federal register / vol. 62, no. 124 / friday, june 27, 1997 / notices

34876 Federal Register / Vol. 62, No. 124 / Friday, June 27, 1997 / Notices

OFFICE OF PERSONNELMANAGEMENT

Science and Technology ReinventionLaboratory Personnel DemonstrationProject at the Missile Research,Development, and Engineering Center(MRDEC)

AGENCY: Office of PersonnelManagementACTION: Notice of approval ofDemonstration Project Final Plan.

SUMMARY: The National DefenseAuthorization Act for fiscal year 1995(P.L. 103-337) authorizes the Secretaryof Defense, with Office of PersonnelManagement (OPM) approval, toconduct a Personnel DemonstrationProject at Department of Defense (DoD)laboratories designated as Science andTechnology Reinvention Laboratories.The legislation requires that mostrequirements of Section 4703 of Title 5shall apply to the demonstration project.Section 4703 requires OPM to publishthe project plan in the Federal Register.DATES: This demonstration project maybe implemented by the MRDECSeptember 28, 1997.FOR FURTHER INFORMATION CONTACT:MRDEC: Dr. William H. Leonard,Special Assistant for LaboratoryManagement, Research, Development,and Engineering Center, U.S. ArmyMissile Command, ATTN: AMSMI-RD,Redstone Arsenal, Alabama 35898–5240, 205–876–1442. OPM: Fidelma A.Donahue, U.S. Office of PersonnelManagement, 1900 E. Street, NW, Room7460, Washington, DC 20415, 202–606–1138.

SUPPLEMENTARY INFORMATION:

1. OverviewNinety letters and six e-mails were

received, and six individualscommented on the Federal Registernotice at the public hearing. Thesecomments brought several newperspectives to the attention of thoseresponsible for implementing,overseeing, and evaluating the project.The comments highlighted instances ofmiscommunication andmisunderstanding with the presentsystem as well as the projectinterventions. Further, they underscoredthe importance of providing training toemployees and supervisors on theDemonstration Project. The substance ofall comments received has beenconveyed to the Center Directors, thePresident of AFGE Local 1858, and theMICOM Civilian Personnel AdvisoryCenter in the event that local policies,processes and training sessions maybenefit from such perspectives. A

summary of all comments received,along with accompanied responses, isprovided below.

A. Step Increase Buy-InComments: There were 73 comments

(one manager claimed to speak for 77employees and 58 comments wereidentical) that expressed concern overthe method of conversion into thedemonstration. Employees preferred tohave their accumulated time towardtheir next within-grade increase addedto their base pay instead of receiving alump-sum cash payment. Bothemployees and union recognized theproposed method does not providefunds that can be added to employees’base pay, and have a positive impact ontheir benefits such as retirement andthrift savings plans.

Response: This issue has been thesubject of negotiations with the unionsince the initial development of theproposal. In the demonstration therewill no longer be step increases. Thefunds that would have been expendedfor that purpose will form part of thePerformance Pay Pools for the payout ofboth performance pay increases and/orperformance bonuses. Each employeeconverted into the demonstration willcompete during the first performanceassessment period for those funds thatwould have been paid for step increases.Thus the strategy developed by thedemonstration development team was toprovide a lump sum cash incentive atthe implementation of thedemonstration for the time credited tothe employee toward what would havebeen the employee’s next within-grade(step) increase and to maintain thePerformance Pay Pool at the highestvalue (2%) which could be supportedby historical fiscal data. The MRDEC, innegotiations with the union, has agreedto convert employees into thedemonstration so that their base paywill be adjusted effective the date ofimplementation, by a prorated valuebased upon the number of weeks anemployee has completed toward thenext higher step. Payment will equal thecurrent value of the employee’s nextwithin-grade increase times theproportion of the waiting periodcompleted at the time of conversion.Both MRDEC Management and theunion recognize that the demonstrationmust be guided by the concept of in-house budget neutrality. Therefore, theMRDEC will reexamine the PayoutFactor (F) at the end of the firstassessment period to determine if apayout factor of 2% was maintained byrevised labor rates. If not, then the factorF must be adjusted prior to the first yearpayout to compensate for the early

payment of step increases which wouldhave been used to form the full robustvalue of the payout factor. Thesechanges are in Sections III.B(Performance Pay Increases and/orPerformance Bonuses) and V(Conversion to the DemonstrationProject).

B. Competitive AreaComments: There were 73 comments

(one manager claimed to speak for 77employees and 58 comments wereidentical) that expressed concern overthe revised Reduction-in-Force (RIF)procedures that limit a competitive areato occupational families in allgeographic areas. These comments cameprimarily from employees in theBusiness Management and E&S SupportOccupational Families. Their concernswere two fold: (1) The inability to bumpoutside of occupational families andretreat to a position during a RIFsituation that had been previously heldthat may be in a different occupationalfamily than that occupied by theemployee, and (2) the reduced numberof employees in a particularoccupational family will result insmaller competitive levels which maylead to more separations from thatfamily if a RIF occurs within theMRDEC. Three comments recommendedthat the best solution would be to putthe Missile Command into thedemonstration so as to widen thecompetitive areas. There was onecomment that suggested thatcompetitive areas be restricted to seriesrather than occupational families and torestrict the competitive area to localgeographic areas.

Response: The project designersproposed this intervention as a means ofminimizing the severe turbulence that isnormally caused during a RIF. Since theMRDEC is predominately customerfunded, its vitality and future credibilitydepend upon a reasonably stableworkforce that is highly trained andmotivated to the precepts of customerservice and quality products. Thisintervention would achieve the desiredgoal of minimizing personnelturbulence, but at the same time it mayput some loyal and recently hiredemployees at an added risk ofseparation. For this reason, this issuehas been negotiated with the union, andthe project design will be changed todefine the competitive areas as theseparate geographic areas of theMRDEC. This change was made in fullrecognition that prior to any RIF actionbeing taken, action will be taken toplace affected employees in other partsof the parent organization and that theprovisions of the DoD Stability of

34877Federal Register / Vol. 62, No. 124 / Friday, June 27, 1997 / Notices

Employment Programs (PriorityPlacement Program) will be used toassist affected employees. At this timethe demonstration cannot be extendedto all of the Missile Command in thatthe demonstration can only beconducted in a Science and TechnologyReinvention Laboratory, which theMissile Command is not. The suggestionto define competitive areas along thelines of series was considered butrejected because the comment may havereflected confusion between competitiveareas and competitive levels(competitive levels will continue to fallalong series lines). These changes are inSection III.F (Revised Reduction-In-Force (RIF) Procedures).

C. Supervisory Pay Differentials

Comments: Seventy-one comments(one manager claimed to speak for 77employees and 58 comments wereidentical) were received and all butthree requested that supervisory paydifferentials be made available to otherthan the engineers and scientistsoccupational family. One commentquestioned whether the differential wasan award or a bonus, one commentexpressed concern about the impact ofa supervisory differential on employeepay pools, and one commentrecommended elimination of thesupervisory differential.

Response: A supervisory differentialis a cash incentive that is paid on a payperiod basis. It is not an award or aperformance bonus. The differential isnot automatic and will range in valuefrom 0% to 10% of the supervisor’sbasic rate of pay. Seven factors areprovided for the Director to consider indetermining the value of a differential.Supervisory differentials were designedto compensate supervisors whosupervise employees that are typicallyat the same grade level or higher. Thisnormally occurs at the higher bands inthe E&S Occupational Families.However, in recognition that restrictingsupervisory differentials to just the E&Soccupational families may be perceivedas an unfair application, the plan will bechanged in Section III.B (SupervisoryPay Differentials) to state thatsupervisory differentials may be used, atthe discretion of the MRDEC Director, toincentivize and reward supervisors whoare in Paybands III, IV or V in anyoccupational family, except foremployees in Payband V of the E&Soccupational family. Additionally, theplan is modified in Section III.B(Supervisory Pay Differentials) to statethat supervisory differentials andsupervisory adjustments will not befunded from the performance pay pools.

D. Performance Evaluation System

Comments: Eleven comments (onemanager claimed to speak for 77employees) were received that raisedquestions and concerns about themechanics of implementing theperformance evaluation system and alsoabout perceived shortcomings of thesystem. Concerns relating to themechanics of implementation includethat (1) managers must be timely withevaluations, (2) peer evaluations maynot be useful, (3) three performanceelements need to be added, (4) ratinglevels be clearly defined, and (5) theemployee to supervisor ratio of about15:1 should be waived. With regard toperceived shortcomings, the new systemis very subjective, has no advantagesover the existing system, does notprovide fairness, reduces cooperationand teamwork, and does not providesimplification, according to somecommenters. Additionally, onecommenter stated that TAPES could bemade to work.

Response: The design teamacknowledges that it is imperative formanagers and supervisors to be timelywith their evaluations. Oversight by thePerformance Management Board and theuse of a critical supervision/EEOperformance element that ‘‘requirestimely/appropriate personnel actions’’will help ensure timeliness.Additionally, supervisory training willemphasize the importance of timelyevaluations and the consequences ofuntimeliness on the payout process.Peer evaluations are in the proposal asan option only, and their use will begoverned by the Personnel ManagementBoard. The recommended threeadditional performance elements(empowers his/her personnel,acquisition streamlining initiatives, andsupport to the organization) will not beadded since they are considered to beembedded within the five non-supervisory performance elements orthe two supervisory or managementelements. Seven performance elements(five for non-managers) are consideredto be sufficient. No change will be madeto the proposal with regard to ratinglevels in that they are clearly defined inAppendix D at four rating levels. Theproposal contains no provisions forchanging supervisory ratios.

Like many Performance EvaluationSystems, the proposed interventionmakes appropriate provisions forsupervisory judgment. The use ofbenchmark performance standards asuniversal criteria for evaluating allemployees in the demonstration projecton any element will lead to greaterfairness and reliability of evaluation,

thus reducing the potential forsubjectivity in the evaluation process.These benchmark performancestandards define expected performanceat the 100%, 70%, 50% andunsatisfactory levels, thus assuring aclear definition of expected performancelevels. The use of a performanceelement which measures ‘‘workingrelationships’’ will assure thatemployees cooperate and that teamworkcontinues and rises to higher levels. Theperformance evaluation process is verycritical to the pay-for-performancesystem, and as such the TAPES processhas not necessarily been simplified butrather redesigned to make it supportiveof the pay-for-performance system. Asimplification does exist in that therating supervisor is not required to writea justification for an assigned rating ofrecord other than unsatisfactory.

E. Pay-for-Performance SystemComments: Seventy-six comments

(one manager claimed to speak for 77employees and 58 comments wereidentical) were received in this area.Comments included assertions that the50% rule and the mid-point rule violatemerit system principles, is a prohibitedpersonnel practice and is arbitrary.Sixty-three comments expressedconcern about the composition andcontrol of pay pools, the source of fundsfor pay pools, and the effect of pay poolresults on retirement and benefits; andone comment equated the pay-for-performance system to the discreditedPerformance Management RecognitionSystem (PMRS). Two commentsreflected a misunderstanding aboutwhether the general increase was in theperformance and bonus pay pools ornot; two comments stated a desire tokeep step increases.

Response: As to the legality of the50% rule and the mid-point rule, theMRDEC Personnel Demonstrationproposal was reviewed by the MICOMLegal Office, DoD Office of GeneralCounsel, and the OPM General Counselprior to publishing it in the FederalRegister on 13 March 1997. Theproposal was determined at that time tonot violate any merit system principles,to have clearly avoided any prohibitedpersonnel practices, and to not havebeen arbitrary in the design of proposedpersonnel practices. The 50% rule andthe mid-point rule are consistently andfairly applied to all employees in theproposed demonstration. Therefore, therules meet the test of being fair andequitable, and are in consonance withmerit system principles. The 50% ruleis similar in purpose to the use of longerwaiting periods at higher steps in theGeneral Schedule pay system. The 50%


rule is not solely a cost containmentmethod, but is also an effort to retainbase pay as an incentive (i.e., to preventreaching the top of a band too soon).

Comments regarding the merit systemprinciple of equal pay for work of equalvalue (5 U.S.C. 2301(b)(3)) are flawed.The words ‘‘equal pay for work of equalvalue’’ are intended to ensure that anemployee’s pay range is based on anaccurate and equitable evaluation of thelevel of work for the employee’sposition. Employees performing at thesame level (as defined by a grade orband) should be paid in the same payrange. Pay setting within a pay rangecan properly reflect factors such astenure, past performance, and currentperformance, while ensuring equaltreatment based on those factors. In fact,the latter part of the equal pay for workof equal value principle (5 U.S.C.2301(b)(3)) expressly allows for‘‘Appropriate incentives and recognition* * * for excellence in performance.’’

The proposed demonstration isconsistent with the merit systemprinciples. Bands will be assigned basedon employee’s nature and level of work.Pay progression within a band will bebased on performance and contributionsover time. To provide enhancedincentives for excellence inperformance, employees will not beallowed to advance beyond the mid-point of the pay range without an A orB rating. Also, employees whose pay isbeyond the midpoint (because of pastperformance) will not be entitled tofurther base pay increases without an Aor B rating. It is true that the proposeddemonstration places more emphasis onperformance than the General Schedule(by design), but that does not violatemerit system principles.

The demonstration proposal attributesclearly change the methods of providingincentives to employees, including theprovision of group or individualincentive bonuses or pay. This is clearlyan allowable practice in accordancewith Title 5 United State Code, chapter47 Section 4703(a)(1–8). However, thereis an assertion that, by changing thebasic rate of pay that an employee mayreceive, this in effect changes thebenefits defined in Chapter 63 orsubpart G of Title 5, and therefore mustbe a violation of 4703(c)(1). All parts ofChapter 63 or subpart G of Title 5 arestill intact, and have not been changedby this proposed demonstration.Changing the method of determiningbase pay increases does not change anyprovision of the retirement system orany other benefit program.

The Personnel Management Board hasbeen established, with permanent unionmembership, with the requirement to

define the pay pool structure that willbe used in the demonstration. Thisstructure will be communicated toemployees through a Director’sNewsletter prior to implementation. Atthe minimum there could be two paypools; one for supervisors and one fornon-supervisors. The designers of thepay-for-performance system were wellaware of the problems with the PMRSsystem and benefited from the lessonslearned. The PMRS system structurelent itself to essentially the creation ofa quota system for ratings. The proposedpay-for-performance system wasdesigned so that managers could fairlyevaluate and provide employeeincentives without creating artificialquota systems for ratings.

The proposal will be revised inSection III.B (Pay-for-Performance) toclarify that the General Increase will bereceived by all covered employeeswhose rating of record is greater than U.Additionally, the proposal will berevised in Section III.B (PerformancePay Increases and/or PerformancesBonuses) to state that performancebonuses have no impact on benefitssuch as retirement.

F. Paybands and Occupational FamiliesComments: Eighty-two comments

(three sets of identical comments: 58, 4,and 3) were received in this area. Sixtycomments (fifty-eight identical)recommended moving BudgetAssistants (GS–561), ProcurementClerks (GS–1106), and ManagementAssistants (GS–344) from the GeneralSupport occupational family to theBusiness Management occupationalfamily; move Library Technicians (GS–1411) from the General Supportoccupational family to the E&S Supportoccupational family; and aligning allMiscellaneous Administrative andProgram positions (GS–301 and GS–303)to the appropriate non-E&Soccupational families depending uponthe closest alignment. A comment citedthe need to include the seriesOperations Research Analyst (CostAnalysis) (GS–1515) in the BusinessManagement occupational family. Fouridentical comments expressedagreement with the use of benchmarkposition descriptions and one commentliked the payband structure. Fouridentical comments expressed concernthat the creation of occupationalfamilies restricted movement betweenoccupational families for careerdevelopment purposes. Eight commentsdealt with the width of Payband III inthe E&S occupational family, removinghigh grade controls, and the lack ofparity by not having all bands the samewidth. Two comments expressed

concern that E&S band V would resultin job losses and seriously reduce fundsavailable for employee performance paypools. One comment questioned the useof the term ‘‘specific course work’’ as arequirement for the E&S occupationalfamily. One comment stated the needfor a management occupational family.

Response: The suggested occupationalseries changes are not consideredfeasible because the Technical andBusiness Support paybands are notcompatible with the typical pay rangeand progression pattern of those seriesidentified in the comments. Thedemonstration will not present barriersto employees who want to crossoccupational family lines for careerdevelopment purposes. However, theproposal will clarify in Section V(Personnel Administration) that thisbarrier does not exist and that thebenchmark position descriptionsidentify series, specialty code, andfunction code. As a result of a BaseRealignment and Closure (BRAC) 95decision, the proposal will be modifiedin Appendix A to include OperationsResearch Analyst (Cost Analyst) (GS1515) in the Technical and Businessoccupational family. The proposedpaybands for engineers and scientistswere designed in conjunction with theunion and with consideration given toOPM design guidelines, thedevelopments of the Acquisition Corpsand the definition of critical AcquisitionCorps positions (GS 14 and 15), thedesigns of the China Lake experiment(banding of GS 14 and 15), and the jobneeds of the MRDEC. A separatemanagement occupational family wasconsidered, but rejected because theoccupational families defined in theproposal already provide for careerprogression of managers. High gradecontrols are not an OPM or Title 5authority; therefore, they cannot beaffected by a Title 5 demonstrationproject. The initial salary of a PaybandV employee comes from generaloperating budgets and does notadversely impact allocation of funds tothe performance pay pools.

The E&S Support and BusinessManagement families are combined intoone occupational family titled‘‘Technical and Business Support.’’ Thischange is portrayed in Section III.A(Paybands) and also in Appendix A.This proposal modification is atechnical change, and is a naturalconsequence of changing the MRDECcompetitive areas from occupationalfamilies to the separate geographic areasof MRDEC. The new occupationalfamily has one payband structure andbenchmark position descriptions havebeen developed for each payband.


G. Management Issues

Comments: Twenty comments (twoidentical sets of 4 and 3; and onemanager claimed to speak for 77employees) were received in this area.These comments generally addressed:(1) Permanent union membership in thePersonnel Management Board, (2)limited promotion opportunities for GS–13 engineers and scientists, (3) theinability of the proposal to solve statedpersonnel system problems, and (4)management’s ability to fairlyimplement the demonstration project.

Response: An extensive effort wasmade with the employees whosubmitted comments to clarify theircomments and concerns. Section II.H(Personnel Management Board) isclarified to specify permanent unionmembership in the PersonnelManagement Board.

In regard to promotions and solvingpersonnel system problems,management literature is replete withtheories on what motivates employeesto higher standards of excellence.However, there have been very fewexperiments to validate these theories ina large, dynamic organizationalenvironment over an extended period oftime. This demonstration is a very largescale experiment to assess suchinterventions as sabbaticals, degreetraining for critical skills, a simplifiedassignment process to enhance careerdevelopment through job rotations,performance pay and bonus increases inmany cases without the need forpromotion actions, minimalclassification issues, greater ranges forpromotions, and greater ranges forsetting entrance salaries. The evaluationprocess will endeavor to measure thestated expected effects and determineimprovements not only in personnelpractices, but also to determine if theMRDEC collectively as an organizationproduces better science and technology.The demonstration attributes do offersimplifications in classification, staffing,compensation, and performancemanagement. For example, hundreds ofjob descriptions will be eliminated andreplaced by as few as about 30benchmark position descriptions. Theneed for promotion considerations hasbeen reduced by more that 50 percent.The personnel problems faced bylaboratory management are beingaddressed by both Title 5 changes andparallel actions involving both Servicechanges to regulations and to relief fromissues managed by the Office ofManagement and Budget. This proposeddemonstration is not a total solution,but serves as a significant building blockto evolve to a better personnel system

that is more management and employeefriendly.

A few comments questioned theability of MRDEC supervisors tocompetently and fairly implement thispersonnel experiment. This issue hasbeen discussed in negotiations with theunion as an area of concern. Thenegotiated solution to this concern isthrough training and employeefeedback. Prior to implementing thedemonstration, managers andsupervisors will be trained in the addedresponsibilities and accountabilitiesassociated with the demonstrationinterventions. Additionally, the unionwill be given an opportunity to describetheir role and function in thedemonstration program. MRDECmanagement and the union agree thatemployee feedback to supervisors (in anon-threatening and not-for-attributionenvironment) is essential for the successof this demonstration. Therefore, theproposal is changed in Section III.B(Performance Scores) to provide anemployee feedback capability.

H. Miscellaneous CommentsComments: There were ninety-one

comments (four identical sets of 58, 4,3, and 2; and one manager claimed tospeak for 77 employees) in this area.These comments include the following:(1) The proposal limits employee abilityto seek employment elsewhere; (2) thedemonstration supports E&S/E&SSupport occupational family positionsonly, therefore limit the demonstrationto E&S occupational family; (3) theproposal should extend E&S perks to alloccupational families; (4) the RIFretention points assignment process isunfair; and (5) clarify the demonstrationproject purpose.

Response: Section V (PersonnelAdministration) is changed to clarifythat the proposal does not presentbarriers to applying for external jobs andfor movement between occupationalfamilies for career developmentpurposes. In the proposal, training fordegrees was always intended to apply tothe entire workforce. The proposal willbe changed in Section III.E.2 (Trainingfor Degrees) to clarify that training fordegrees is available for all occupationalfamilies. The Expanded DevelopmentalOpportunity Program (sabbaticals) hasbeen extended in Section III.E.1(Expanded Developmental OpportunityProgram) to all occupational familiesexcept for the General Supportoccupational family. Section III.B(Supervisory Pay Differentials) has beenchanged to make supervisorydifferentials applicable to alloccupational families. The RIF retentionpoint strategy proposed was designed to

reward performance. Sensitivitymodeling has demonstrated that thisintervention will achieve the desiredeffect of retaining high achievers whohave a limited amount of career status.Therefore, this intervention will beretained.

2. Demonstration Project SystemChanges

The following is a summary ofchanges and clarifications in the projectproposal that were of paramountinterest to employees:

(1) In Section V (Conversion), themethod of converting employees intothe demonstration is changed so thatemployees’ base pay will be adjustedeffective the date of implementation bya prorated value based upon the numberof weeks an employee has completedtoward the next higher step. Paymentwill equal the value of the employee’snext within-grade increase times theproportion of the waiting periodcompleted at the time of conversion.

(2) Section III.B (Performance PayIncreases and/or Performance Bonuses)is changed to reflect that both MRDECManagement and the Union recognizethat the demonstration must be guidedby the concept of in-house budgetneutrality. Therefore, the MRDEC willreexamine the Payout Factor (F) at theend of the first assessment period todetermine if a payout factor of 2% wasmaintained by revised labor rates.

(3) In Section III.F (CompetitiveAreas), the project design is changed toredefine the competitive areas asseparate geographic areas of theMRDEC. Additionally, the method ofbumping and retreating is redefined asfollows: ‘‘In the Demonstration Projectan employee can bump to a positionheld by another employee in a lowersubgroup or tenure group; the positionmay be no lower than the equivalent ofthree GS grades (or appropriate gradeintervals) below the minimum GS gradelevel of his/her current band. Anemployee can retreat to a position heldby another employee in the samesubgroup who has a lower adjusted RIFservice computation date; the positionmay be no lower than the equivalent ofthree GS grades (or appropriate gradeintervals) below the minimum GS gradelevel of his/her current band. Apreference eligible with a compensableservice-connected disability of 30percent or more may retreat to aposition equivalent to five GS gradesbelow the minimum grade level of his/her current band.’’

(4) In Section III.A (Paybands) andAppendix A, the proposal is changed tocombine the E&S Support occupationalfamily with the Business Management


occupational family to form oneoccupational family called ‘‘Technicaland Business Support.’’

(5) Additionally, editorial andtechnical changes were made to correctthe final version of the Project.James B. King,Director.

Table of ContentsI. Executive SummaryII. Introduction

A. PurposeB. Problems with the Present SystemC. Changes Required/Expected BenefitsD. Participating OrganizationE. Participating EmployeesF. Labor ParticipationG. Project DesignH. Personnel Management Board

III. Personnel System ChangesA. BroadbandingB. Pay-for-Performance Management

SystemC. ClassificationD. Hiring and Appointment AuthoritiesE. Employee DevelopmentF. Revised Reduction-in-Force (RIF)

ProceduresIV. TrainingV. ConversionVI. Project DurationVII. Evaluation PlanVIII. Demonstration Project CostsIX. Required Waivers to Laws and

RegulationsAppendix A: Occupational Series by

Occupational FamilyAppendix B: Project Evaluation and

OversightAppendix C: Performance ElementsAppendix D: Benchmark Performance

Standards

I. Executive SummaryThis project was designed by the

Department of the Army, withparticipation of and review by theDepartment of Defense (DoD) and theOffice of Personnel Management (OPM).The purpose of the project is to achievethe best workforce for the MRDECmission, adjust the workforce forchange, and improve workforce quality.The MRDEC strives to exceed thegreatest expectations of its manycustomers. To achieve this, the MRDECmust be able to balance customerrequirements for near-term technicaland scientific products and informationwith the evolving capabilities of theworkforce. These purposes will besignificantly enhanced by interventionssuch as training for degrees in criticalskills areas, the contingent employeeappointment authority, and theVoluntary Emeritus Program.

The foundations of this project arebased on the concept of linkingperformance to pay for all coveredpositions; simplifying paperwork andthe processing of classification and

other personnel actions; emphasizingpartnerships among management,employees, and unions representingcovered employees; and delegatingclassification and other authorities toline managers. Additionally, theresearch intellect of the MRDECworkforce will be revitalized throughthe use of expanded opportunities foremployee development. Theseopportunities will reinvigorate thecreative intellect of the research anddevelopment community.

Development and execution of thisproject will be in-house budget neutral,based on a baseline of September 1995in-house costs and consistent with theDepartment of the Army (DA) plan todownsize laboratories. Army managersat the DoD S&T Reinvention Laboratorysites will manage and control theirpersonnel costs to remain withinestablished in-house budgets. An in-house budget is a compilation of costsof the many diverse componentsrequired to fund the day-to-dayoperations of a laboratory. Thesecomponents generally include pay ofpeople (labor, benefits, overtime,awards), training, travel, supplies, non-capital equipment, and other costsdepending on the specific function ofthe activity.

This project will be under the jointsponsorship of the Assistant Secretaryof the Army for Research, Developmentand Acquisition and the AssistantSecretary of the Army for Manpowerand Reserve Affairs. The Commander,U.S. Army Materiel Command, willexecute and manage the project. Projectoversight within the Army will beachieved by an executive steeringcommittee made up of top-levelexecutives, co-chaired by the DeputyAssistant Secretary of the Army forResearch and Technology and theDeputy Assistant Secretary of the Army(Civilian Personnel Policy)/Director,Civilian Personnel. Oversight external tothe Army will be provided by theDepartment of Defense and the Office ofPersonnel Management.

II. Introduction

A. Purpose

The purpose of the project is todemonstrate that the effectiveness ofDepartment of Defense (DoD)laboratories can be enhanced byallowing greater managerial control overpersonnel functions and, at the sametime, expanding the opportunitiesavailable to employees through a moreresponsive and flexible personnelsystem. The quality of DoD laboratories,their people, and products has beenunder intense scrutiny in recent years.

This perceived deterioration of qualityis due, in substantial part, to the erosionof control which line managers haveover their human resources. Thisdemonstration, in its entirety, attemptsto provide managers, at the lowestpractical level, the authority, control,and flexibility needed to achieve qualitylaboratories and quality products.

B. Problems with the Present SystemThe MRDEC products contribute to

the readiness of U.S. forces and to thestability of the American economy. Todo this, the MRDEC must acquire andretain an enthusiastic, innovative, andhighly educated and trained workforce,particularly scientists and engineers.The MRDEC must be able to competewith the private sector for the best talentand be able to make job offers in atimely manner with the attendantbonuses and incentives to attract highquality employees. Today, industrylaboratories can make an offer ofemployment to a promising new hirebefore the government can prepare thepaperwork necessary to begin therecruitment process.

Currently, jobs are described using aclassification system that is overlycomplex and specialized. This hampersa manager’s ability to shape theworkforce and match the positionswhile making best use of employees.Managers must be given local control ofpositions and their classification tomove both their employees andvacancies within their organization toother lines of the business activities tomatch the life cycle needs of supportedcustomers.

These issues work together to hampersupervisors in all areas of humanresource management. Hiringrestrictions and overly complex jobclassifications, coupled with poor toolsfor rewarding and motivating employeesand a system that does not assistmanagers in removing poor performersbuilds stagnation in the workforce andwastes valuable time.

C. Changes Required/Expected BenefitsThis project is expected to

demonstrate that a human resourcesystem tailored to the mission andneeds of the MRDEC will result in: (a)Increased quality in the total workforceand the products they produce; (b)increased timeliness of key personnelprocesses; (c) increased retention ofhigh quality employees and separationrates of poor quality employees; and (d)increased customer satisfaction with theMRDEC and its products by allcustomers it serves.

The MRDEC demonstration programbuilds on the successful features of


demonstration projects at China Lakeand the National Institute of Standardsand Technology (NIST). Thesedemonstration projects have producedimpressive statistics on the jobsatisfaction for their employees versusthat for the federal workforce in general.Therefore, in addition to expectedbenefits mentioned above, the MRDECdemonstration expects to find moresatisfied employees on many aspects ofthe demonstration including pay equity,classification decisions, and careerdevelopment opportunities. A full rangeof measures will be collected duringproject evaluation (Section VII).

D. Participating Organization

MRDEC has approximately 1881employees covered by the project.Approximately 99 percent of theemployees are located at RedstoneArsenal, Alabama, with the remaininglocated at the following sites: Andover,Massachusetts; Eglin AFB, Florida;Orlando, Florida; Dallas, Texas; WhiteSands Missile Range, New Mexico;Camden, Arkansas; Los Angeles,California; Washington, DC; FortBenning, Georgia; Hampton, Virginia;and Kwajalein Island.

E. Participating Employees

The demonstration project includescivilian appropriated funded employeesin the competitive and excepted servicepaid under the General Schedule (GS)pay system. Scientific and Professional(ST) employees and positions will beincluded for employee development,performance appraisal, and awardprovisions only; their classification,staffing, and compensation, however,will not change. Senior ExecutiveService employees and positions,Federal Wage System employees, andemployees in the Quality AssuranceSpecialist (Ammunition Surveillance)(QASAS) career program will not becovered in the demonstration project.Additionally, DA interns will not beconverted to the demonstration untilthey complete their intern program.Personnel added to the laboratory afterimplementation, in like positionscovered by the demonstration (eitherthrough appointment, promotion,reassignment, change to a lower grade orwhere their functions and positionshave been transferred into thelaboratory) will be converted to thedemonstration project. Successororganizations which may result fromactions associated with the 1995 BaseRealignment and Closure Commission(BRAC) or future Commissions willcontinue coverage in the demonstrationproject.

F. Labor Participation

The American Federation ofGovernment Employees (AFGE)represents many GS employees atMRDEC. The MRDEC is continuing tofulfill its obligations to consult and/ornegotiate with the AFGE, in accordancewith 5 U.S.C. 4703(F) and 7117. Theparticipation with the AFGE is withinthe spirit and intent of Executive Order12871.

The AFGE represents all professionaland non-professional employees exceptthose who are supervisors or managers.AFGE Local 1858 has been involvedwith and has participated in thedevelopment of the project since itsinception. The union is an integral partof this personnel demonstration, andwill be a full partner in arriving at majordecisions involving programimplementation.

G. Project Design

An Integrated Process Team approachwas used at the U.S. Army MissileCommand to develop the attributes ofthis personnel demonstration proposal.The team was lead by MRDECmanagement, and team members camefrom managers and associates from theMRDEC, AFGE Local 1858, the CivilianPersonnel Office, and several othermajor functional organizations withinthe Missile Command.

This personnel system design hasbeen subjected to critical reviews byExecutive Steering Groups within theMRDEC and the Missile Command.Additionally, negotiations with AFGELocal 1858 have influenced the designin areas of significant concern tobargaining unit employees. A survey,designed by AFGE Local 1858, wasconducted to elicit MRDEC employeeopinions and preferences on keyfeatures of the proposal.

The design was preceded by anexhaustive study of broadbandingsystems currently practiced in theFederal sector. A first generation designwas briefed to the MRDEC workforcewith the assistance of AFGE Local 1858.During these briefing sessions,employees were provided a copy of thefirst generation proposal, a set ofanticipated questions and answers, anda list of points of contact for concernsand questions. Later design generationshave evolved from critical reviews byheadquarters elements of theDepartment of the Army, Department ofDefense, and the Office of PersonnelManagement. Additionally, consultationwas provided by the designers of thebroadbanding systems practiced by theNavy China Lake experiment and the

National Institute of Standards andTechnology.

H. Personnel Management Board

The MRDEC intends to establish anappropriate balance between thepersonnel management authority andaccountability of supervisors and of theoversight responsibilities of a PersonnelManagement Board (PMB). The Directorwill delegate management and oversightof the Project at MRDEC to a PersonnelManagement Board whose members,Chairperson, and staff (other than theunion and Equal EmploymentOpportunity Office members) will beappointed by the Director. The unionand the Equal Employment OpportunityOffice will have permanent membershipin the PMB, and their representativeswill be selected by the respectiveorganizations. The establishment of thisBoard shall not affect the authority ofany management official in the exerciseof their management rights set forth in5 U.S.C. 7106(b)(1). The PMB will betasked with the following:

1. Overseeing the civilian pay budget,2. Determining the composition of the

pay-for-performance pay pools inaccordance with the guidelines of thisproposal and internal procedures,

3. Administering funds allocation topay pool managers,

4. Reviewing operation of MRDEC paypools,

5. Reviewing hiring and promotionsalaries as well as exceptions to pay-for-performance salary increases,

6. Providing guidance to pay poolmanagers,

7. Monitoring award pool distributionby organization or any other specialcategorization,

8. Selecting participants for theExpanded Developmental OpportunityProgram, long term training, and anyspecial developmental assignments,

9. Managing promotions to staywithin ‘‘high grade’’ controls,

10. Addressing in-house budgetneutrality issues to include tracking ofaverage salaries,

11. Assessing the need for changes todemonstration procedures and policies.

III. Personnel System Changes

A. Broadbanding

Occupational Families

Occupations at the MRDEC will begrouped into occupational families.Occupations will be grouped accordingto similarities in type of work,customary requirements for formaltraining or credentials, and inconsideration of the business practicesat the MRDEC. The common patterns ofadvancement within the occupations as


practiced at DoD Laboratories and in theprivate sector will also be considered.The current occupations and gradeshave been examined, and theircharacteristics and distribution haveserved as guidelines in the developmentof the three occupational familiesdescribed below:

1. Engineers and Scientists (E&S).This occupational family includes alltechnical professional positions, such asengineers, physicists, chemists,metallurgists, mathematicians, andcomputer scientists. Predominantly,specific course work or educationaldegrees are required for theseoccupations.

2. Technical and Business Support.This occupational family containspositions that directly support the E&Smission: it includes specializedfunctions in such fields as technicalinformation management, librarians,equipment specialists, qualityassurance, engineering and electronicstechnicians, finance, accounting,administrative computing, andmanagement analysis.

Employees in these jobs may or maynot require college course work.Analytical ability and specializedknowledge in administrative fields arerequired. Knowledge of and training inthe various electrical, mechanical,chemical, or computer principles,methods, and techniques are alsogenerally required.

3. General Support. This occupationalfamily is composed of positions forwhich minimal formal education isneeded, but for which special skills,such as office automation or shorthand,are usually required. Clerical workusually involves the processing andmaintenance of records. Assistant workrequires knowledge of methods andprocedures within a specificadministrative area. Other supportfunctions include the work ofsecretaries, guards, and mail clerks.

PaybandsEach occupational family will be

composed of discrete paybands (levels)corresponding to recognizedadvancement within the occupations.These paybands will replace grades.They will not be the same for alloccupational families. Eachoccupational family will be divided intofour to five paybands; each paybandcovering the same pay range nowcovered by one or more grades. A salaryoverlap, similar to the current overlapbetween GS grades, will be maintained.

Ordinarily an individual will be hiredat the lowest salary in a payband.Exceptional qualifications, specificorganizational requirements, or other

compelling reasons may lead to a higherentrance level within a band.

The proposed paybands for theoccupational families and how theyrelate to the current GS grades areshown in Figure 1. Application of theFair Labor Standards Act (FLSA) withineach payband is also shown in Figure 1.This payband concept has the followingadvantages:

1. It may reduce the number ofclassification decisions required during anemployee’s career.

2. It simplifies the classification decision-making process and paperwork. A paybandcovers a larger scope of work than a grade,and will be defined in shorter and simplerlanguage.

3. It supports delegation of classificationauthority to line managers.

4. It provides a broader range ofperformance-related pay for each level. Inmany cases, employees whose pay wouldhave been frozen at the top step of a gradewill now have more potential for upwardmovement in the broader payband.

5. It prevents the progression of lowperformers through a payband by merelongevity, since job performance serves as thebasis for determining pay.

The MRDEC paybanding planexpands the paybanding concept used atChina Lake and NIST by creatingPayband V of the Engineers andScientists occupational family. Thispayband is designed for SeniorScientific Technical Managers.

Current legal definitions of SeniorExecutive Service (SES) and Scientificand Professional (ST) positions do notfully meet the needs of MRDEC. TheSES designation is appropriate forexecutive level managerial positionswhose classification exceeds the GS–15grade level. The primary knowledgesand abilities of SES positions relate tosupervisory and managerialresponsibilities. Positions classified asST are reserved for bench researchscientists and engineers; these positionsrequire a very high level of technicalexpertise and they have little or nosupervisory responsibility.

MRDEC currently has severalpositions, typically directorate/officechiefs, that have characteristics of bothSES and ST classifications. Mostdirectorate/office chiefs in MRDEC areresponsible for supervising other GS–15positions, including function chiefs,non-supervisory research engineers andscientists and, in some cases, STpositions. Most directorate/office chiefpositions are classified at the GS–15level, although their technical expertisewarrants classification beyond GS–15.Because of their managementresponsibilities, these individuals areexcluded from the ST system. Becauseof management considerations, they

cannot be placed in the SES.Management considers the primaryrequirement for directorate/office chiefsto be knowledge of, and expertise in, thespecific scientific and technology areasrelated to the mission of theirdirectorates/offices. Historically,incumbents of these positions have beenrecognized within the community asscientific and engineering leaders, whopossess primarily scientific/engineeringcredentials and are considered expertsin their field. However, they must alsopossess strong managerial andsupervisory abilities. Therefore,although some of these employees havescientific credentials that mightcompare favorably with ST criteria,classification of these positions as STsis not an option, because the managerialand supervisory responsibilitiesinherent in the positions cannot beignored.

The purpose of Payband V (whichwill reinforce the equal pay for equalwork principle) is to solve a criticalclassification problem. It will alsocontribute to an SES ‘‘corporate culture’’by excluding from the SES positions forwhich technical expertise is paramount.Payband V proposes to overcome thedifficulties identified above by creatinga new category of positions, the SeniorScientific Technical Manager, whichhas both scientific/technical expertiseand full managerial and supervisoryauthority.

Current GS–15 directorate/officechiefs will convert into thedemonstration project at Payband IV.After conversion they will be reviewedagainst established criteria to determineif they should be reclassified to PaybandV. Other positions possibly meetingcriteria for classification to Payband Vwill be reviewed on a case by case basis.The proposed salary range is aminimum of 120% of the minimum rateof basic pay for GS–15 with a maximumrate of basic pay established at the rateof basic pay (excluding locality pay) forSES level 4 (ES–4). Vacant positions inPayband V will be competitively filledto ensure that selectees are preeminentresearchers and technical leaders in thespecialty fields who also possesssubstantial managerial and supervisoryabilities. MRDEC will capitalize on theefficiencies that can accrue from centralrecruiting by continuing to use theexpertise of the Army MaterielCommand SES Office as the recruitmentagent.

Panels will be created to assist infilling Payband V positions. Panelmembers will be selected from a pool ofcurrent MRDEC SES members, STemployees, and later those in PaybandV, and an equal number of individuals


of equivalent stature from outside thelaboratory to ensure impartiality,breadth of technical expertise, and arigorous and demanding review. Thepanel will apply criteria developedlargely from the current OPM ResearchGrade Evaluation Guide for positionsexceeding the GS–15 level.

DoD will test the establishment ofPayband V for a five-year period.Positions established in Payband V willbe subject to limitations imposed byOPM and DoD. Payband V positionswill be established only in an S&TReinvention Laboratory which employsscientists, engineers, or both.Incumbents of Payband V positions willwork primarily in their professional

capacity on basic or applied researchand secondarily perform managerial orsupervisory duties. The number ofPayband V positions within theDepartment of Defense will not exceed40. These 40 positions will be allocatedby ASD (FMP), DoD, and administeredby the respective Services. The numberof Payband V positions will be reviewedperiodically to determine appropriateposition requirements. Payband Vposition allocations will be managedseparately from SES, ST, and SLpositions. An evaluation of the PaybandV concept will be performed during thefifth year of the demonstration project.

The final component of Payband V isthe management of all Payband V assets.

Specifically, this authority will beexercised at the DA level, and includesthe following: authority to classify,create, or abolish positions within thelimitations imposed by OPM and DoD;recruit and reassign employees in thispayband; set pay and to have theirperformance appraised under thisproject’s Pay for Performance System.The laboratory wants to demonstrateincreased effectiveness by gaininggreater managerial control andauthority, consistent with merit,affirmative action, and equalemployment opportunity principles.

BILLLING CODE 6325–01–U

BILLING CODE 6325–01–C

Fair Labor Standards Act

Fair Labor Standards Act (FLSA)exemption and nonexemptiondeterminations will be made consistentwith criteria found in 5 CFR part 551.There are six paybands (see Figure 1)where employees can be either exemptor nonexempt from overtime provisions.For these six paybands supervisors withclassification authority will make thedeterminations on a case-by-case basisby comparing the duties andresponsibilities assigned, theclassification standards for eachpayband, and the FLSA criteria under 5CFR part 551. Additionally, the adviceand assistance of the Civilian PersonnelAdvisory Center/Civilian Personnel

Operations Center (CPAC/CPOC) will beobtained in making determinations aspart of the performance review process.The benchmark position descriptionswill not be the sole basis for thedetermination. Basis for exemption willbe documented and attached to eachdescription. Exemption criteria will benarrowly construed and applied only tothose employees who clearly meet thespirit of the exemption. Changes will bedocumented and provided to the CPAC/CPOC, as appropriate.

Simplified Assignment Process

Today’s environment of downsizingand workforce transition mandates thatthe MRDEC have increased flexibility toassign individuals. Broadbanding can be

used to address this need. As a result ofthe assignment to a particular leveldescriptor, the organization will haveincreased flexibility to assign anemployee, without pay change, withinbroad descriptions consistent with theneeds of the organization, and theindividual’s qualifications and rank orlevel. Subsequent assignments toprojects, tasks, or functions anywherewithin the organization requiring thesame level and area of expertise, andqualifications would not constitute anassignment outside the scope orcoverage of the current level descriptor.

Such assignments within the coverageof the generic descriptors areaccomplished without the need toprocess a personnel action. For instance,


a technical expert can be assigned toany project, task, or function requiringsimilar technical expertise. Likewise, amanager could be assigned to manageany similar function or organizationconsistent with that individual’squalifications. This flexibility allows abroader latitude in assignments andfurther streamlines the administrativeprocess and system.

Promotion

A promotion is a move of anemployee to (1) a higher payband in thesame occupational family or (2) apayband in another occupational familyin combination with an increase in theemployee’s salary. Positions withknown promotion potential to a specificband within an occupational family willbe identified when they are filled. Notall positions in an occupational familywill have promotion potential to thesame band. Movement from oneoccupational family to another willdepend upon individual knowledge,skills, and abilities, and needs of theorganization.

Promotions will be processed undercompetitive procedures in accordancewith merit principles and requirementsand the local merit promotion plan. Thefollowing actions are excepted fromcompetitive procedures:

(a) Re-promotion to a position whichis in the same payband andoccupational family as the employeepreviously held on a permanent basiswithin the competitive service.

(b) Promotion, reassignment,demotion, transfer or reinstatement to aposition having promotion potential nogreater than the potential of a positionan employee currently holds orpreviously held on a permanent basis inthe competitive service.

(c) A position change permitted byreduction in force procedures.

(d) Promotion without currentcompetition when the employee wasappointed through competitiveprocedures to a position with adocumented career ladder.

(e) A temporary promotion, or detailto a position in a higher payband, of 180days or less.

(f) Reclassification to include impactof person on-the-job promotions.

(g) A promotion resulting from thecorrection of an initial classificationerror or the issuance of a newclassification standard.

(h) Consideration of a candidate notgiven proper consideration in acompetitive promotion action.

(i) Impact of person on the job andFactor IV process (application of theResearch Grade Evaluation Guide,Equipment Development Grade

Evaluation Guide, Part III, or similarguides) promotions.

Link Between Promotion andPerformance

Career ladder promotions andpromotions resulting from the additionof duties and responsibilities areexamples of promotions that can bemade noncompetitively. Promotions canbe made noncompetitively whencontributions and achievements aresuch that a higher payband is achievedwhen comparing the overall position tothe Equipment Development GradeEvaluation Guide, Part III or theResearch Grade Evaluation Guide. To bepromoted noncompetitively from oneband to the next, an employee mustmeet the minimum qualifications for thejob and have a current performancerating of B or better (see PerformanceEvaluation) or equivalent under adifferent performance managementsystem. Selection of employees throughcompetitive procedures will require acurrent performance rating of B orbetter.

B. Pay-for-Performance ManagementSystem

Performance Evaluation

Introduction

The performance evaluation systemwill link compensation to performancethrough annual performance appraisalsand performance scores. Theperformance evaluation system willallow optional use of peer evaluationand/or input from subordinates asdetermined appropriate by thePersonnel Management Board. Thesystem will have the flexibility to bemodified, if necessary, as moreexperience is gained under the project.

Performance Objectives

Performance objectives are statementsof job responsibilities based on the workunit’s mission, goals and supplementalbenchmark position descriptions.Employees and supervisors will jointlydevelop performance objectives whichwill reflect the types of duties andresponsibilities expected at therespective pay level. In case ofdisagreements, the decision of thesupervisor will prevail. Performanceobjectives deal with outputs andoutcomes of a particular job. Theperformance objectives, representingjoint efforts of employees and theirrating chains, should be in place within30 days from the beginning of eachrating period.

Performance Elements

Performance elements are genericattributes of job performance, such astechnical competence, that an employeeexhibits in performing jobresponsibilities and associatedperformance objectives. Newperformance elements and rating formswill be designed to implement a newscoring and rating system. The newperformance evaluation system will bebased on critical and non-criticalperformance elements defined inAppendix C. Each performance elementis assigned a weight between a specifiedrange. The total weight of all elementsis 100 points. The supervisor assignseach element some portion of the 100points in accordance with itsimportance for mission attainment. As ageneral rule, essentially identicalpositions will have the same criticalelements and the same weight. Theseweights will be developed along withemployee performance objectives.

Mid-Year Review

A mid-year review between asupervisor and employee will be held todetermine whether objectives are beingmet and whether ratings on performanceelements are above an unsatisfactorylevel. Performance objectives should bemodified as necessary to reflect changesin planning, workload, and resourceallocation. The weights assigned toperformance elements may be changedif necessary. Additional reviews may beheld as deemed necessary by thesupervisor or requested by theemployee. The supervisor will provideperiodic feedback to the employee ontheir level of performance. If thesupervisor determines that theemployee is not performing at anacceptable level on one or moreelements, the supervisor must alert theemployee and document the problem(s).This feedback will be provided at anytime during the rating cycle.

Employee Feedback to Supervisors

Employee feedback to supervisors (ina non-threatening and not-for-attribution environment) is consideredessential for the success of thisdemonstration. A feedback process willbe developed and implemented withinsix months after implementation of thedemonstration. The employee feedbackwill be for the supervisors’ informationonly, and will not be a factor indetermining annual ratings of record.Additionally, the individual supervisorratings will be aggregated into asummary for the Director’s use (withcopies furnished to the union) inassessing the quality of supervision


provided and to take whatever steps areneeded in supervisory training anddevelopment.

Performance AppraisalA performance appraisal will be

scheduled for the final weeks of theannual performance cycle, although anindividual performance appraisal maybe conducted at any time after theminimum appraisal period of 120 daysis met. The performance appraisalprocess brings supervisors andemployees together for formaldiscussions on performance and resultsin (1) written appraisals, (2)performance ratings, (3) performancescores, and (4) other individualperformance-related actions asappropriate. A performance appraisalshall consist of two meetings heldbetween employee and supervisor: theperformance review meeting and theevaluation feedback meeting.

Performance Review Meeting BetweenEmployee and Supervisor

The review meeting is to discuss jobperformance and accomplishments.Supervisors will not assign performancescores or performance ratings at thismeeting. The supervisor notifies theemployee of the review meeting in timeto allow the employee to prepare a listof accomplishments. Employees will begiven an opportunity at the meeting togive a personal performance assessmentand describe accomplishments. Thesupervisor and employee will discussjob performance and accomplishmentsin relation to performance elements andperformance objectives.

Evaluation Feedback Meeting BetweenEmployee and Supervisor

In this second meeting betweenemployee and supervisor, the supervisorinforms the employee of management’sappraisal of the employee’s performanceon performance objectives, and theemployee’s performance score andrating on performance elements. Duringthis second meeting, the supervisor andemployee will discuss and documentperformance objectives for the nextrating period.

Performance ScoresThe overall score is the sum of

individual performance element scores.Employees will receive an academic-type rating of A, B, C, or U dependingupon the score attained. These summaryratings are representative of pattern E (a4 level system) in summary level chartin 5 CFR 430.208(d)(1). This rating willbecome the rating of record, and onlythose employees rated C or higher willreceive general increases, performance

pay increases (i.e., basic pay increases),and/or performance bonuses. A rating ofA will be assigned for scores from 85 to100 points, B for scores from 70 to 84,C for scores from 50 to 69, and U forscores from 0 to 49 or a failure toachieve at the 50% level of any criticalelement. The academic-type ratings willbe used to determine performancepayouts and to award additional RIFretention years as follows:

Rating Compensation

RIF re-tention

yrsadded

A ....................... 4 shares + c * ... 10B ....................... 2 shares + c * ... 7C ....................... 1 share + c * ..... 3U ....................... 0 ....................... 0

* c = GS General Increase (Title 5, Section5303). Pay increases for employees receivingretained rates will be determined in accord-ance with 5 U.S.C. 5363 except that thosewith a U rating will receive no pay increase.

Selection of the weighted points toassign to an employee’s performance onperformance elements is assisted by useof benchmark performance standards(Appendix D). These benchmarkperformance standards are modifiedversions of the performance standardsused by the National Institute ofStandards and Technology (NIST),National Bureau of Standards. Eachbenchmark performance standarddescribes the level of performanceassociated with a particular point on arating scale. Supervisors may addsupplemental standards for employeesthey supervise to further elaborate thebenchmark performance standards.

Performance-Based ActionsMRDEC will implement a process to

deal with poor performers. This processmay lead to involuntary separations,with grievance or appeal rights. Theprocess may start at any time during therating period, not necessarily at the endof an appraisal period. This processbegins when the supervisor identifies adeficiency(ies) which causes the level ofperformance to be at the U(unsatisfactory) level based on acomposite score that is less than 50 forall elements or a score on any criticalelement of less than 50 percent.

When the employee’s performance isdetermined to be unsatisfactory at theclose of the annual rating period, theUnsatisfactory (U) rating will becomethe rating of record for all mattersrelating to pay or Reduction-in-Force(RIF).

There are two processes to deal withpoor performers:

1. Change in Assignment—Because itis recognized that employees may be

assigned to a position for which they arenot suited, an attempt will be made toplace poor performers in a positionbetter suited to their skills andcapabilities. The offer of change inassignment will be contingent upon theemployee’s concurrence and will beeither within the same band or in thenext lower payband. If reassigned, theemployee will receive writtennotification that they will be given areasonable opportunity period of no lessthan thirty (30) calendar days in length,to demonstrate performance at a levelthat is at least equal to that of asummary level C rating. The period oftime considered to be reasonable will bedetermined, in part, by whether theemployee’s reassignment is to asubstantially similar or the sameposition under a different supervisor, orin a different office, or in a substantiallydifferent position. Essential training andmentoring will be provided asappropriate during this opportunityperiod. Failure to achieve a level ofperformance that is at least equal to thatof a summary level C rating (followingthe above-referenced opportunityperiod) will place the employees in Step3 of this process. There will be nofurther opportunity period.

2. Performance Improvement Plan(PIP)—If the employee does not acceptan offer of change in assignment, or ifthere is no appropriate, availableposition to assign an employee, thesupervisor will develop a PIP that willbe monitored for a reasonable period oftime (no less than 30 calendar days).When an employee is placed in a PIP,the employee will be informed inwriting, that unless their level ofperformance improves to, and issustained at a level at least equal to thatof a summary level C rating, theemployee may be removed from theposition (change in assignment,reduction in pay, or removal from theFederal service).

If, during or at the conclusion of thePIP, the employee’s level ofperformance improves to a level at leastequal to that of a summary level C ratingand is again determined to deteriorate tobelow level C in any area during oneyear from the beginning of the PIP, theMRDEC may initiate action to removethe employee from the position with noadditional opportunity to improve. Anemployee whose level of performanceimproves to a level at least equal to thatof a summary level C rating for one yearfrom the beginning of the PIP, and thendeteriorates to below level C again, inany area, during succeeding ratingperiods, will be placed in a second PIPbefore initiating action to remove theemployee from the position.


If and when performance improvesduring the period in which theemployee is otherwise ineligible for thegeneral increase, then the generalincrease shall be restored. Suchrestoration is not retroactive and isseparate and apart from incentive pay.

3. Removal—If the employee fails todemonstrate a level of performance atleast equal to that of a summary level Crating after completing either Step 1 orStep 2, the employee will be given awritten notice of proposed removal fromthe position. The notice period will bea minimum of 30 calendar days and theemployee will have a reasonable periodof time in which to reply. The employeewill be given a written notice ofdecision to include all applicablegrievance and appeal rights.

Note: Performance-based adverse actionsmay be taken under 5 U.S.C. Chapter 75,rather than Chapter 43.

A decision to remove an employee forpoor performance may be based only onthose instances of poor performance thatoccurred during the opportunity period(Step 1) or during the one-year periodending on the date of proposed removal(Step 2). The notice of decision willspecify the instances of poorperformance on which the action isbased and will be given to the employeeat or before the time the action will beeffective.

The MRDEC will preserve all relevantdocumentation concerning an actiontaken for poor performance and make itavailable to review by the affectedemployee or designated representative.At a minimum, the record will consistof a copy of the notice of proposedaction; the employee’s written reply, ifprovided, or a summary if the employeemakes an oral reply. Additionally, therecord will contain the written notice ofdecision and the reasons therefore,along with any supporting materialincluding documentation regarding theopportunity afforded the employee todemonstrate improved performance. Anemployee who sustains theirperformance at a level at least equal toa summary level C rating for one year,will have all relevant documentationremoved from their record.

Employee Relations

Employees covered by the project willbe evaluated under a performanceevaluation system that affords grievanceor appeal rights comparable to thoseprovided currently.

Senior Executive Service and 5 U.S.C.3104 (ST) Employees

Members of the SES will remainunder the current SES performance

appraisal system. Title 5 U.S.C. 3104(ST) employees will be included in theproject performance evaluation system,but will not be in the project pay-for-performance system.

Awards

The MRDEC currently has anextensive awards program consisting ofboth internal and external awards. On-the-spot, special act (which are bothperformance related andnonperformance related), and otherinternal awards (both monetary andnonmonetary) will continue under theproject, and may be modified orexpanded as appropriate. MACOM, DA,and DoD awards and other honorarynoncash awards will be retained.

Teams may distribute an award poolamong themselves where appropriate.Thus, a team leader or supervisor mayallocate a sum of money to a team foroutstanding completion of a specialtask, and the team may decide theindividual distribution of the totaldollars among themselves.

The MRDEC Director will have theauthority to grant awards to coveredemployees of up to $10,000 for a specialact. The scale of the award will bedetermined using criteria in AR 5–17.AFGE Local 1858 will be notified andprovided an opportunity to comment onproposed special act awards forbargaining unit employees before theeffective date of the award. The name ofproposed special act awardees will notbe released to the union for privacy actpurposes.

Members of the SES will remainunder their current awards system andwill not participate in the projectperformance recognition bonus awardsprogram. Title 5 U.S.C. 3104 (ST)employees will be eligible for cashawards.

Pay Administration

Introduction

The objective is to establish a paysystem that will improve the ability ofthe MRDEC to attract and retain qualityemployees. The new system will be apay-for-performance system and, whenimplemented, will result in aredistribution of pay resources basedupon individual performance. The firstperformance payout will be madeeffective with the first full pay period ofFY 1999 (October 1998). Future payadjustments will be effective at thebeginning of the first full pay period ofsubsequent fiscal years. Generalincrease payouts in January 1998 will beprovided to all covered employeesregardless of their rating of record orcurrent performance status.

Pay-for-Performance

MRDEC will use a simplifiedperformance appraisal system that willpermit both the supervisor and theemployee to focus on quality of thework. The proposed system will permitthe manager/supervisor to baseincentive pay increases entirely onperformance or value added to the goalsof the organization. This system willallow managers to withhold payincreases from nonperformers, therebygiving the nonperformer the incentive toimprove performance or leavegovernment service. For example,employees with ratings of U will receiveno performance pay increase, generalincrease, or performance bonus. Thisaction may result in the employee’s payfalling below the minimum rate of theircurrent payband because the minimumrate is increased by the general increase(5 U.S.C. 5303). Under these transitoryconditions, the employee’s paybanddesignator will remain the same. Sincethere is no reduction in band level orpay, there is no adverse action.

Pay for performance has twocomponents: performance pay increasesand/or performance bonuses. The basicrates of pay used in computing the paypool and performance payouts excludelocality pay. All covered employees willbe given the full amount of locality payadjustments when they occur regardlessof performance. Additionally, allcovered employees who have a rating ofrecord above U will receive a fullgeneral increase, except that employeesreceiving retained rates will receive apay increase in accordance with 5U.S.C. 5363. The funding forperformance pay increases and/orperformance bonuses is composed ofmoney previously available for within-grade increases, quality step increases,promotions from one grade to anotherwhere both grades are now in the samepayband, and for some performanceawards. Additionally, funds will beobtained from performance payincreases withheld for poor performance(see Performance Evaluation ).

Performance Pay Pool

The performance pay pool iscomposed of a base pay fund and abonus pay fund. The payouts made toemployees from the performance paypool will be a mix of base pay increasesand bonus payments, subject to theamounts available in the respectivefunds.

The funding for the base pay fund iscomposed of money previouslyavailable for within-grade increases,quality step increases, and promotionsbetween grades that are banded under


the demonstration project. The bonuspay fund is separately funded withinthe constraints of the organization’soverall performance award budget.Some portion of the performance awardbudget will be reserved for special adhoc awards—e.g., suggestion awards orspecial act awards—and will not beincluded as part of the performance paypool.

The MRDEC Center Support Office, inconsultation with AFGE Local 1858 andsupporting personnelists, will calculatethe total performance pay pool fundsand allocate pay pools prior toimplementation to Major OrganizationalUnits or teams as appropriate.

Performance Pay Increases and/orPerformance Bonuses

A pay pool manager is accountable forstaying within pay pool limits. The paypool manager assigns performance pay

increases and/or performance bonusesto individuals on the basis of anacademic-type rating, the value of theperformance pay pool resourcesavailable, and the individual’s currentbasic rate of pay within a givenpayband. A pay pool manager mayrequest approval from the PersonnelManagement Board (PMB) or itsdesignee to grant a performance payincrease to an employee that is higherthan the compensation formula for thatemployee to recognize extraordinaryachievement or to provide acceleratedcompensation for local interns.

Performance payouts will becalculated for each individual basedupon a performance pay pool value thatwill be initially 3 percent (e.g., 2.0%performance pay + 1.0% performancebonus) of the combined basic rates ofpay of the assigned employees.

This percentage, a payout factor, willbe adjusted as necessary to compensatefor changing employee demographicswhich impact the elements used in theGS system, such as the amount of stepraises, quality step increases, andpromotions. The MRDEC will reexaminethe payout factor (F) at the end of thefirst assessment period to determine if apayout factor of 2% was maintained byrevised labor rates. If not, then the factorF must be adjusted prior to the first yearpayments to compensate for the earlypayment of step increases which wouldhave been used to form the full robustvalue of this factor. Performancepayouts will be calculated so that a paypool manager will not exceed theresources that are available in the paypool. An employee’s performancepayout is computed as follows:

Performance

Payout=

Pool Value SAL N

SUM(SALj j = 1to n

∗ ∗

∗Nj);

Where: Pool Value=F * SUM (SALk);k=1 to n

n=Number of employees in pay poolN=Number of shares earned by an

employee based on theirperformance rating (0 to 4)

SAL=An individual’s basic rate of paySUM=The summation of the entities in

parenthesis over the range indicatedF=Payout Factor

Once the individual performancepayout amounts have been determined,the next step is to determine whatportion of each payout will be in theform of a base pay increase as opposedto a bonus payment. A base pay sharefactor is derived by dividing the amountof the base pay fund by the amount ofthe total performance pay pool. Thisfactor is multiplied by the individualperformance payout amounts to deriveeach individual’s projected base payincrease. Certain employees will not beable to receive the projected base payincrease due to base pay caps. Base payis capped when an employee reachesthe maximum rate of pay in an assignedpayband, when the midpoint principleapplies (see below), and when the 50percent rule applies (see below). Also,for employees receiving retained ratesabove the applicable paybandmaximum, the entire performancepayout will be in the form of a bonuspayment.

If the organization determines it isappropriate, it may reallocate a portion(up to the maximum possible amount)of the unexpended base pay funds forcapped employees to uncapped

employees. This reallocation must bemade on a proportional basis so that alluncapped employees receive the samepercentage increase in their base payshare (unless the reallocationadjustment is limited by a pay cap). Anydollar increase in an employee’sprojected base pay increase will beoffset, dollar for dollar, by anaccompanying reduction in theemployee’s projected bonus payment.Thus, the employee’s total performancepayout is unchanged.

A midpoint principle will be used todetermine performance pay increases.This principle requires that employeesin all paybands must receive a B ratingor higher to advance their basic rate ofpay beyond the midpoint dollarthreshold of their respective paybands.If the performance payout formulayields a basic pay increase for a C-ratedemployee that would increase theirbasic rate of pay beyond the midpointdollar threshold, then their basic rate ofpay will be adjusted to the midpointdollar threshold and the balanceconverted to a performance bonus. Oncean employee has progressed beyond themidpoint dollar threshold, futureperformance pay increases will requirea B rating or greater. If an employeeattains a C rating and is beyond themidpoint dollar threshold, incentivepay increases will be restricted toperformance bonuses only.

Annual performance pay increaseswill be limited to (1) 50 percent of thedifference between the particular

maximum band rate and the employee’scurrent basic rate of pay, or (2) theprojected performance pay increase,whichever is less, with the balanceconverted to a performance bonus. Thisrule will not apply when an employee’scurrent basic rate of pay is within $100of the maximum band rate. This meansthat employees whose pay has reachedthe upper limits of a particular paybandwill receive most performanceincentives as a performance bonus.Performance bonuses are cash paymentsand are not part of the basic pay for anypurpose (e.g., lump sum payments ofannual leave on separation, lifeinsurance, and retirement).

Supervisory Pay Adjustments

Supervisory pay adjustments may beused at the discretion of the MRDECDirector, to compensate employeesassuming positions entailingsupervisory responsibilities.Supervisory pay adjustments areincreases to the supervisor’s basic rateof pay, ranging up to 10 percent of thatpay rate, subject to the constraint thatthe adjustment may not cause theemployee’s basic rate of pay to exceedthe payband maximum rate. Onlyemployees in supervisory positions withformal supervisory authority meetingthat required for coverage under theOPM GS Supervisory Guide may beconsidered for the supervisory payadjustment. Criteria to be considered indetermining the pay increase percentageinclude the following organizational


and individual employee factors: (1)Needs of the organization to attract,retain, and motivate high qualitysupervisors; (2) budgetary constraints;(3) years of supervisory experience; (4)amount of supervisory training received;(5) performance appraisals andexperience as a group or team leader; (6)their organizational level of supervision;and (7) managerial impact on theorganization. The supervisory payadjustment will not apply to 5 U.S.C.3104 (ST) positions or to employees inPayband V of the E&S occupationalfamily.

Conditions, after the date ofconversion into the demonstrationproject, under which the application ofa supervisory pay adjustment may beconsidered are as follows:

(1) New hires into supervisorypositions will have their initial rate ofbasic pay set at the supervisor’sdiscretion within the pay range of theapplicable payband. This rate of paymay include a supervisory payadjustment determined using the rangesand criteria outlined above.

(2) A career employee selected for asupervisory position that is within theemployee’s current payband may also beconsidered for a supervisory payadjustment. If a supervisor is alreadyauthorized a supervisory payadjustment and is subsequently selectedfor another supervisory position, withinthe same payband, then the supervisorypay adjustment will be redetermined.

Within the demonstration projectrating system, the performance element‘‘Supervision/EEO’’ is identified as acritical element. Changes in the ratingvalue for this element awarded to asupervisor with a supervisory payadjustment may generate a review of theadjustment and may result in anincrease or decrease to that adjustment.Decrease to a supervisory payadjustment is not an adverse action ifthis action results from changes insupervisory duties or supervisoryratings.

Supervisors, upon initial conversioninto the demonstration project into thesame, or substantially similar position,will be converted at their existing basicrate of pay and will not be offered asupervisory pay adjustment.Supervisory adjustments will not befunded from performance pay pools.

The initial dollar amount of theadjustment will be removed when theemployee voluntarily leaves thesupervisory position. The cancellationof the adjustment under thesecircumstances is not an adverse actionand is not appealable. If an employee isremoved from a supervisory position forpersonal cause (performance or

conduct), the adjustment will beremoved under adverse actionprocedures. However, if an employee isremoved from a non-probationarysupervisory position for conditionsother than voluntary or for personalcause, then the pay retention provisionsof 5 CFR part 536 will prevail.

Supervisory Pay DifferentialsSupervisory differentials may be used,

at the discretion of the MRDEC Director,to incentivize and reward supervisorswho are in Paybands III, IV, and V ofany occupational family in supervisorypositions with formal supervisoryauthority meeting that required forcoverage under the OPM GSSupervisory Guide (excluding PaybandV of the E&S occupational family). Asupervisory pay differential is a cashincentive that may range up to 10percent of the supervisor’s basic rate ofpay. It is paid on a pay period basis andis not included as part of thesupervisor’s basic rate of pay. Criteria tobe considered in determining theamount of this supervisory paydifferential includes those identified forSupervisory Pay Adjustments.

The supervisory pay differential maybe considered, either during conversioninto or after initiation of thedemonstration project, if the supervisorhas subordinate employees in the samepayband. The differential must beterminated if the employee is removedfrom a supervisory position, regardlessof cause, or no longer meets establishedeligibility criteria. Supervisorydifferentials will not be funded fromperformance pay pools.

As specified in Supervisory PayAdjustments, after initiation of thedemonstration project, all personnelactions involving a supervisorydifferential will require a statementsigned by the employee acknowledgingthat the differential may be terminatedor reduced at the MRDEC Director’sdiscretion. The termination or reductionof the differential is not an adverseaction and is not subject to appeal.

Pay and Compensation CeilingsAn employee’s total monetary

compensation paid in a calendar yearmay not exceed the basic rate of paypaid in level I of the Executive Scheduleconsistent with 5 U.S.C. 5307 and 5 CFRpart 530, subpart B.

In addition, each payband will haveits own pay ceiling, just as grades do inthe current system. Pay rates for thevarious paybands will be directly keyedto the GS rates. Except for retained rates,basic pay will be limited to themaximum rates payable for eachpayband.

Pay Setting for Promotion

Upon promotion to a higher payband,an employee will be entitled to a 6%pay increase or the lowest level in thepayband to which promoted, whicheveris greater. Highest previous rate alsomay be considered in setting pay uponpromotion, under rules similar to thehighest previous rate rules in 5 CFR531.203 (c) and (d).

Grade and Pay Retention

Except where waived or modified inthe waivers section of this plan, gradeand pay retention will follow currentlaw and regulations.

C. Classification

Introduction

The objectives of the newclassification system are to simplify theclassification process, make the processmore serviceable and understandable,and place more decision-makingauthority and accountability with linemanagers. All positions listed inAppendix A will be in the classificationstructure. Provisions will be made forincluding other occupations asemployment requirements change inresponse to changing technicalprograms.

Occupational Series

The present GS classification systemhas over 400 occupations (also calledseries), which are divided into 22groups. The occupational series will bemaintained. New series, established byOPM, may be added as needed to reflectnew occupations in the workforce.Appendix A lists the occupational seriescurrently represented at the MRDEC byoccupational family.

Classification Standards

MRDEC will use a classificationsystem that is a modification of thesystem now in use at the U.S. Navy,Naval Command, Control and OceanSurveillance Center, San Diego,California. The present classificationstandards will be used to create localbenchmark position descriptions foreach payband, reflecting duties andresponsibilities comparable to thosedescribed in present classificationstandards for the span of gradesrepresented by each payband. Therewill be at least one benchmark positiondescription for each payband. Asupervisory benchmark positiondescription may be added to thosepaybands that include supervisoryemployees. Present titles and series willcontinue to be used in order torecognize the types of work beingperformed and educational backgrounds


and requirements of incumbents.Locally developed specialty codes andOPM functional codes will be used tofacilitate titling, making qualificationdeterminations, and assigningcompetitive levels to determineretention status.

Position Descriptions and ClassificationProcess

The MRDEC Director will havedelegated classification authority andmay redelegate this authority tosubordinate managers. New benchmarkposition descriptions will be developedto assist managers in exercisingdelegated position classificationauthority. Managers will identify theoccupational family, job series, thefunctional code, the specialty code,payband level, and the appropriateacquisition codes. The manager willdocument these decisions on a coversheet similar to the present DA Form374.

Specialty codes will be developed bySubject Matter Experts (SMEs) toidentify the special nature of workperformed. Functional codes are thosecurrently found in the OPMIntroduction to the ClassificationStandards which define certain kinds ofactivities, e.g., Research, Development,Test and Evaluation, etc., and coversEngineers & Scientists.

Classification Appeals

An employee may appeal theoccupational family, occupationalseries, or payband level of his or herposition at any time. An employee mustformally raise the areas of concern to thesupervisors in the immediate chain ofcommand, either verbally or in writing.If an employee is not satisfied with thesupervisory response, he or she maythen appeal to the DoD appellate level.If an employee is not satisfied with theDoD response, he or she may thenappeal to the Office of PersonnelManagement, only after DoD hasrendered a decision under theprovisions of this demonstration project.Appellate decisions from OPM are finaland binding on all administrative,certifying, payroll, disbursing, andaccounting officials of the Government.Time periods for case processing underTitle 5 apply.

An employee may not appeal theaccuracy of the position description, thedemonstration project classificationcriteria, or the pay-setting criteria; theassignment of occupational series to anoccupational family; the title of aposition; the propriety of a salaryschedule; or matters grievable under anadministrative or negotiated grievance

procedure or an alternative disputeresolution procedure.

The evaluation of a classificationappeal under this demonstration projectare based upon the demonstrationproject classification criteria. Case fileswill be forwarded for adjudicationthrough the Civilian Personnel AdvisoryCenter/Civilian Personnel OperationsCenter (CPAC/CPOC) providingpersonnel service and will includecopies of appropriate demonstrationproject criteria.

D. Hiring and Appointment Authorities

1. Hiring Authority

A candidate’s basic eligibility will bedetermined using Office of PersonnelManagement’s (OPM) QualificationStandards Handbook for GeneralSchedule Positions. Candidates mustmeet the minimum standards for entryinto the payband. For example, if thepayband includes positions in gradesGS–5 and GS–7, the candidate mustmeet the qualifications for positions atGS–5 level. Specific experience/education required will be determinedbased on whether a position to be filledis at the lower or higher end of the band.Selective placement factors can beestablished in accordance with the OPMQualification Handbook, when judgedto be critical to successful jobperformance. These factors will becommunicated to all candidates forparticular position vacancies and mustbe met for basic eligibility. Under thedemonstration authority, the MRDECwill modify qualification standards onlyas authorized in the General Policiesand instructions (paragraph 8) of theQualification Standard Handbook.

2. Appointment Authority

Under the demonstration project,there will continue to be career andcareer conditional appointments andtemporary appointments not to exceedone year. These appointments will useexisting authorities and entitlements.Non-permanent positions (exceedingone year) needed to meet fluctuating oruncertain workload requirements willbe filled using a Contingent Employeeappointment authority.

Employees hired for more than oneyear, under the contingent employeeappointment authority, are given termappointments in the competitive servicefor no longer than five years. TheMRDEC Director is authorized to extenda contingent appointment oneadditional year. These employees areentitled to the same rights and benefitsas term employees and will serve a oneyear trial period. The Pay-for-Performance Management System

described in III.B applies to contingentemployees.

Appointments will be made under thesame appointment authorities andprocesses as regular term appointments,but recruitment bulletins must indicatethat there is a potential for conversionto permanent employment.

Employees hired under the contingentemployee authority may be eligible forconversion to career-conditionalappointments. To be converted, theemployee must (1) have been selectedfor the term position under competitiveprocedures, with the announcementspecifically stating that the individual(s)selected for the term position(s) may beeligible for conversion to career-conditional appointment at a later date;(2) served two years of substantiallycontinuous service in the term position;(3) be selected under merit promotionprocedures for the permanent position;and (4) have a current rating of B orbetter.

Employees serving under regular termappointments at the time of conversionto the Demonstration Project will beconverted to the new contingentemployee appointments provided theywere hired for their current positionsunder competitive procedures. Theseemployees will be eligible forconversion to career-conditionalappointment if they have a currentrating of B or better (or one of the toptwo ratings on the current evaluationsystem), and are selected under meritpromotion procedures for theirpermanent position after havingcompleted two years of continuousservice. Time served in term positionsprior to conversion to the contingentemployee appointment is creditable tothe requirement for two years ofcontinuous service stated above,provided the service was continuous.

3. Extended Probationary PeriodThe current one year probationary

period will be extended to two years forall newly hired employees in theEngineers and Scientists and Technicaland Business Support occupationalfamilies. The purpose of extending theprobationary period is to allowsupervisors an adequate period of timeto fully evaluate an employee’s ability tocomplete a cycle of work (such asresearch, program development andexecution, and technology transfer) andto fully evaluate an employee’scontribution and conduct. Employees inthe General Support occupationalfamily will serve a one yearprobationary period.

Aside from extending the time period,all other features of the currentprobationary period are retained


including the potential to remove anemployee without providing the fullsubstantive and procedural rightsafforded a non-probationary employee.Any employee appointed prior to theimplementation date will not beaffected. The two year probation willapply to new hires or those who do nothave reemployment rights orreinstatement privileges.

Probationary employees will beterminated when the employee fails todemonstrate proper conduct, technicalcompetency, and/or adequatecontribution for continued employment.When the MRDEC decides to terminatean employee serving a probationaryperiod because his/her workperformance or conduct during thisperiod fails to demonstrate their fitnessor qualifications for continuedemployment, it shall terminate his/herservices by written notification of thereasons for separation and the effectivedate of the action. The information inthe notice as to why the employee isbeing terminated shall, as a minimum,consists of the manager’s conclusions asto the inadequacies of their performanceor conduct.

4. Supervisory Probationary PeriodsSupervisory probationary periods will

be made consistent with 5 CFR 315,Subchapter 315.901. Employees thathave successfully completed the initialprobationary period will be required tocomplete an additional one yearprobationary period for the initialappointment to a supervisory position.If, during the probationary period, thedecision is made to return the employeeto a nonsupervisory position for reasonssolely related to supervisoryperformance, the employee will bereturned to a comparable position of nolower payband and pay than theposition from which they werepromoted.

5. Voluntary Emeritus ProgramUnder the demonstration project, the

MRDEC Director will have the authorityto offer retired or separated individuals(engineers and scientists) voluntaryassignments in the MRDEC. Thisauthority will include individuals whohave retired or separated from Federalservice. Voluntary Emeritus Programassignments are not considered‘‘employment’’ by the Federalgovernment (except for purposes ofinjury compensation). Thus, suchassignments do not affect an employee’sentitlement to buyouts or severancepayments based on an earlier separationfrom Federal service. The VoluntaryEmeritus Program will ensure continuedquality research while reducing the

overall salary line by allowing higherpaid individuals to accept retirementincentives with the opportunity toretain a presence in the scientificcommunity. The program will be ofmost benefit during manpowerreductions as senior S&Es could acceptretirement and return to providevaluable on-the-job training ormentoring to less experiencedemployees. Voluntary service will notbe used to replace any employee, orinterfere with career opportunities ofemployees.

To be accepted into the emeritusprogram, a volunteer must berecommended by MRDEC managers tothe MRDEC Director. Everyone whoapplies is not entitled to a voluntaryassignment. The MRDEC Director mustclearly document the decision processfor each applicant (whether accepted orrejected) and retain the documentationthroughout the assignment.Documentation of rejections will bemaintained for two years.

To ensure success and encourageparticipation, the volunteer’s federalretirement pay (whether military orcivilian) will not be affected whileserving in a voluntary capacity. Retiredor separated federal employees mayaccept an emeritus position without abreak or mandatory waiting period.

Volunteers will not be permitted tomonitor contracts on behalf of thegovernment or to participate on anycontracts or solicitations where aconflict of interest exists. The samerules that currently apply to sourceselection members will apply tovolunteers.

An agreement will be establishedbetween the volunteer, the MRDECDirector and the CPAC/CPOC Director.The agreement will be reviewed by thelocal Legal Office for ethicsdeterminations under the Joint EthicsRegulation. The agreement must befinalized before the assumption ofduties and shall include:

(a) a statement that the voluntaryassignment does not constitute anappointment in the civil service and iswithout compensation, and any and allclaims against the Government (becauseof the voluntary assignment) are waivedby the volunteer,

(b) a statement that the volunteer willbe considered a federal employee for thepurpose of injury compensation,

(c) volunteer’s work schedule,(d) length of agreement (defined by

length of project or time defined byweeks, months, or years),

(e) support provided by the MRDEC(travel, administrative, office space,supplies),

(f) a one page Statement of Duties andExperience,

(g) a provision that states noadditional time will be added to avolunteer’s service credit for suchpurposes as retirement, severance pay,and leave as a result of being a memberof the Voluntary Emeritus Program,

(h) a provision allowing either partyto void the agreement with 10 workingdays written notice, and

(i) the level of security access required(any security clearance required by theassignment will be managed by theMRDEC while the volunteer is amember of the Voluntary EmeritusProgram).

E. Employee Development

1. Expanded DevelopmentalOpportunity Program

The MRDEC ExpandedDevelopmental Opportunity Programwill be funded by the MRDEC, and itwill cover all demonstration projectemployees in the Engineers andScientists and the Technical andBusiness Support occupational families.An expanded developmentalopportunity complements existingdevelopmental opportunities such as (1)long term training, (2) one year workexperiences in an industrial setting viathe Relations With Industry Program, (3)one year work experiences inlaboratories of allied nations via theScience and Engineer ExchangeProgram, (4) rotational job assignmentswithin the MRDEC, (5) up to one yeardevelopmental assignments in higherheadquarters within the Army andDepartment of Defense, and (6) selfdirected study via correspondencecourses and local colleges anduniversities.

Each developmental opportunityperiod should benefit the MRDEC, aswell as increase the employee’sindividual effectiveness. Variouslearning or uncompensateddevelopmental work experiences maybe considered, such as advancedacademic teaching or research, or on-the-job work experience with public ornon-profit organizations. Employeeswill be eligible after completion ofseven years of Federal service. Finalapproval authority will rest with theMRDEC Director, and selection of anemployee to be granted an expandeddevelopmental opportunity will be on acompetitive basis. An expandeddevelopmental opportunity period willnot result in loss of (or reduction in)basic pay, leave to which the employeeis otherwise entitled, or credit for timeor service. Employees accepting anexpanded developmental opportunity


do not have to sign a continued serviceagreement cited in 5 U.S.C. 4108(a)(1)(Supplement 1995).

The opportunity to participate in theExpanded Developmental OpportunityProgram will be announced annually.Instructions for application and theselection criteria will be included in theannouncement. Final selection forparticipation in the program will bemade by the Personnel ManagementBoard. The position of employees on anexpanded developmental opportunitymay be backfilled with employeestemporarily promoted or contingentemployees or employees assigned viathe simplified assignment process inIII.A. However, that position or itsequivalent must be made available tothe employee returning from theexpanded developmental opportunity.

2. Training for Degrees

Degree training is an essentialcomponent of an organization thatrequires continuous acquisition ofadvanced and specialized knowledge.Degree training in the academicenvironment of laboratories is also acritical tool for recruiting and retainingemployees with or requiring criticalskills. Constraints under current lawand regulation limit degree payment toshortage occupations. In addition,current government wide regulationsauthorize payment for degrees basedonly on recruitment or retention needs.Degree payment is not permittedcurrently for non-shortage occupationsinvolving critical skills.

The MRDEC proposes to expand theauthority to provide degree payment toemployees in all occupational familiesfor purposes of meeting critical skillrequirements, to ensure continuousacquisition of advanced and specializedknowledge essential to the organization,and to recruit and retain personnelcritical to the present and futurerequirements of the organization. Degreepayment may not be authorized whereit would result in a tax liability for theemployee without the employee’sexpress and written consent. It isexpected that the degree paymentauthority will be used primarily andlargely for advanced degrees, exceptwhere an undergraduate program isnecessary to the attainment of anadvanced degree or credits. Anyvariance from this policy must berigorously determined and documented.

The MRDEC will develop guidelinesto ensure competitive approval ofdegree payment and that such decisionsare fully documented.

F. Revised Reduction-in-Force (RIF)Procedures

IntroductionModifications include limiting

competitive area, as defined below, andincreasing the emphasis on performancein the RIF Process. Retention criteria arein the following order; tenure, veterans’preference, service credit adjusted by asum of the last three performanceratings. Current reduction in forceregulations/procedures have beenadjusted in the context of theoccupational family and the paybandclassification system.

Competitive AreasAll positions included in the

Demonstration Project at a specificgeographic location will be considered aseparate competitive area. Bumps andretreats will occur only within thecompetitive area and only to positionsfor which the employee is qualified.Competitive levels will be establishedbased on the payband, classificationseries, and where responsibilities aresimilar enough in duties, qualificationrequirements, pay schedules, andworking conditions so that an employeemay be reassigned to any of the otherpositions within the level withoutrequiring significant training or causingundue interruption. Separatecompetitive levels will be establishedfor positions in the competitive andexcepted service; for positions filled ona full-time, part-time, intermittent,seasonal, or on-call basis; and separatelevels will be established for positionsfilled by an employee in a formallydesignated trainee or developmentalprogram.

RetentionCompeting employees are listed on a

retention register in the order shownbelow. Each tenure group has threesubgroups (30% or higher compensableveterans, other veterans, and non-veterans) and employees appear on theretention register in that order. Withineach subgroup, employees are in orderof years of service adjusted to includeperformance credit.

Tenure I (Career employees)Tenure II (Career-Conditional

employees)Tenure III (Contingent employees)In the demonstration project, an

employee can bump to a position heldby another employee in a lowersubgroup or tenure group; the positionmay be no lower than the equivalent ofthree GS grades (or appropriate gradeintervals) below the minimum GS gradelevel of his/her current band inaccordance with Section V (Conversion

or Movement from a Project Position toa General Schedule Position, a. Grade-Setting Provision). An employee canretreat to a position held by anotheremployee in the same subgroup who hasa lower adjusted RIF servicecomputation date; the position may beno lower than the equivalent of three GSgrades (or appropriate grade intervals)below the minimum GS grade level ofhis/her current band, in accordancewith Section V (Conversion orMovement from a Project Position to aGeneral Schedule Position, a GradeSetting Provision). A preference eligiblewith a compensable service-connecteddisability of 30 percent or more mayretreat to a position equivalent to fiveGS grades (or appropriate gradeintervals) below the minimum gradelevel of his/her current band.

An employee with a current annualperformance rating of U has assignmentrights only to a position held by anotheremployee who has a U rating. Anemployee who has been given a writtendecision of removal because ofunacceptable performance will beplaced at the bottom of the retentionregister for his/her competitive level.

Link Between Performance andRetention

An employee will have additionalyears of service added to the servicecomputation date for retentionpurposes. The credit is applied for eachof the last three annual performanceratings of record, received over the lastfour years, for a potential credit of 30years. If an employee has less than threeannual performance ratings of record,then for each missing rating, an averageof the ratings received for the past fouryears will be used. Ratings given undernon-demo systems will be converted tothe demo rating scheme and providedthe equivalent rating credit.

Rating A adds 10 yearsRating B adds 7 yearsRating C adds 3 yearsRating U adds no credit for retention

IV. Training

Introduction

The key to the success or failure of theproposed demonstration project will bethe training provided for all involved.This training will not only provide thenecessary knowledge and skills to carryout the proposed changes, but will alsolead to program commitment on the partof participants.

Training before the beginning ofimplementation and throughout thedemonstration will be provided tosupervisors, employees, and theadministrative staff responsible for


assisting managers in effecting thechangeover and operation of the newsystem.

The elements to be covered in theorientation portion of this training willinclude: (1) A description of thepersonnel system, (2) how employeesare converted into and out of thesystem, (3) the pay adjustment and/orbonus process, (4) familiarization withthe new position descriptions andperformance objectives, (5) theperformance evaluation managementsystem, (6) the reconsideration process,and (7) the demonstration projectadministrative and formal evaluationprocess. AFGE Local 1858 will be givenan opportunity to describe their role andfunction in the demonstration program.

SupervisorsThe focus of this project on

management-centered personneladministration, with increasedsupervisory and managerial personnelmanagement authority andaccountability, demands thoroughtraining of supervisors and managers inthe knowledge and skills that willprepare them for their newresponsibilities. Training will includedetailed information on the policies andprocedures of the demonstration project,skills training in using the classificationsystem, position descriptionpreparation, performance evaluation,and interaction with AFGE Local 1858as a partner. Additional training mayfocus on nonproject proceduraltechniques such as interpersonal andcommunication skills.

Administrative StaffThe administrative staff, generally

personnel specialists, technicians, andadministrative officers, will play a keyrole in advising, training, and coachingsupervisors and employees inimplementing the demonstrationproject. This staff will need training inthe procedural and technical aspects ofthe project.

EmployeesThe MRDEC, in conjunction with the

AFGE Local 1858 and education anddevelopment assets of the CPAC/CPOCwill train employees covered under thedemonstration project. In the monthsleading up to the implementation date,meetings will be held for employees tofully inform them of all projectdecisions, procedures, and processes.

V. Conversion

Conversion to the Demonstration Projecta. Initial entry into the demonstration

project will be accomplished through afull employee protection approach that

ensures each employee an initial placein the appropriate payband without lossof pay. Employees serving under regularterm appointments at the time of theimplementation of the demonstrationproject will be converted to thecontingent employee appointment.Position announcement, etc. will not berequired for these contingent employeeappointments. An automatic conversionfrom current GS/GM grade and pay intothe new broadband system will beaccomplished. Each employee’s initialtotal salary under the demonstrationproject will equal the total salaryreceived immediately before conversion.Employees who enter the demonstrationproject later by lateral reassignment ortransfer will be subject to parallel payconversion rules. If conversion into thedemonstration project is accompaniedby a geographic move, the employee’sGS pay entitlements in the newgeographic area must be determinedbefore performing the pay conversion.

b. Employees who are on temporarypromotions at the time of conversionwill be converted to a paybandcommensurate with the grade of theposition to which promoted. At theconclusion of the temporary promotion,the employee will revert to the paybandwhich corresponds to the grade ofrecord. When a temporary promotion isterminated, the employee’s payentitlements will be determined basedon the employee’s position of record,with appropriate adjustments to reflectpay events during the temporarypromotion, subject to the specificpolicies and rules established by theMRDEC. In no case may thoseadjustments increase the pay for theposition or record beyond the applicablepay range maximum rate. The onlyexception will be if the originalcompetitive promotion announcementstipulated that the promotion could bemade permanent; in these cases actionsto make the temporary promotionpermanent will be considered, and ifimplemented, will be subject to allexisting priority placement programs.

c. Employees who are covered byspecial salary rates, prior to thedemonstration project, will no longer beconsidered a special rate employeeunder the Demonstration Project. Theseemployees will, therefore, be eligible forfull locality pay. The adjusted salaries ofthese employees will not change.Rather, the employees will receive anew basic pay rate computed bydividing their adjusted basic pay (higherof special rate or locality rate) by thelocality pay factor for their area. A fulllocality adjustment will then be addedto the new basic pay rate. Adverseaction and pay retention provisions will

not apply to the conversion process asthere will be no change in total salary.

d. During the first 12 monthsfollowing conversion, employees willreceive pay increases for non-competitive promotion equivalentswhen the grade level of the promotionis encompassed within the samebroadband, the employee’s performancewarrants the promotion and promotionswould have otherwise occurred duringthat period. Employees who receive anin-level promotion at the time ofconversion will not receive a proratedstep increase equivalent as definedbelow.

e. Under the current pay structure,employees progress through theirassigned grade in step increments. Sincethis system is being replaced under thedemonstration project, employees(including those added to the MRDECby BRAC 95 actions) will be awardedthat portion of the next higher stepbased upon the portion of the waitingperiod they have completed prior to thedate of implementation. As under thecurrent system, supervisors will be ableto withhold these partial step increasesif the employee’s performance fallsbelow fully successful. Rules governingWithin-Grade Increases (WGI) under thecurrent Army performance plan willcontinue in effect until theimplementation date. Adjustments tothe employee’s base salary for WGIequity will be computed effective thedate of implementation to coincide withthe beginning of the first formal PFPassessment cycle. WGI equity will beacknowledged by increasing basesalaries by a prorated share based uponthe number of weeks an employee hascompleted toward the next higher step.Payment will equal the current value ofthe employee’s next WGI times theproportion of the waiting periodcompleted (weeks completed in waitingperiod/weeks in the waiting period) atthe time of conversion. Employees atstep 10, or receiving retained rates, onthe date of implementation will not beeligible for WGI equity adjustmentssince they are already at or above thetop of the step scale.

Conversion or Movement From a ProjectPosition to a General Schedule Position

If a demonstration project employee ismoving to a General Schedule (GS)position not under the demonstrationproject, or if the project ends and eachproject employee must be convertedback to the GS system, the followingprocedures will be used to convert theemployee’s project payband to a GS-equivalent grade and the employee’sproject rate of pay to GS equivalent rateof pay. The converted GS grade and GS


rate of pay must be determined beforemovement or conversion out of thedemonstration project and anyaccompanying geographic movement,promotion, or other simultaneousaction. For conversions upontermination of the project and for lateralreassignments, the converted GS gradeand rate will become the employee’sactual GS grade and rate after leavingthe demonstration project (before anyother action). For transfers, promotions,and other actions, the converted GSgrade and rate will be used in applyingany GS pay administration rulesapplicable in connection with theemployee’s movement out of the project(e.g., promotion rules, highest previousrate rules, pay retention rules), as if theGS converted grade and rate wereactually in effect immediately before theemployee left the demonstration project.

a. Grade-Setting Provisions: Anemployee in a payband correspondingto a single GS grade is converted to thatgrade. An employee in a paybandcorresponding to two or more grades isconverted to one of those gradesaccording to the following rules:

(1) The employee’s adjusted rate ofbasic pay under the demonstrationproject (including any locality payment)is compared with step 4 rates in thehighest applicable GS rate range. (Forthis purpose, a ‘‘GS rate range’’ includesa rate in (1) the GS base schedule, (2)the locality rate schedule for the localitypay area in which the position islocated, or (3) the appropriate specialrate schedule for the employee’soccupational series, as applicable.) If theseries is a two-grade interval series, onlyodd-numbered grades are consideredbelow GS–11.

(2) If the employee’s adjusted projectrate equals or exceeds the applicablestep 4 rate of the highest GS grade in theband, the employee is converted to thatgrade.

(3) If the employee’s adjusted projectrate is lower than the applicable step 4rate of the highest grade, the adjustedrate is compared with the step 4 rate ofthe second highest grade in theemployee’s payband. If the employee’sadjusted rate equals or exceeds step 4rate of the second highest grade, theemployee is converted to that grade.

(4) This process is repeated for eachsuccessively lower grade in the banduntil a grade is found in which theemployee’s adjusted project rate equalsor exceeds the applicable step 4 rate ofthe grade. The employee is thenconverted at that grade. If theemployee’s adjusted rate is below thestep 4 rate of the lowest grade in theband, the employee is converted to thelowest grade.

(5) Exception: If the employee’sadjusted project rate exceeds themaximum rate of the grade assignedunder the above-described ‘‘step 4’’ rulebut fits in the rate range for the nexthigher applicable grade (i.e., betweenstep 1 and step 4), then the employeeshall be converted to that next higherapplicable grade.

(6) Exception: An employee will notbe converted to a lower grade than thegrade held by the employeeimmediately preceding a conversion,lateral reassignment, or lateral transferinto the project, unless since that timethe employee has undergone a reductionin band.

b. Pay-Setting Provisions: Anemployee’s pay within the converted GSgrade is set by converting theemployee’s demonstration project rateof pay to GS rate of pay in accordancewith the following rules:

(1) The pay conversion is done beforeany geographic movement or other pay-related action that coincides with theemployee’s movement or conversion outof the demonstration project.

(2) An employee’s adjusted rate ofbasic pay under the project (includingany locality payment) is converted to aGS adjusted rate on the highestapplicable rate range for the convertedGS grade. (For this purpose, a ‘‘GS raterange’’ includes a rate range in (1) theGS base schedule, (2) an applicablelocality rate schedule, or (3) anapplicable special rate schedule.)

(3) If the highest applicable GS raterange is a locality pay rate range, theemployee’s adjusted project rate isconverted to a GS locality rate of pay.If this rate falls between two steps in thelocality-adjusted schedule, the rate mustbe set at the higher step. The convertedGS unadjusted rate of basic pay wouldbe the GS base rate corresponding to theconverted GS locality rate (i.e., samestep position). (If this employee is alsocovered by a special rate schedule as aGS employee, the converted special ratewill be determined based on the GS stepposition. This underlying special ratewill be basic pay for certain purposesfor which the employee’s higher localityrate is not basic pay.)

(4) If the highest applicable GS raterange is a special rate range, theemployee’s adjusted project rate isconverted to a special rate. If this ratefalls between two steps in the specialrate schedule, the rates must be set atthe higher step. The converted GSunadjusted rate of basic pay will be theGS rate corresponding to the convertedspecial rate (i.e., same step position).

c. E&S Payband V Employees: Anemployee in Payband V of the E&SOccupational family will convert out of

the demonstration project at the GS–15level. The MRDEC, in consultation withthe MICOM CPAC, will develop aprocedure to ensure that employeesentering Payband V understand that ifthey leave the demonstration projectand their adjusted pay exceeds the GS–15, step 10 rate, there is no entitlementto retained pay; their GS-equivalent ratewill be deemed to be the rate for GS–15, step 10. For those Payband Vemployees paid below the adjusted GS–15, step 10 rate, the converted rates willbe set in accordance with paragraph b.

d. Employees with Band or PayRetention: (1) If an employee isretaining a band level under thedemonstration project, apply theprocedures in paragraphs a and b,above, using the grades encompassed inthe employee’s retained band todetermine the employee’s GS-equivalentretained grade and pay rate. The time ina retained band under thedemonstration project counts toward the2-year limit on grade retention in 5U.S.C. 5382.

(2) If an employee is retaining rateunder the demonstration project, theemployee’s GS-equivalent grade is thehighest grade encompassed in his or herband level. MRDEC will coordinate withOPM to prescribe a procedure fordetermining the GS-equivalent pay ratefor an employee retaining a rate underthe demonstration project.

e. Within-Grade Increase—EquivalentIncrease Determinations: Service underthe demonstration project is creditablefor within-grade increase purposes uponconversion back to the GS pay system.Performance pay increases (including azero increase) under the demonstrationproject are equivalent increases for thepurpose of determining thecommencement of a within-gradeincrease waiting period under 5 CFR531.405(b).

Personnel AdministrationAll personnel laws, regulations, and

guidelines not waived by this plan willremain in effect. Basic employee rightswill be safeguarded and merit principleswill be maintained. Supportingpersonnel specialists will continue toprocess personnel-related actions andprovide consultative and otherappropriate services.

Use of benchmark positiondescriptions is not anticipated toadversely impact an employee’s abilityto seek employment outside of MRDEC.MRDEC employees participating in theproject will have short genericbenchmark position descriptions whichdescribe the general type of workperformed, and the range of complexityand supervisory controls. The


benchmark position description coversheet lists the OPM occupational series,e.g., 855 for Electronics Engineer, towhich the employee is assigned, and,where additional specificity is needed,lists a specialty code, which ties theemployee’s benchmark description to aparticular technology or functional area.The OPM occupational code will serveas ready identification Government-wide of the basic qualifications andexperience that the employee possesses.In addition, virtually all federalemployment systems, including theOffice of Personnel Management’s, relyon employee-generated resumes whichallow the applicants to summarize ordescribe the details of their experienceand training. Any pertinent informationregarding the MRDEC employees’knowledge, skills or abilities notcontained in the benchmark positiondescription can be conveyed to potentialemployers through their resume.

AutomationThe MRDEC will continue to use the

Defense Civilian Personnel Data System(DCPDS) for the processing ofpersonnel-related data. Payroll servicingwill continue from the respectivepayroll offices.

Local automated systems will bedeveloped to support computation ofperformance related pay increases andawards and other personnel processesand systems associated with thisproject.

Experimentation and RevisionMany aspects of a demonstration

project are experimental. Upon writtenrequest by Management or the union tothe other party, modifications may benegotiated at any time as experience isgained, results are analyzed, andconclusions are reached on how thesystem is working. The MRDEC willmake minor modifications, such aschanges in the occupational series in anoccupational family without furthernotice. Major changes, such as a changein the number of occupational families,will be negotiated with the union andpublished in the Federal Register. See5 CFR part 470.

VI. Project DurationPublic Law 103–337 removed any

mandatory expiration date for thisdemonstration. The project evaluationplan adequately addresses how each

intervention will be comprehensivelyevaluated for at least the first 5 years ofthe demonstration. Major changes andmodifications to the interventions canbe made through announcement in theFederal Register and would be made ifformative evaluation data warranted. Atthe 5 year point, the entiredemonstration will be reexamined foreither: (a) Permanent implementation,(b) change and another 3–5 year testperiod, or (c) expiration.

VII. Evaluation Plan

Chapter 47 (Title 5 U.S.C.) requiresthat an evaluation system beimplemented to measure theeffectiveness of the proposed personnelmanagement interventions. Anevaluation plan for the entire laboratorydemonstration program covering 24 DoDlabs was developed by a joint OPM/DoDEvaluation Committee. AComprehensive evaluation plan wassubmitted to the Office of DefenseResearch & Engineering in 1995 andsubsequently approved (Proposed Planfor Evaluation of the Department ofDefense S&T Laboratory DemonstrationProgram, Office of Merit SystemsOversight & Effectiveness, June 1995).The overall evaluation effort will becoordinated and conducted by OPM’sPersonnel Resources and DevelopmentCenter (PRDC). The primary focus of theevaluation is to determine whether thewaivers granted result in a moreeffective personnel system than thecurrent as well as an assessment of thecosts associated with the new system.

The present personnel system with itsmany rigid rules and regulations isgenerally perceived as an impediment tomission accomplishment. TheDemonstration Project is intended toremove some of those barriers andtherefore, is expected to contribute toimproved organizational performance.While it is not possible to prove a directcausal link between intermediate andultimate outcomes (improved personnelsystem performance and improvedorganizational effectiveness), such alinkage is hypothesized and data will becollected and tracked for both types ofoutcome variables.

An intervention impact model(Appendix B) will be used to measurethe effectiveness of the variouspersonnel system changes orinterventions. Additional measures will

be developed as new interventions areintroduced or existing interventionsmodified consistent with expectedeffects. Measures may also be deletedwhen appropriate. Activity specificmeasures may also be developed toaccommodate specific needs or interestswhich are locally unique.

The evaluation model for theDemonstration Project identifieselements critical to an evaluation of theeffectiveness of the interventions. Theoverall evaluation approach will alsoinclude consideration of contextvariables that are likely to have animpact on project outcomes: e.g., HRMregionalization, downsizing, cross-service integration, and the general stateof the economy. However, the mainfocus of the evaluation will be onintermediate outcomes, i.e., the resultsof specific personnel system changeswhich are expected to improve humanresources management. The ultimateoutcomes are defined as improvedorganizational effectiveness, missionaccomplishment, and customersatisfaction.

Data from a variety of differentsources will be used in the evaluation.Information from existing managementinformation systems supplemented withperceptual data will be used to assessvariables related to effectiveness.Multiple methods provide more thanone perspective on how thedemonstration project is working.Information gathered through onemethod will be used to validateinformation gathered through another.Confidence in the findings will increaseas they are substantiated by the differentcollection methods. The following typesof data will be collected as part of theevaluation: (1) Workforce data; (2)personnel office data; (3) employeeattitudes and feedback using surveys,structured interviews, and focus groups;(4) local activity histories; and, (5) coremeasures of laboratory effectiveness.

VIII. Demonstration Project Costs

Costs associated with thedevelopment of the personneldemonstration system include softwareautomation, training, and projectevaluation. All funding will be providedthrough the MICOM/MRDEC budget.The projected annual expenses for eacharea is summarized in Table 1.

TABLE 1.—PROJECTED DEVELOPMENTAL COSTS (THEN YEAR DOLLARS)

FY 96 FY 97 FY 98 FY 99 FY 00 FY 01

Training ......................................................................................... $6K $99K $12KProject Evaluation ......................................................................... $25K $60K $60K $60K $60K $60K


TABLE 1.—PROJECTED DEVELOPMENTAL COSTS (THEN YEAR DOLLARS)—Continued

FY 96 FY 97 FY 98 FY 99 FY 00 FY 01

Automation .................................................................................... $80K $10K

Totals .................................................................................. $111K $169K $72K $60K $60K $60K

IX. Required Waivers to Law andRegulation

Public Law 103–337 gave the DoD theauthority to experiment with severalpersonnel management innovations. Inaddition to the authorities granted bythe law, the following are the waivers oflaw and regulation that will benecessary for implementation of theDemonstration Project. In due course,additional laws and regulations may beidentified for waiver request.

1. Title 5, U.S. CodeChapter 31, Section 3111: Acceptance

of Volunteer Service—To the extent thatthe acceptance of retired or separatedengineers and scientists are included asvolunteers under current statute.

Chapter 31, Section 3132: The SeniorExecutive Service; Definitions andexclusions.

Chapter 33, Section 3324:Appointment to positions classifiedabove GS–15.

Chapter 41, Section 4107: Pay forDegrees.

Chapter 41, Section 4108: EmployeeAgreements; Service after Training—Tothe extent that employees who accept anexpanded developmental opportunity(sabbatical) do not have to sign acontinued service agreement.

Chapter 43, Sections 4301(3):Definitions

Chapter 43, Section 4302:Establishment of Performance AppraisalSystems.

Chapter 43, Section 4303(a), (b), and(c): Actions based on UnacceptablePerformance.

Chapter 51, Sections 5101–5111:Related to classification standards andgrading; to the extent that white collaremployees will be covered bybroadbanding. Pay categorydetermination criteria for federal wagesystem positions remain unchanged.

Chapter 53, Sections 5301, 5302 (8)and (9), 5303 and 5304: Sections 5301,5302, and 5304 are waived only to theextent necessary to allow demonstrationproject employees to be treated asGeneral Schedule employees and toallow basic rates of pay under thedemonstration project to be treated asscheduled rates of pay. This waiver doesnot apply to ST employees whocontinue to be covered by theseprovisions, as appropriate. Employeesin Payband V of the E&S occupational

family are treated as ST employees forthe purposes of these provisions.

Chapter 53, Section 5305: SpecialRates

Chapter 53, Sections 5331–5336:General Schedule pay rates.

Chapter 53, Sections 5361–5366:Grade and pay retention—This waiverapplies only to the extent necessary to(1) replace ‘‘grade’’ with ‘‘payband’; (2)allow demonstration project employeesto be treated as General Scheduleemployees; (3) provide that payretention provisions do not apply toconversions from General Schedulespecial rates to demonstration projectpay, as long as total pay is not reduced,and to reductions in pay due solely tothe removal of a supervisory payadjustment upon voluntarily leaving asupervisory position; (4) provide that anemployee on pay retention whoseperformance rating is ‘‘U’’ is not entitledto 50 percent of the amount of theincrease in the maximum rate of basicpay payable for the payband of theemployee’s position; and, (5) ensure thatfor employees of Payband V of the E&Soccupational family, payband retentionis not applicable and pay retentionprovisions are modified so that no rateestablished under these provisions mayexceed the rate of basic pay for GS–15,step 10 (i.e., there is no entitlement toretained rate). This waiver does notapply to ST employees unless theymove to a GS-equivalent position underthe demonstration project underconditions that trigger entitlement topay retention.

Chapter 55, Section 5545(d):Hazardous duty differential—Thiswaiver applies only to the extentnecessary to allow demonstrationproject employees to be treated asGeneral Schedule employees. Thiswaiver does not apply to ST employeesor employees in Payband V of the E&Soccupational family.

Chapter 57, Section 5753, 5754, and5755: Recruitment and RelocationBonuses, Retention Allowances andSupervisory Differentials—This waiverapplies only to the extent necessary toallow employees and positions underthe demonstration project to be treatedas employees and positions under theGeneral Schedule. This waiver does notapply to ST employees who continue tobe covered by these provisions, as

appropriate. Employees in Payband V ofthe E&S occupational family are treatedas ST employees for the purposes ofthese provisions.

Chapter 75, Section 7512(3): Adverseactions—This waiver applies only to theextent necessary to replace ‘‘grade’’ with‘‘payband’’.

Chapter 75, Section 7512(4): Adverseactions—This waiver applies only to theextent necessary to provide that adverseaction provisions do not apply to (1)conversions from General Schedulespecial rates to demonstration projectpay, as long as total pay is not reducedand (2) reductions in pay due to theremoval of a supervisory pay adjustmentupon voluntary movement to anonsupervisory position.

2. Title 5, Code of FederalRegulations:

Part 300.601–605: Time-in-Graderequirements—Restrictions eliminatedunder the demonstration.

Part 308.101 through 308.103:Volunteer Service—To the extent thatretired engineers/scientists can performvoluntary services.

Part 315.801 and 315.802:Probationary Period—Demonstrationproject employees in some occupationalfamilies will have extendedprobationary period.

Part 316.301: Term Appointments—Adding years to exceed 4.

Part 316.303: Tenure of TermEmployees—Demonstration allows forconversion.

Part 316.305: Eligibility for Within-Grade Increases.

Part 351.402(b): Competitive Areas—Demonstration establishes each separategeographic location of the MRDEC as aseparate competitive area.

Part 351.403: Competitive level—Tothe extent that payband is substitutedfor grade.

Part 351.504: Credit forPerformance—As it relates to years ofcredit.

Part 351.701: Assignment InvolvingDisplacement—To the extent thatemployees bump and retreat rights willbe limited to one payband except in thecase of 30% preference eligibles whichis a position equivalent to five GSgrades below the minimum grade levelof his/her payband.

Part 430 subpart B, PerformanceAppraisal for General Schedule,


Prevailing Rate, and Certain OtherEmployees: Employees under thedemonstration project will not besubject to the requirements of thissubpart.

Part 432: Modified to the extent thatan employee may be removed, reducedin band level with a reduction in pay,reduced in pay without a reduction inband level and reduced in band levelwithout a reduction in pay based onunacceptable performance. Alsomodified to delete reference to criticalelement. For employees who arereduced in band level without areduction in pay, Sections 432.105 and432.106(a) do not apply.

Part 432, Sections 104 and 105:Proposing and Taking Action Based onUnacceptable Performance.

Part 511: Classification Under theGeneral Schedule—To the extent thatgrades are changed to paybands, andthat white collar positions are coveredby paybanding.

Part 530, subpart C: Special salaryrates.

Part 531, subparts B, D, and E:Determining rate of basic pay, within-grade increases, and quality stepincreases.

Part 531, subpart F: Locality pay—This waiver applies only to the extentnecessary to allow demonstrationproject employees to be treated asGeneral Schedule employees, and basicrates of pay under the demonstrationproject to be treated as scheduledannual rates of pay. This waiver doesnot apply to ST employees whocontinue to be covered by theseprovisions, as appropriate. Employeesin Payband V of the E&S occupationalfamily are treated as ST employees forthe purposes of these provisions.

Part 536: Grade and pay retention—This waiver applies only to the extentnecessary to (1) replace ‘‘grade’’ with‘‘payband’; (2) provide that payretention provisions do not apply toconversions from General Schedulespecial rates to demonstration projectpay, as long as total pay is not reduced,and to reductions in pay due solely tothe removal of a supervisory payadjustment upon voluntarily leaving asupervisory position; (3) provide that anemployee on pay retention whoseperformance rating is ‘‘U’’ is not entitledto 50 percent of the amount of theincrease in the maximum rate of basicpay payable for the payband of theemployee’s position; and, (4) ensure thatfor employees of Payband V of the E&Soccupational family, payband retentionis not applicable and pay retentionprovisions are modified so that no rateestablished under these provisions may

exceed the rate of basic pay for GS–15,step 10 (i.e., there is no entitlement toretained rate). This waiver does notapply to ST employees unless theymove to a GS-equivalent position underthe demonstration project underconditions that trigger entitlement topay retention.

Part 550.703: Severance Pay—Thiswaiver applies only to the extentnecessary to modify the definition of‘‘reasonable offer’’ by replacing ‘‘twograde or pay levels’’ with ‘‘one bandlevel’’ and ‘‘grade or pay level’’ with‘‘band level’.

Part 550.902: Hazardous DutyDifferential—This waiver applies onlyto the extent necessary to allowdemonstration project employees to betreated as General Schedule employees.This waiver does not apply to STemployees or employees in Payband Vof the E&S occupational family.

Part 575, subparts A, B, C, and D:Recruitment Bonuses, RelocationBonuses, Retention Allowances andSupervisory Differentials—This waiverapplies only to the extent necessary toallow employees and positions underthe demonstration project covered bypaybanding to be treated as employeesand positions under the GeneralSchedule. This waiver does not apply toST employees who continue to becovered by these provisions, asappropriate. Employees in Payband V ofthe E&S occupational family are treatedas ST employees for the purposes ofthese provisions.

Part 752.401 (a)(3): Adverse Actions—This waiver applies only to the extentnecessary to replace ‘‘grade’’ with‘‘payband.’’

Part 752.401(a)(4): Adverse Actions—This waiver applies only to the extentnecessary to provide that adverse actionprovisions do not apply to (1)conversions from General Schedulespecial rates to demonstration projectpay, as long as total pay is not reducedand (2) reductions in pay due to theremoval of a supervisory pay adjustmentupon voluntary movement to anonsupervisory position.

Appendix A: Occupational Series byOccupational Family

I. Engineers & Scientists0801 General Engineer0806 Materials Engineer0808 Architecture0810 Civil Engineer0819 Environmental Engineer0830 Mechanical Engineer0850 Electrical Engineer0854 Computer Engineer0855 Electronics Engineer

0861 Aerospace Engineer0892 Ceramics Engineer0893 Chemical Engineer0896 Industrial Engineer0899 Student Trainee (Engr)1301 Physical Scientist1310 Physicist1320 Chemist1321 Metallurgist1515 Operations Research Analyst1520 Mathematician1529 Mathematician Stat1550 Computer Scientist

II. Technical and Business Support0028 Environ Protec Specialist0301 Data & Configuration

Management, Standardization0301 Misc Admin & Program0334 Computer Specialist0340 Program Manager0341 Administrative Officer0342 Support Services Spec0343 Mgmt/Prog Analyst0346 Log Mgt Spec0391 Telecommunications0560 Budget Analyst0802 Engineering Technician0809 Construction Rep0856 Electronics Technician1001 General Arts & Information1040 Language Specialist1082 Technical Information Writer1083 Technical Writer/Editor1102 Contract Specialist1150 Industrial Specialist1176 Building Manager1311 Physical Sciences Tech1410 Librarian (Phy Sci & Engr)1412 Technical Information Spec1499 Student Trainee1515 Operations Research Analyst

(Cost)1521 Mathematics Technician1670 Equipment Specialist1910 Quality Assurance Specialist

42001 General Supply SpecIII. General Support

0085 Guard0302 Messenger0303 Misc Clerk and Asst0305 Mail Clerk0312 Clerk-Stenographer0318 Secretary0326 Ofc Automation Clerk0344 Management Assistant0561 Budget Assistant1106 Procurement Clerk1411 Library Technician2005 Supply Technician

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Appendix C—Performance Elements

All employees will be rated against atleast the five generic performanceelements listed through ‘‘e’’ below.Technical competence is a mandatorycritical element. Other elements may beidentified as critical by agreementbetween the rater and the employee. Incase of disagreements, the decision ofthe supervisor will prevail. Generally,any performance element weighted 25or higher should be critical. However,only those employees whose dutiesrequire manager/leader responsibilitieswill be rated on element ‘‘f.’’Supervisors will be rated against anadditional critical performance element,listed at ‘‘g’’ below:

a. Technical Competence. Exhibitsand maintains current technicalknowledge, skills, and abilities toproduce timely and quality work withthe appropriate level of supervision.Makes prompt, technically sounddecisions and recommendations thatadd value to mission priorities andneeds. For appropriate occupationalfamilies, seeks and acceptsdevelopmental and/or specialassignments. Adaptive to technologicalchange. (Weight range: 15 to 50)

b. Working Relationships. Acceptspersonal responsibility for assigned

tasks. Considerate of others’ views andopen to compromise on areas ofdifference, if allowed by technology,scope, budget, or direction. Exercisestact and diplomacy and maintainseffective relationships, particularly inimmediate work environment andteaming situations. Always willing togive assistance. Shows appropriaterespect and courtesy. (Weight Range: 5to 15)

c. Communications. Provides orexchanges oral/written ideas andinformation in a manner that is timely,accurate and cogent. Listens effectivelyso that resultant actions showunderstanding of what was said.Coordinates so that all relevantindividuals and functions are includedin, and informed of, decisions andactions. (Weight Range: 5 to 15)

d. Resource Management. Meetsschedules and deadlines, andaccomplishes work in order of priority;generates and accepts new ideas andmethods for increasing work efficiency;effectively utilizes and properly controlsavailable resources; supportsorganization’s resource developmentand conservation goals. (Weight Range:15 to 50)

e. Customer Relations. Demonstratescare for customers through respectful,courteous, reliable and conscientiousactions. Seeks out and develops solid

working relationships with customers toidentify their needs, quantifies thoseneeds, and develops practical solutions.Keeps customer informed and preventssurprises. Within the scope of jobresponsibility, seeks out and developsnew programs and/or reimbursablecustomer work. (Weight Range: 10 to 50)

f. Management/Leadership. Activelyfurthers the mission of the organization.As appropriate, participates in thedevelopment and implementation ofstrategic and operational plans of theorganization. Develops and implementstactical plans. Exercises leadershipskills within the environment. Mentorsjunior personnel in career development,technical competence, and interpersonalskills. Exercises due responsibility oftechnical/acquisition/organizationalpositions assigned to them. (WeightRange: 0 to 50)

g. Supervision/EEO. Works towardrecruiting, developing, motivating, andretaining quality team members; takestimely/appropriate personnel actions,applies EEO/merit principles;communicates mission andorganizational goals; by example,creates a positive, safe, and challengingwork environment; distributes work andempowers team members. (WeightRange: 15 to 50)

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federal register / vol. 62, no. 124 / friday, june 27, 1997 / notices

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