probation when the service is in the Department of Army, is in the same
line of work, and contains or is followed by no more than a single
break in service that does not exceed 30 calendar days.
In the case of modified-term employees who are converted to
permanent status, the time served under the term appointment counts
toward the required probationary period as long as it is in the same
line of work. If the permanent position is in a different line of work,
the full three-year probationary requirement applies.
6. Supervisory Probationary Period
Supervisory probationary periods will be made consistent with 5 CFR
315.901 except references to grade will be indicated as pay band. New
supervisors will be required to complete a one year probationary period
for the initial appointment to a supervisory position. If, during the
probationary period, the decision is made to return the employee to a
nonsupervisory position for reasons solely related to supervisory
performance, the employee will be returned to a comparable position of
no lower pay band and pay than the position from which promoted. Pay
will not exceed the maximum rate of the lower pay band.
New supervisors who are hired into the E&S occupational family will
only serve under a single one-year probationary period and are not
subject to the three-year probationary period described above. The
reason for this is that the position for which they were hired is
primarily supervisory in nature and performance can adequately be
measured in the one year probationary period.

E. Internal Placement and Pay Setting

1. Promotions
A promotion is the movement of an employee to a higher pay band
within the same occupational family or to a pay band in a different
occupational family which results in an increase in the employee's
salary. Supervisors may consider promoting employees at any time since
promotions are not tied to the pay for performance system. Progression
within a pay band is based upon performance pay increases; as such,

[[Page 10695]]

these actions are not considered promotions and are not subject to the
provisions of this section.
Promotions will be processed under competitive procedures in
accordance with merit principles and requirements and the local merit
promotion plan. The following actions are excepted from competitive
procedures:
(a) Re-promotion to a position which is in the same pay band and
occupational family as the employee previously held on a permanent
basis within the competitive service.
(b) Promotion, reassignment, demotion, transfer or reinstatement to
a position having promotion potential no greater than the potential of
a position an employee currently holds or previously held on a
permanent basis in the competitive service.
(c) A position change permitted by reduction in force procedures.
(d) Promotion without current competition when the employee was
appointed through competitive procedures to a position with a
documented career ladder.
(e) A temporary promotion or detail to a position in a higher pay
band of 180 days or less.
(f) Reclassification to include impact of person in the job
promotions.
(g) A promotion resulting from the correction of an initial
classification error or the issuance of a new classification standard.
(h) Consideration of a candidate not given proper consideration in
a competitive promotion action.
Upon promotion to a higher pay band, an employee will be entitled
to a 6% increase in base pay or the lowest level in the pay band to
which promoted, whichever is greater. The maximum amount of pay
increase upon promotion will not exceed 10 percent or other such amount
established by the Personnel Management Board. However, on a case-by-
case basis, the Personnel Management Board may recommend approval of
requests for promotion beyond 10 percent. Highest previous rate also
may be considered in fixing pay in accordance with the laboratory's pay
fixing policies.
2. Demotions
A demotion is a placement into a lower pay band within the same
occupational family, or placement into a pay band in a different
occupational family with a lower salary. Demotions may be for cause
(performance or conduct) or for reasons other than cause (e.g., erosion
of duties, reclassification of duties to a lower pay band, application
under competitive announcements or at the employee's request, or
placement actions resulting from reduction in force procedures).
Employees demoted for cause are not entitled to pay retention.
Employees demoted for reasons other than cause may be entitled to pay
retention in accordance with the laboratory's pay fixing policies.
3. Pay Fixing Policies and Procedures
The ARL Director will establish pay administration policies which
conform with basic governmental pay fixing policy; however, the ARL
policies will be exempt from Army Regulations or local pay fixing
policies, except where negotiated agreements prevail.
Highest previous rate (HPR) will be considered in placement actions
for which authorized under rules similar to the HPR rules in 5 CFR
531.203(c) and (d). Use of HPR will be at the supervisor's discretion.
The pay retention provisions of 5 U.S.C. 5363 and 5 CFR 536.101 will
apply to this plan except where waived or modified as specified in the
waiver section. Pay retention may also be granted by the ARL Director
to employees who meet general eligibility requirements, but do not have
specific entitlement by law, provided not specifically excluded.
An employee's total monetary compensation paid in a calendar year
may not exceed the basic pay of level I of the Executive Schedule
consistent with 5 U.S.C. 5307 and 5 CFR part 530 subpart B.
As a general rule, pay will be set at the lowest level in a pay
band. Appointments made above the minimum level will be based upon
superior qualifications of the candidate. A candidate appointed toward
the higher end of a pay band should have qualifications approaching the
lowest General Schedule grade incorporated into the next higher pay
band. For example, a person appointed at the higher end of Pay Band II
in the Engineers and Scientist occupational family would have
education, experience, or a combination of the two approaching the
qualifications of the GS-12 level, which is the lowest General Schedule
grade incorporated into Pay Band III. Appointments above the minimum of
the pay band will be approved at the directorate level.
Directorates may make full use of recruitment, retention, and
relocation payments as currently provided for by OPM.
When a temporary promotion is terminated, the employee's pay
entitlements will be redetermined based on the employee's position of
record, with appropriate adjustments to reflect pay events during the
temporary promotion, subject to the specific policies and rules
established by ARL. In no case may those adjustments increase the pay
for the position of record beyond the applicable pay range maximum
rate.
4. Staffing Supplements
Employees assigned to occupational series and geographic areas
covered by special rates will be eligible for a staffing supplement if
the maximum adjusted rate for the banded GS grades to which assigned is
a special rate that exceeds the maximum GS locality rate for the banded
grades. The staffing supplement is added to the base pay, much like
locality rates are added to base pay. The employee's total pay
immediately after implementation of the demonstration project will be
the same as immediately before the demonstration project, but a portion
of the total will be in the form of a staffing supplement. Adverse
action and pay retention provisions will not apply to the conversion
process as there will be no change in total salary. The staffing
supplement is calculated as described below.
Upon conversion, the demonstration base rate will be established by
dividing the employee's old GS adjusted rate (the higher of special
rate or locality rate) by the staffing factor. The staffing factor will
be determined by dividing the maximum special rate for the banded
grades by the GS unadjusted rate corresponding to that special rate
(step 10 of the GS rate for the same grade as the special rate). The
employee's demonstration staffing supplement is derived by multiplying
the demonstration base rate by the staffing factor minus one. So the
employee's final demonstration special staffing rate equals the
demonstration base rate plus the special staffing supplement; this
amount will equal the employee's former GS adjusted rate.
Simplified, the formula is this:

[[Page 10696]]

[GRAPHIC] [TIFF OMITTED] TN04MR98.008

Staffing Supplement = demonstration base rate x (staffing factor--1)
Salary upon conversion = demonstration base rate + staffing supplement
(sum will equal existing rate)

Example: In the case of a GS-801-11/03 employee who is receiving a
special salary rate, the salary before the demonstration project is
$42,944. The maximum special rate for a GS-801-11 Step 10 is $51,295
and the corresponding regular rate is $46,523. The staffing factor is
computed as follows:
[GRAPHIC] [TIFF OMITTED] TN04MR98.009

Then to determine the staffing supplement, multiply the demonstration
base by the staffing factor minus 1.
[GRAPHIC] [TIFF OMITTED] TN04MR98.010

The Staffing Supplement of $3,996 is added to the Demonstration
Base Rate of $38,948 and the total salary is $42,944, which is the
salary of the employee before conversion to the demonstration project.
If an employee is in a band where the maximum GS adjusted rate for
the banded grades is a locality rate, when the employee is converted
into the demonstration project, the demonstration base rate is derived
by dividing the employee's former GS adjusted rate (the higher of
locality rate or special rate) by the applicable locality pay factor
(for example, in the Washington-Baltimore area, it is currently
1.0711). The employee's demonstration locality-adjusted rate will equal
the employee's former GS adjusted rate.
Any General Schedule or special rate schedule adjustment will
require recomputation of the staffing supplement. Employees receiving a
staffing supplement remain entitled to an underlying locality rate,
which may over time supersede the need for a staffing supplement. If
OPM discontinues or decreases a special rate schedule, affected
employees will be entitled to pay retention. Upon geographic movement,
an employee who receives the special staffing supplement will have the
supplement recomputed. Any resulting reduction in pay will not be
considered an adverse action or a basis for pay retention.
Established salary including the staffing supplement will be
considered basic pay for the same purposes as a locality rate under 5
CFR 531.606(b), i.e., for purposes of retirement, life insurance,
premium pay, severance pay, and advances in pay. It will also be used
to compute worker's compensation payments and lump-sum payments for
accrued and accumulated annual leave.
5. Simplified Assignment Process
Today's environment of downsizing and workforce transition mandates
that ARL have increased flexibility to assign individuals. Broadbanding
can be used to address this need. As a result of the assignment to a
more general position description, the organization will have increased
flexibility to assign an employee without a basic pay change consistent
with the needs of the organization, and the individual's qualifications
and rank or level. Subsequent assignments to projects, tasks, or
functions anywhere within the organization requiring the same level and
area of expertise, and qualifications would not constitute an
assignment outside the scope or coverage of the current position
description.
Such assignments within the coverage of the generic descriptions
can be accomplished without the need to process a personnel action. For
instance, a technical expert can be assigned to any project, task, or
function requiring similar technical expertise. This flexibility allows
a broader latitude in assignments and further streamlines the
administrative process and system.
6. Details
Under this plan employees may be detailed to a position in the same
band (requiring a different level of expertise and qualifications) or
lower pay band (or its equivalent in a different occupational family)
for up to one year. Details may be implemented by submitting one SF 52-
B to cover the one year period. As in the current system, details to
duties in a higher pay band for more than 180 days will be implemented
using competitive procedures.

F. Employee Development

1. Expanded Development Opportunities
The ARL Expanded Developmental Opportunities Program, to include
sabbaticals, will cover all demonstration project employees. The
developmental opportunity period will not result in loss of (or
reduction in) basic pay, leave to which the employee is otherwise
entitled, or credit for time of service. The positions of employees on

[[Page 10697]]

expanded developmental opportunities may be backfilled (i.e., with
temporarily promoted employees or with term employees). However, that
position or its equivalent must be made available to the employee
returning from the expanded development opportunity.
a. Sabbaticals
ARL will have the authority to grant paid sabbaticals to career
employees to permit them to engage in study or uncompensated work
experience that will contribute to their development and effectiveness.
One developmental opportunity for a sabbatical 3-12 months in duration
may be granted to an employee in any 10-year period. Employees will be
eligible after completion of seven years of Federal service. Each
opportunity must result in a product, service, report, or study that
will benefit the ARL mission as well as increase the employee's
individual effectiveness. Various learning or developmental experiences
may be considered, such as advanced academic teaching; study; research;
self-directed or guided study; and on-the-job work experience with a
public, private commercial, or private nonprofit organization.
b. Critical Skills Training
Training is an essential component of an organization that requires
continuous acquisition of advanced and specialized knowledge. Degree
training in the academic environment of laboratories is also a critical
tool for recruiting and retaining employees with or requiring critical
skills. Constraints under current law and regulation limit degree
payment to shortage occupations. In addition, current government-wide
regulations authorize payment for degrees based only on recruitment or
retention needs. Degree payment is not permitted for non-shortage
occupations involving critical skills.
ARL is expanding the authority to provide degree or certificate
payment for purposes of meeting critical skill requirements, to ensure
continuous acquisition of advanced specialized knowledge essential to
the organization, and to recruit and retain personnel critical to the
present and future requirements of the organization. Degree or
certificate payment may not be authorized where it would result in a
tax liability for the employee without the employee's express and
written consent. Any variance from this policy must be rigorously
determined and documented. In addition, this proposal will be
implemented consistent wit

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-5426. Public record. Not legal advice.