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THE NATIONAL SECURITY PERSONNEL SYSTEM 

AND PERFORMANCE MANAGEMENT IN THE 

FEDERAL GOVERNMENT 

HEARING 

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE, AND THE 

DISTRICT OF COLUMBIA SUBCOMMITTEE 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JUNE 9, 2010 

Available via http://www.gpoaccess.gov/congress/index.html 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 


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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

ROLAND W. BURRIS, Illinois 

EDWARD E. KAUFMAN, Delaware 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

LINDSEY GRAHAM, South Carolina 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

DANIEL K. AKAKA, Hawaii, Chairman 

CARL LEVIN, Michigan 

MARY L. LANDRIEU, Louisiana 

ROLAND W. BURRIS, Illinois 

EDWARD E. KAUFMAN, Delaware 

GEORGE V. VOINOVICH, Ohio 

SCOTT P. BROWN, Massachusetts 

LINDSEY GRAHAM, South Carolina 

LISA M. POWELL, Staff Director 

BRYAN G. POLISUK, Counsel 

JENNIFER A. HEMINGWAY, Minority Staff Director 

SEAN M. STIFF, Minority Professional Staff Member 

AARON H. WOOLF, Chief Clerk 


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C O N T E N T S 

Opening statements: Page 

Senator Akaka .................................................................................................. 1 

Senator Voinovich ............................................................................................. 2 

WITNESSES 

WEDNESDAY, JUNE 9, 2010 

John H. James, Jr., Director, National Security Personnel System Transition 

Office, U.S. Department of Defense .................................................................... 4 

Charles D. Grimes III, Deputy Associate Director for Employee Services, 

U.S. Office of Personnel Management ................................................................ 6 

Gregory J. Junemann, President, International Federation of Professional 

and Technical Engineers, AFL-CIO, CLC .......................................................... 16 

Patricia Niehaus, National President, Federal Managers Association ............... 18 

Patricia Viers, President, Local 1148, American Federation of Government 

Employees, AFL-CIO ........................................................................................... 20 

ALPHABETICAL LIST OF WITNESSES

Grimes, Charles D. III: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 44 

James, John H. Jr.: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 29 

Junemann, Gregory J.: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 47 

Niehaus, Patricia: 

Testimony .......................................................................................................... 18 

Prepared statement .......................................................................................... 57 

Viers, Patricia: 

Testimony .......................................................................................................... 20 

Prepared statement by John Gage, President ................................................ 70 

APPENDIX 

Background .............................................................................................................. 76 

Howard Risher, Ph.D., representative of HRSolutions, Wayne, PA, prepared 

statement .............................................................................................................. 80 

Questions and responses for the Record: 

Mr. James ......................................................................................................... 86 


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THE NATIONAL SECURITY PERSONNEL 

SYSTEM AND PERFORMANCE MANAGEMENT 

IN THE FEDERAL GOVERNMENT 

WEDNESDAY, JUNE 9, 2010 

U.S. SENATE,

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT

MANAGEMENT, THE FEDERAL WORKFORCE,

AND THE DISTRICT OF COLUMBIA,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:30 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Daniel K. Akaka, 

Chairman of the Subcommittee, presiding. 

Present: Senators Akaka and Voinovich. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. This hearing will come to order. 

Good afternoon. Welcome and aloha. I would like to thank you 

all for joining us here today for this hearing examining the repeal 

of the National Security Personnel System and Performance Management in the Federal Government. 

The Fiscal Year 2010 National Defense Authorization Act 

(NDAA) repealed the National Security Personnel System (NSPS) 

at the Department of Defense (DOD), our Nation’s largest Federal 

agency. Since its inception, NSPS was plagued by employee distrust and a lack of transparency. As one of three Senators to vote 

against NSPS in 2003, I was pleased that the system was repealed. 

Federal employees, especially those charged with defending our 

Nation, are entitled to a personnel system that is fair and transparent. 

As a result of the appeal, approximately 226,000 DOD employees 

must be converted out of NSPS by January 1, 2012. Most of these 

employees will transition back to the General Schedule (GS) system. The NDAA also requires that no DOD employee suffer any 

loss of pay as a result of this transition process. 

Although DOD has until 2012 to complete this transition, DOD 

estimates that the large majority of employees will be removed 

from NSPS by the end of 2010. As of today, more than 50,000 DOD 

employees have already transformed out of NSPS. DOD should be 

applauded for establishing a NSPS transition office and starting 

the transition quickly. 


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However, I am concerned with certain issues related to the transition. For instance, DOD has reported that it plans to place a 

large number of employees who received large raises under NSPS 

on pay retention. As a result, these employees will receive half of 

their annual pay increase until the General Schedule catches up 

with their pay. I understand that there is significant concern about 

this issue, especially from employees approaching retirement, and 

I look forward to hearing from our witnesses on it. 

In addition to repealing NSPS, the NDAA provided DOD, in coordination with the Office of Personnel Management (OPM), with 

authority to create a new performance management system for 

DOD employees. OPM has also indicated that it may seek to implement a new performance management system governmentwide. I 

am pleased that DOD is required to involve employees and labor 

organizations in the design and implementation of this system. 

I am also pleased that the law requires that the new system be 

fair, credible and transparent, that both supervisors and employees 

be trained on the system, and that supervisors receive additional 

training on performance management and motivating employees, 

that employees receive formal and on-the-job training and mentoring to help their performance, and that other transparency and 

accountability safeguards be built into the system. 

I believe that NSPS was ultimately unsuccessful because DOD 

did not adequately seek employee input or share information with 

stakeholders. The success of any large-scale agencywide change depends largely on acceptance and understanding by employees and 

supervisors. We must all keep this in mind as we consider significant performance management changes for both DOD and throughout the Federal Government. 

I look forward to hearing from DOD on its plans to move forward 

as well as other witnesses’ input on how performance management 

systems at DOD and governmentwide should be structured. 

With that, I will ask my good friend, Senator Voinovich, for any 

opening remarks that he may have. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. Thank you, Mr. Chairman, and I am really 

pleased that you are having this hearing today because the NSPS 

system was something that I worked on for 4 or 5 years. I will say 

this, that after looking into what the alternative is, it is much better than I originally anticipated. 

That being said, NSPS was the most ambitious effort yet at improving the way the Federal Government manages and rewards its 

employees. Beginning in 2003, I spent much time and effort working, along with colleagues Senators Collins, Levin and John Warner, to get the system right. 

I remember going over to the Department of Defense and saying, 

you are going too fast. Slow down. Take your time. Make sure the 

training is there because you cannot do this unless you have the 

proper training. 

In many ways, this work required Congress to force the Department to make course corrections. For instance, in response to 

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gress established a Meet and Confer requirement to provide for 

stakeholder input. 

Congress also worked to slow down implementation, to transform 

the System’s rollout into an event-driven process rather than one 

that followed arbitrary timelines. A lengthier implementation period allowed the Department to incorporate lessons learned for new 

classes of DOD employees when their time came to join NSPS. As 

a matter of fact, Senator Akaka and I had a hearing out in his 

wonderful State of Hawaii with some folks to see how NSPS was 

being cascaded throughout the Country. 

Unfortunately though, bipartisan good faith efforts in Congress 

were not matched by what I consider similar contributions from 

important stakeholder groups. For example, shortly after the Department unveiled the NSPS final rule, I asked a Federal labor 

union to provide me with a list of 10 improvements they would like 

to see made to NSPS. Topping the list I received in return was a 

proposal to allow bargaining over pay in NSPS. As my colleagues 

well know, pay has never been subject to bargaining among Executive Branch agencies. 

When coupled with similar experiences like the disappointing 

participation of various groups during the Meet and Confer process, 

I could only conclude that some were never interested in seeing 

NSPS succeed. The interesting thing is that NSPS never did get 

cascaded to members of the unions. It was all non-union members 

that were involved in the System. 

Now I do not mean to suggest that NSPS problems can be attributed solely to early and prolonged opposition from certain quarters. 

Very real and important implementation flaws existed during 

NSPS’s short life including pay disparities correlated with race, 

gender and job assignment. It was imperfect. 

But after only a few years of implementation, the solution to 

these flaws should not have been the wholesale repeal pursued by 

Congressional Democrats and the Obama Administration. Rather, 

increased resources should have been dedicated to training managers and supervisors in properly completing performance appraisals and in developing oversight mechanisms to discipline the use 

of pay pool funds. 

I understand the Fiscal Year 2010 National Defense Authorization Act provides the Department with certain personnel flexibilities in an effort to retain some of the positive features of NSPS. 

Quite frankly, Mr. Chairman, as I mentioned, I was not aware of 

those. 

Though I look forward to today’s discussion about these authorities, I am not optimistic that this intended capture will occur because already we see past patterns being repeated. In early March, 

the Department of Defense NSPS Transition Office invited 81 

stakeholders to a conference intended to be held in my hometown, 

Cleveland, Ohio in mid-April. That meeting was promptly canceled 

though after certain stakeholder groups objected to the ‘‘short notice’’ provided for this conference and because of other alleged concerns about the meeting’s agenda. The forum has yet to be rescheduled. 

If the Department of Defense cannot even assemble a discussion 

group on possible uses for these new personnel flexibilities, I hold 


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1The prepared statement of Mr. James appears in the Appendix on page 29. 

little hope that the Department will receive the level of constructive dialogue and cooperation necessary to craft a reasonable system for submission to Congress by the October deadline. 

Mr. James, you have a difficult task ahead of you. I wish you 

luck. 

There is one positive note on the performance management horizon though. I am hopeful that Director Berry, who unfortunately 

cannot join us today, will continue to work toward his goal of overhauling the way the Federal Government improves employee performance. I, for one, think Director Berry gets it. Remarks delivered by Director Berry last November at the Maxwell School of 

Syracuse University accurately capture the plight of an ambitious 

Federal employee under the present performance management system and, more importantly, what is at stake in this discussion. 

According to the Director, and this is a quote—I will be finishing 

up, Mr. Chairman—‘‘Too often you will run into an HR system and 

culture that favors red tape inertia over initiative. You will find a 

lot of extra effort may get you a little more reward, but not that 

much. So you will be disheartened. You will either settle for a slower pace or you will get restless and leave. If that happens, everyone 

loses.’’ 

So, Mr. Chairman, I am looking forward to this hearing today. 

Thank you very much for holding it. 

Senator AKAKA. Thank you very much, Senator Voinovich. 

I would like to now introduce our first panel, and again it is my 

pleasure to welcome you to this hearing: John James, Jr., Director 

of the NSPS Transition Office at the Department of Defense and 

Chuck Grimes, Deputy Associate Director of Employee Services at 

the Office of Personnel Management. 

As you know it is the custom of this Subcommittee to swear in 

the witnesses, and I will ask you both to stand and raise your right 

hands. 

Do you solemnly swear that this testimony you are about to give 

this Subcommittee is the truth, the whole truth and nothing but 

the truth, so help you, God? 

Mr. JAMES. I do. 

Mr. GRIMES. I do. 

Senator AKAKA. Thank you very much. Let the record show that 

the witnesses answered in the affirmative. 

I want you both to know that although your remarks are limited 

to 5 minutes, your full statements will be included in the record. 

Mr. James, please proceed with your statement. 

TESTIMONY OF JOHN H. JAMES, JR.,1 DIRECTOR, NATIONAL 

SECURITY PERSONNEL SYSTEM TRANSITION OFFICE, U.S. 

DEPARTMENT OF DEFENSE 

Mr. JAMES. Thank you, Mr. Chairman. 

Mr. Chairman, Senator Voinovich, thank you for the opportunity 

to speak to you today about implementing the repeal of the National Security Personnel System and acting on the personnel authorities provided to DOD in the National Defense Authorization 

Act of 2010. 


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Transitioning employees from NSPS to the appropriate statutory 

non-NSPS pay and personnel system is a high priority for the Department. I will talk about that first. 

When we began the transition process, there were approximately 

226,000 employees converted by NSPS. Approximately 75 percent 

of our NSPS workforce will transition to the General Schedule (GS) 

system by September 30, 2010. 

Currently, more than 53,000 employees have been transitioned 

from NSPS to the GS system. Of that number, approximately 71 

percent received a pay increase with an average salary increase of 

close to $1,400 per year. Another 8 percent remained at the same 

rate of pay. The remaining 21 percent of transition employees were 

placed on pay retention, which I will discuss in a few moments. 

The Department did not convert bargaining unit employees into 

NSPS. However, some employees under NSPS exercised their 

rights and organized into bargaining units represented by labor 

unions. As a result, 27 bargaining units were formed, covering 913 

NSPS bargaining unit employees. 

In some cases, unions, after receiving notice of pending transition, simply requested some information on transition issues and 

did not seek negotiations. In other cases, requests to bargain were 

received, and management is honoring its collective bargaining obligations. As of this date, half of the bargaining unit employees 

have transitioned from NSPS. 

Reclassifying NSPS positions to the General Schedule is critical 

to a successful transition. NSPS is fundamentally different from 

the General Schedule system as each pay band is wide and encompasses a broad range of duties and responsibilities found in several 

grades of the General Schedule system. Under the governmentwide 

GS classification system, duties and responsibilities are tightly defined in 15 discrete grades. Each DOD component has put in place 

a process to ensure that position descriptions identify the major duties and responsibilities of positions, and are accurately classified. 

With roughly 170,000 NSPS employees rejoining 320,000 General 

Schedule employees whose jobs were not under NSPS, we are 

mindful that governmentwide General Schedule pay and personnel 

system rules and standards must be applied equitably. 

NDAA 2010 requires that employees suffer no loss of, or decrease 

in, pay due to termination of NSPS or their transition to the statutory pay and personnel system that last applied or that would have 

applied if NSPS were never put in place. To accomplish this, many 

employees are being placed on pay retention. 

Pay retention is a valuable safeguard for NSPS transition and for 

many other situations like reductions in force due to base realignments and closures. In addition, the NDAA language gives added 

protection to transitioning NSPS employees whose salaries may be 

higher than what a GS employee can earn. 

Because employees on pay retention are being paid at a higher 

rate than is applicable to the duties of the position they hold, the 

pay retention law and regulation are designed to normalize their 

salaries over time by aligning their pay with the grade of the duties performed. By law, the employee on pay retention receives 50 

percent of the annual governmentwide pay increase. Each time a 

GS annual adjustment occurs, the employee’s pay comes closer to 


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1The prepared statement of Mr. Grimes appears in the Appendix on page 44. 

being appropriate for the grade level of the work that he or she 

performs. 

Pay retention allows the Department to be in conformance with 

the law and to protect the employee’s pay. 

We have set up a NSPS transition Website to publicize up-todate information on the training and transition to the GS system 

and performance management basics. The Website is available to 

everyone including the general public. 

In addition, DOD components all have robust communications 

campaigns in preparation for transition from NSPS to GS, including town hall meetings, leadership and workforce briefings, and 

video teleconferences. I have personally accepted invitations to 

speak on NSPS transition at several workforce functions around 

the Country over the past 3 months. Some organizations are providing individual counseling to employees with concerns, and all report that employees are being told about available training, and encouraged to ask questions of their supervisors and local human resource offices. 

Fulfilling the NDAA’s provisions for developing and implementing a new DOD-wide performance management system and 

hiring process requires full engagement amongst management, the 

workforce, unions, and others with vested interest like OPM. The 

Department is meeting with labor organizations to discuss a way 

forward on designing a new performance management system and 

hiring process. One significant result of these meetings is our work 

with the labor unions in designing a conference where management 

and labor attendees will come together and begin a series of open 

and structured discussions to gather different views regarding options for the new authorities. 

While this may take a little longer, it is my intent that the 

design process is transparent and that employees and other interested parties participate in, and be kept informed about, the development and deployment of new programs. Training will be developed concurrently with the design of the new authorities and made 

available to all. 

In closing, let me assure you that the Department is committed 

to an open and transparent process for both the NSPS transition 

and the development of the DOD-unique performance management 

and hiring authorities provided in NDAA 2010. 

Thank you for your ongoing support of our DOD civilian workforce and providing me the opportunity to share with you our experiences as we implement the repeal of NSPS and undertake the design of the NDAA 2010 personnel authorities. 

I welcome your questions. Thank you. 

Senator AKAKA. Thank you very much, Mr. James, for your testimony. Mr. Grimes, please proceed. 

TESTIMONY OF CHARLES D. GRIMES III,1 DEPUTY ASSOCIATE 

DIRECTOR FOR EMPLOYEE SERVICES, U.S. OFFICE OF PERSONNEL MANAGEMENT 

Mr. GRIMES. Chairman Akaka and Ranking Member Voinovich, 

on behalf of the Office of Personnel Management, thank you for the 


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opportunity to participate in this hearing to examine the 

transitioning of employees from the National Security Personnel 

System back to the General Schedule classification and pay system, 

as well as performance management in the Federal Government. 

As you know, the National Defense Authorization Act for Fiscal 

Year 2010 repealed NSPS and required that employees covered by 

the system be moved back to their former personnel systems by 

January 1, 2012. For most employees, this means they will be returned to the General Schedule classification and pay system. This 

transition is proceeding on schedule. The Department of Defense 

has said it expects around 75 percent of NSPS employees to be 

back under the General Schedule by the end of the first year. 

You asked me specifically to discuss pay retention and position 

classification after the transition. When employees are moved back 

to the General Schedule from NSPS, DOD will classify all positions 

in accordance with classification standards and guidance issued by 

OPM. The Department will apply the same criteria in classifying 

the positions of transitioning NSPS employees that agencies use 

when classifying any Federal job. 

While OPM’s classification standards are designed to provide 

consistency in the way work is classified across the government, individual contributions within a job may affect its classification over 

time. It is possible, for example, that some transitioning employees 

will return to GS positions that will be classified at a higher grade 

level than the positions they held before becoming covered by 

NSPS. These positions may now require more knowledge, more 

complex work or less supervision. These factors are routinely taken 

into account in classifying Federal jobs. 

At the same time, we recognize that there are many employees 

who earn salaries under NSPS that substantially exceed what they 

would be receiving had they remained under the General Schedule. 

Under the law, when NSPS employees are placed in positions for 

which the maximum rate of pay is lower than their NSPS salary, 

they will continue to receive their NSPS salary as a retained pay 

rate. 

However, when GS pay rates are adjusted each January, these 

employees will receive 50 percent of the pay increase, including locality pay. This 50 percent increase will continue until the maximum pay for the employees’ grade meets or exceeds their retained 

pay rate. At that point, they will be placed in the highest step of 

their grade and will begin receiving 100 percent of the annual pay 

increase. 

The entitlement to retained pay eases these employees’ transition 

back to the General Schedule and ensures that they will not experience a precipitous drop in pay when they return to the General 

Schedule system. This is a significant benefit. 

As of December 2009, about 5,100 GS employees were on retained pay rates. Their average salaries were about $6,600 over the 

maximum rate of the grade they would have otherwise been in. 

Meanwhile, Mr. Chairman, as you noted in your invitation to 

this hearing, the NDAA also provided the Department of Defense 

with certain personnel flexibilities. In particular, you asked us to 

comment on the implementation of the authority for the Secretary, 

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ance appraisal and hiring systems for the Department. Although 

DOD has not yet approached OPM about a proposal for how this 

authority might be exercised, we have worked with DOD, among 

other agencies, in developing our governmentwide hiring reform 

initiative which was recently launched by the President. We at 

OPM are very grateful for DOD’s participation in helping identify 

and implement needed changes in the hiring process. 

Finally, Mr. Chairman, you asked us about our plans for changes 

to the Government’s Performance Management System. Director 

Berry has been talking with various stakeholders and gathering 

their feedback on different approaches to governmentwide performance management reform. However, we have not yet formulated 

any specific plans in this regard, so it would be premature for me 

to discuss a particular proposal at this time. 

Thank you again for the opportunity to discuss these matters 

with you. I would be happy to respond to any questions you may 

have. 

Senator AKAKA. Thank you very much, Mr. Grimes. 

I have questions for both of you on the panel. As you know, the 

NDAA requires DOD to coordinate with OPM in designing any new 

performance management system. I believe that OPM’s human resource expertise will be helpful to DOD in establishing a fair and 

credible system. 

I would like to hear from both of you about your agency’s respective role in this process and how well the coordination is working. 

So let me first call on Mr. James. 

Mr. JAMES. Thank you, Mr. Chairman. I have a number of committees where OPM has a sitting member with the committees. 

Every move that we make, OPM works with us hand in hand. 

We have had the opportunity during the transition to ask OPM 

for waivers: One, a time and grade waiver, another was a waiver 

for employees that are on term appointments. The response has 

been very rapid, very quick from OPM, and we got an affirmative 

on both waivers. That allowed us to address employees’ concerns 

and to ease the process of the transition. 

For performance management, we have been working very closely with OPM. I have met with Director Berry twice, and working 

with his staff. 

Any process that we put in place, including our design teams, 

using the authorities, it is our intent that OPM would be a sitting 

member on all design subcommittees. Thank you. 

Senator AKAKA. Thank you. Mr. Grimes. 

Mr. GRIMES. Thank you. As Mr. James noted, we have been 

working with DOD whenever possible. In fact, Senator Voinovich, 

we were invited to that meeting out in Cleveland that did not take 

place. So I have every confidence that as these authorities begin to 

be developed that we will be working hand in hand with DOD. 

Senator AKAKA. Thank you. 

Mr. James, as you know, the establishment and implementation 

of NSPS at DOD was a polarizing issue. Please tell us what you 

believe the successes and failures of NSPS to be and what lessons 

can be applied as DOD considers the establishment of a new performance management system. 


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Mr. JAMES. Thank you, Mr. Chairman. Prior to this job, I was 

a career civil servant, and I held a line job where I implemented 

NSPS. Prior to that, I grew up under the General Schedule system. 

I understand the challenges and the advantages of both systems. 

I think one of the advantages of NSPS is that it provided a clear 

line of sight from the employees and employees’ objectives to the 

priorities of the organization. I believe that the employees understood how they fit into the mission of the organization, which was 

critical to setting objectives and to establishing their performance 

objectives. 

I think one of the challenges as we move forward really is engaging all of the stakeholders that have a concern about a new performance management system and hiring flexibilities. To that end, 

it is my intent to have an open and transparent process, inviting 

all stakeholders, including our labor partners, in developing the 

new authorities. 

Senator AKAKA. Thank you. Mr. Grimes, in your testimony, you 

state that OPM has not yet formulated specific plans with respect 

to governmentwide performance management reform. What steps 

has OPM taken thus far in considering this issue, and do you believe OPM will release a proposal in the near term or wait until 

after DOD designs its new system? 

Mr. GRIMES. Thank you, Mr. Chairman. We have taken a number of steps in terms of talking to stakeholders. We have talked to 

various employee groups. We have talked to unions. In fact, we 

have talked to you all about some possibilities. So I think it is fair 

to say that we are in the information gathering stage, looking at 

all the options that are out there before we develop a proposal. 

I guess I would be hard pressed to say if I think that we will 

have a proposal ready this term or next, but we are moving forward. Thank you. 

Senator AKAKA. Thank you. 

Mr. Grimes, what are the key elements of a fair, transparent and 

effective performance management system, and what lessons can 

OPM learn from NSPS as it refines its performance management 

agenda? 

Mr. GRIMES. I think one of the lessons that we can carry away 

from NSPS is that they had a terrific performance management 

system. It was quite transparent. It had an efficient automated appraisal system that drove alignment between the goals of the employees and the goals of the organizations. 

The performance plans are focused on achieving results. DOD 

was able to track whether employees received progress reviews. 

Routine progress reviews are an essential part of a good performance management system. 

Supervisors were held accountable for appraising employees and, 

again, that was tracked. 

Extensive training on the performance management system was 

given. 

The plans had a good balance between results and competencies—not only what you got done, but how you got your work 

done. 

And the agency addressed organizational performance in relation 

to individual performance. 


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All of those are essential to a transparent and good performance 

appraisal system, and DOD did all those things under NSPS. 

Senator AKAKA. Thank you very much. 

Mr. James, one of the lessons we learned from the implementation of NSPS is that communication between supervisors and employees is essential to the success of any new performance management system. As DOD develops its new system, what is DOD doing 

to ensure that supervisors have the skills to effectively seek input 

and communicate changes to employees? 

Mr. JAMES. Mr. Chairman, we would agree that one of the advantages under NSPS is that we forced communications between 

the employees and supervisors, especially the first-line supervisor 

which really is the transition between leadership and the rank and 

file. 

Our plan is to continue with that and to train first-line supervisors in the areas of supervisor responsibilities, how to engage employees, how to measure performance for the entire organization 

and the opportunities that are available for supervisors to reward 

employees for superior performance. We believe that is critical to 

moving our organization forward. 

Senator AKAKA. Thank you very much. Senator Voinovich, your 

questions please. 

Senator VOINOVICH. I would like to comment that we are talking 

about 225,000 people in the process that started in March and get 

it all done by October 1 of this year, I do not know how you can 

do it and do it right. So that is my first comment. I just cannot believe it. 

It is the same thing as when I got a hold of the Department of 

Defense and said you guys are going too fast, when I talked to Secretary Rumsfeld about it. I said you cannot do this. 

So I would like your comment on how are you doing and how 

many classification appeals have you had from people that have 

been shifted back to the General Schedule. 

In the second panel we are going to hear that the General Schedule system is sufficient for proper performance management. I 

would like you to comment on that issue. 

So let’s start out with the first question, Mr. James. 

Mr. JAMES. Thank you, Senator Voinovich. It is the Department’s 

intent to transition approximately 75 percent of the 226,000 employees that are presently in NSPS primarily to the General Schedule system by September 30, 2010. 

We will accomplish this by engaging all the components—Navy, 

Air Force, Army Marine Corps, and the Fourth Estate which are 

DOD activities—and making sure that: 

One, that the information technology (IT) capability is in place 

to accomplish the transition. I have visited the Human Resources 

Business, Information, and Technology Solutions Office in San Antonio, Texas where the performance management system redesign 

took plae. They are on schedule. The information technology process capability was in place on April 25. 

Also to ensure that they have the classification capability in 

place, they do. 

And that there is minimal impact to the mission of the organization and employees. 


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We have all those things in place. I have approved the components’ transition plans, and they are proceeding accordingly. As of 

May 23, we have transitioned 53,000 employees out of NSPS primarily to the General Schedule system. We have had great success 

in that process. 

At the end of June, we will transition likely another 15,000 employees out of NSPS. 

Senator VOINOVICH. Have you had any appeals at all during that 

period? 

Mr. JAMES. Sir, there is an appeals process for employees. I will 

tell you that my office has received e-mail from employees. We direct those inquisitions, inquiries to the components, and the employees are answered personally. We have communicated to employees that there is a process to appeal their classification. 

Senator VOINOVICH. OK. How about the other question? We got 

into NSPS in the beginning because it was decided that Department’s additional flexibilities were justified as being necessary to 

confront a new security environment that required the civilian 

workforce to become more agile, adaptable, and responsive. So, obviously, DOD felt that the General Schedule was not as good as it 

ought to be in terms of getting the kind of performance that you 

would like to get from people, including not letting a lot of them 

know exactly where they stood in terms of their job performance. 

I guess the real answer to this is do you both think that the additional flexibilities that were included in the FY 2010 NDAA are 

necessary for you to have a situation where you have a system that 

will inspire your people to the kind of performance that you would 

like to see? 

Mr. GRIMES. The General Schedule has some performance friendly features. The difficulty is that it tends to recognize and reward 

experience at the expense of performance. I think the flexibilities 

that you have given in NDAA, I think, will go a long ways towards 

helping adjust the balance between experience and performance. 

But the General Schedule is not immune from recognizing performance. We can give quality step increases. The problem there is 

that those are fairly large ‘‘3 percent’’ increases. In the economic 

environment that we are in, they dwarf even the General Schedule 

increases in January. So there is an awful lot of emphasis on experience, when you get those within-grades every year or every 2 or 

3 years. 

Quality step increases are not given all that often, and they are 

fairly inflexible. You either get one or you do not, and in fact they 

are not used very much. 

So it is probably a combination of structure and implementation 

that causes the problem with recognizing performance under the 

General Schedule system. 

Senator VOINOVICH. Thank you. 

It is my understanding that supposedly the new system is to be 

standing up by October 28 of this year, and it is my understanding 

that no specific discussions have taken place on use of the Department’s new personnel flexibilities. The question I have is will the 

Department be able to meet this October deadline or will an extension be necessary? 


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Mr. JAMES. Sir, the Department intends to make a report to Congress by October. We will not have a system designed, and the regulations written and in place, by October. 

We have engaged some stakeholders, and we are beginning the 

discussion. I put together an organization to address the individual 

authorities that have been authorized in NDAA 2010. So we are 

working hard to do that. 

I believe the job that I am charged to do is to look at the General 

Schedule system and to determine if there are flexibilities that I 

need or I think that I need in conjunction with our stakeholders, 

to provide the flexibilities to incentivize today’s workforce. 

Senator VOINOVICH. Well, I would say that I would take your 

time and do it right. 

Mr. JAMES. Yes, sir. 

Senator VOINOVICH. Mr. Chairman. 

Senator AKAKA. Thank you very much, Senator Voinovich. 

Mr. James, I understand that research suggests that NSPS had 

a discriminatory impact on racial minorities with respect to performance ratings and payouts. I know that you have focused on fostering diversity and equal opportunity throughout your career in 

the Navy. I would like to know what steps you will take to ensure 

that any new performance management system at DOD is fair to 

all employees. 

Mr. JAMES. Mr. Chairman, I have not had a chance to review all 

of the data out of NSPS. I am in the process of doing that as the 

data comes in. 

Senator AKAKA. Thank you. 

Mr. JAMES. My sense of what has occurred is we need to go develop a process in conjunction with many stakeholders that allows 

us to view this from many points. The team that develops the new 

process using the new authorities needs to be diverse. The diversity 

of that organization will help us address the concerns that you 

mentioned. 

But I also believe that the deeper concern really fosters around 

mentoring where employees, especially new employees, are positioned in the organization, the opportunities that new employees 

have, how they are mentored and the opportunities that they see 

for promotion. In conjunction with the new authorities, it is important that we, as leaders and supervisors, meet with employees and 

get them to understand that there are opportunities in the Department of Defense and that we will reward superior performance. 

Senator AKAKA. Mr. James, your testimony states that so far 21 

percent of DOD employees transitioned from NSPS have been 

placed on pay retention. Do you know how many NSPS employees 

are expected to be placed on pay retention overall and the GS levels of these employees? 

Mr. JAMES. Sir, we have not made a projection of the number of 

employees that will be on retained pay. I can tell you as of today— 

data I have as of May 23, 2010—there have been approximately 

53,000 employees transitioned out of NSPS. Of those 53,000, approximately 11,000 employees are on retained pay for various reasons. 

Senator AKAKA. Thank you. 


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Mr. Grimes, in your testimony, you note that employees placed 

on pay retention benefited from a pay increase under NSPS and 

will receive higher pay than if they had remained under the GS 

system. However, there may be morale and retention concerns at 

DOD if a large number of employees who were receiving large 

raises yearly will receive only half raises in future years. How do 

you respond to these concerns? 

Mr. GRIMES. Mr. Chairman, I agree that it is a possible concern 

for many employees who are transitioning out of NSPS into the 

General Schedule. They have got kind of a double whammy, if you 

will. They are not getting those large performance-based increases 

that they might have been used to. And now January comes 

around, and they will receive half the increase everybody else does. 

However, they are bright employees, and if they think about it 

for a second, they will realize they are keeping that money that 

they earned under NSPS. It counts towards their high-3 average 

salary for retirement purposes. They are able to use it to contribute 

to the Thrift Savings Plan (TSP). It would count for their life insurance. It has enormous benefits that they have earned, and they get 

to keep that. So I think that if given a choice between getting half 

of the pay increase in January and keeping their salaries, they 

would make a good choice. 

Pay retention is a very substantial benefit, and 11,000 people are 

already benefiting from it. 

Senator AKAKA. Thank you. 

Mr. James, I understand that approximately 25 percent of NSPS 

employees will transition to pay and personnel systems other than 

the GS system beginning next year. Can you please discuss how 

these personnel systems differ from the GS system and the challenges to moving to these systems? 

Mr. JAMES. Thank you, Mr. Chairman. The 25 percent of employees that will not be transitioning out of NSPS by September 30, 

2010 really revolves around categories of employees that the NDAA 

specifically makes allocations for. One of them is Science and Technology Reinvention Laboratory. The law calls out specific organizations that will transition to that personnel management system. 

Prior to transitioning into the General Schedule system, there 

were employees who were in the Acquisition Demonstration 

Project. They transitioned from the Acquisition Demonstration 

Project into NSPS. The law dictates that they have to transition 

back to the personnel management system that they transitioned 

out of prior to NSPS. 

Also, there is an allocation that is not in the NDAA but we have 

talked about in my office, which is the health care professionals. 

Physicians, dentists and other health care professionals will develop a new personnel management system under Title 38. When 

NSPS came along, they were subsumed by NSPS, and NSPS had 

the authorities that allowed us to properly compensate physicians 

and dentists. As they transition out of NSPS, they are now reviewing the Title 38 authorities and will develop a system under Title 

38. 

Also, there are employees that are affected by Base Realignment 

and Closure (BRAC), and there are employees that will transition 


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back to an alternative personnel system in the Department of the 

Navy. 

Senator AKAKA. Thank you. 

Mr. Grimes, your testimony mentions that the NSPS Transition 

Office’s Website has been helpful to employees in understanding 

the transition process. Has OPM participated in the effort to inform employees about the transition process, particularly regarding 

how GS classifications are done and the right to appeal position 

classifications? 

Mr. GRIMES. Mr. Chairman, I understand that DOD developed a 

GS 101 learning tool because some of these folks in NSPS, while 

they are going back to the General Schedule, never were in the 

General Schedule to begin with. They came in under NSPS. I am 

certain that we helped them with that. 

I do not know that there is something specific on our Website 

about NSPS to GS conversions, but I can check and let you know. 

Senator AKAKA. Thank you very much. 

Mr. GRIMES. Thank you. 

Senator AKAKA. Senator Voinovich. 

Senator VOINOVICH. I really appreciated both of your descriptions 

of NSPS. Mr. James, you experienced it. Mr. Grimes, you are very 

familiar with it. Thank you for your comments in regard to it. 

It is interesting that with 225,000 people, I think that about 913 

wanted to create labor organizations after joining NSPS. That 

would indicate to me that a lot of people in the Department felt 

that the system that was put in place was relatively fair, understanding that any time you have a new system there are things 

that need to be worked out in the systems, as contrasted from the 

Government Accountability Office (GAO) where they went to a performance evaluation system, and there were so many people that 

were upset about it that they formed a labor union because of the 

fact they were unhappy with the system. 

So I think that the people in the Department of Defense that 

were responsible for administering NSPS should be given a real 

pat on the back for a job well done. 

And I do not think Gordon England will ever get any credit for 

it, but he was the one that was the quarterback on it, and I think 

the man really knew what he was doing. He really cared about employees, and he really wanted to try and get the job done the best 

way that it could possibly be done. 

Mr. James, I recently met with a senior civilian leader who was 

concerned that the use of the retained pay status could result in 

his top performers leaving the Department to work for another organization that recognizes and rewards their performance. 

Now Mr. Grimes did a pretty nice job when he answered Senator 

Akaka’s question, that a lot of them can say, well, you got it. 

I mean I went through this when I was mayor. I said you are 

overpaid, and they did not like it. 

That means I am not going to get a pay increase? 

No, you are not. But I said enjoy the fact that you have been 

overpaid. 

So I think maybe that is right, and with the labor market right 

now maybe the fact of the matter is that a lot of people will stick 

around. But I cannot help but think that continued attention 


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should be given to this situation because you have got some really 

outstanding people, and I would hate like heck to lose them. 

The other thing where we are at right now that is of concern to 

me—and Senator Akaka and I just sent a letter off to Mr. Zients— 

is that we have this wonderful opportunity to hire some people for 

the Federal Government that we really need, that under ordinary 

circumstances we might not be able to get. I just wonder, as we go 

after these people, if they have a system that does not recognize 

their performance that they may decide: I do not want to stay; I 

want to go to an organization that rewards my performance. 

Most private organizations have pay-for-performance. They go 

through the performance evaluation process and so forth. So what 

we do in the Federal Government, to a degree, is unlike what they 

do in the private sector. 

So I guess the only suggestion I have is that these new flexibilities that you were given under the law, which frankly I was not 

familiar enough with, could be very important at this time in terms 

of the Federal Government’s competitiveness. Even though I say 

take your time, I think we ought to move on it because we ought 

to be able to say to people: Yes, it is not exactly like you have in 

the private sector, but we do have some flexibilities here. Or you 

do have performance evaluation, and if you are a top performer 

that can be recognized. 

Anyone want to comment? 

Mr. JAMES. Sir, we recognize that in the Department of Defense 

that we have a very highly trained workforce, that for the most 

part you cannot just walk out on the street and pick up the kind 

of folks that we need to execute our business. Because of that, we 

need to constantly bring in new employees to adjust for the attrition, but in addition to that we need to make sure that they are 

properly trained, they continue to be trained and that we reward 

superior performance. 

The General Schedule system does have mechanisms in it to reward superior performance, but I believe with the new authorities 

there is a possibility that we could come up with new ways, or 

more efficient ways, to reward employees for superior performance 

and incentivize employees that take on more responsibility and 

more accountability within the Department of Defense. 

Senator VOINOVICH. Mr. Grimes. 

Mr. GRIMES. Thank you, Senator. We hear anecdotal, as well as 

other, evidence that young people today want to be a part of organizations where performance is rewarded. They are part of the 

video game generation, if you will, where they get instant feedback. 

They like that. They like to know when they are doing a good job. 

They want to know what they need to do and get down to it. 

There was a WorldatWork Conference last year in which most of 

the participants said that they wanted differentiated performance 

assessment, that was key to improving customer satisfaction and 

organizational performance. 

So I think at some point, whether this term or next, something 

is going to have to be done. 

Senator VOINOVICH. Thank you. Thank you, Senator. 

Senator AKAKA. Thank you very much, Senator Voinovich. 


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1The prepared statement of Mr. Junemann appears in the Appendix on page 47. 

I want to thank you both on the first panel for your testimonies 

and your responses. We are glad to hear of your progress. We are 

concerned that it be done fairly as you continue to work and that 

the employees will work it out as well with you. 

All of this is because we want to try to work together, and legislation is needed to improve the system, we may need to consider 

that. But in the meantime, we will continue to keep in contact with 

you to see how it is moving. 

Senator Voinovich and I, of course, are looking for the best solutions. As he always says, the right person for the right job at the 

right time, and this is an opportunity for us to do that. 

So thank you very much again for being here today. 

Mr. GRIMES. Thank you. 

Mr. JAMES. Thank you, Mr. Chairman. Thank you, Senator 

Voinovich. 

Senator AKAKA. Now I would like to call up our second panel. On 

our second panel this afternoon, I want to welcome Greg 

Junemann, President of the International Federation of Professional and Technical Engineers, Patricia Niehaus, President of the 

Federal Managers Association, and Patricia Viers, President of 

American Federation of Government Employees Local 1148. 

It is the custom, as you know, to swear in the witnesses, and I 

will ask you to please stand and raise your right hands. 

Do you solemnly swear that the testimony you are about to give 

this Subcommittee is the truth, the whole truth and nothing but 

the truth, so help you, God? 

Mr. JUNEMANN. I do. 

Ms. NIEHAUS. I do. 

Ms. VIERS. I do. 

Senator AKAKA. Thank you. For the record, the witnesses did respond in the affirmative. 

I want all of you to know that although your remarks are limited 

to 5 minutes your full statements will be included in the record. 

Mr. Junemann, will you please proceed with your statement? 

TESTIMONY OF GREGORY J. JUNEMANN,1 PRESIDENT, INTERNATIONAL FEDERATION OF PROFESSIONAL AND TECHNICAL ENGINEERS, AFL-CIO, CLC 

Mr. JUNEMANN. Thank you, Mr. Chairman. Good afternoon. I 

would like to thank Chairman Akaka, Ranking Member Voinovich 

and Members of the Subcommittee for inviting me to testify today. 

I would like to offer a special note of appreciation to Chairman 

Akaka and his Subcommittee staff. As a union representing tens of 

thousands of Federal workers, including Federal workers represented by International Federation of Professional and Technical 

Engineers (IFPTE) Local 121, at the Pearl Harbor Naval Shipyard, 

IFPTE commends the Chairman for his longstanding support to the 

members of IFPTE Local 121. 

My testimony will first take a look at the transition from NSPS 

back to the GS system, followed by IFPTE’s views on performance 

management and hiring retention. 


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We applaud the workforce provisions included in Fiscal Year 

2010 National Defense Authorization Act, including those provisions allowing Federal workers to allocate unused sick leave toward their thrift savings plans. However, the highlight of the bill 

for IFPTE was the repeal of NSPS. The saga of NSPS is key to today’s broader message because we believe it is a reflection of lessons learned as we consider the question of moving forward with 

comprehensive performance management in the Federal Government. 

Setting aside the major flaws of NSPS and focusing on just the 

pay and performance evaluation part of the failed personnel system, data and studies have shown NSPS to be, among other things, 

a discriminatory pay system. White workers overall got higher 

raises than did racial and ethnic minorities. Workers at the higher 

end of the pay scale, or those with plum assignments, benefited 

under NSPS while others lost out. For example, those working in 

higher commands or at the Pentagon received higher ratings and 

pay than their counterparts in less visible locations. 

To lead this transition and in an effort to change from the controversial culture with respect to NSPS, this past January, the Department announced the appointment of John James to head the 

transition from NSPS to GS. IFPTE believes that Mr. James’s appointment is a step in the right direction. While we continue to be 

vigilant and aggressive in working on behalf of our membership, 

we believe that Mr. James’s presence in leading this effort will 

prove to be a huge improvement. 

Along with the repeal of NSPS come the requirements that no 

worker suffers a loss in pay through this transition. We certainly 

agree with this requirement, but it does present a different task of 

figuring out how to accomplish this. While we support pay retention, there still remains a glaring flaw that must be resolved. 

Workers put under retained pay have the potential of receiving 

lower raises indefinitely. There will likely be some circumstances 

where the top level of a GS salary of a particular grade may never 

catch up. 

Given this, IFPTE would recommend that another approach be 

considered. Instead of retained pay, IFPTE seeks a proposal to create two additional steps within grades, Steps 11 and 12, with corresponding pay raises for each GS grade. DOD could make the 

length in time to reach these steps 5 years, with a sustained performance required in each of those years, to achieve Step 11 and 

consequently Step 12. 

In discussing a sensible replacement for NSPS, IFPTE believes 

that in addition to creating a system with labor as a fully participating partner the expectation is that any new performance system 

makes full use of the flexibilities already inherent within the GS 

system. 

Along with what DOD is doing, OPM and the Office of Management and Budget (OMB) have indicated that they intend to move 

forward on performance management systems that will impact just 

about every Executive Branch agency in the Federal Government. 

While there are few details of the potential OPM/OMB proposal 

that IFPTE has been made privy to, we have received assurances 

from OPM Director John Berry that labor, including IFPTE, will be 


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1The prepared statement of Ms. Niehaus appears in the Appendix on page 57. 

an equal partner in any attempt to develop any new government 

management system impacting Federal workers. Our union applauds Director Berry for his interest in involving labor. 

Admittedly, IFPTE remains eager to learn the logistics of how all 

this will play out. Will DOD simply defer to OPM and OMB, or will 

they move forward on their own? Regardless of how this takes 

shape, our future success will depend on how equal are the equal 

partners, how fair is fair and how good is the good faith between 

the parties. 

Outside of bargaining a new performance management system 

across every locality, IFPTE believes that a fair and comprehensive 

performance management system can be achieved through the existing flexibilities provided in the current GS system. GS has all of 

the elements to achieve a system that can reward good performers, 

penalize poor performers and provide flexibility necessary to hire 

and fire. 

IFPTE also believes that in order to address the hiring and retention problems facing the Federal Government that Congress 

must act on legislation that creates an environment where people 

look forward to spending a career as a public servant. 

This concludes my testimony. Thank you again for the opportunity to be here today. I look forward to any questions the Members of the Subcommittee might have. 

Senator AKAKA. Thank you very much, Mr. Junemann. Now we 

will hear from Ms. Niehaus. 

TESTIMONY OF PATRICIA NIEHAUS,1 NATIONAL PRESIDENT, 

FEDERAL MANAGERS ASSOCIATION 

Ms. NIEHAUS. Chairman Akaka and Ranking Member Voinovich, 

thank you for the opportunity to present the Federal Managers Association’s (FMA) views before you today. As stakeholders in the 

successful transition out of the National Security Personnel System, we appreciate the opportunity to appear before you. 

The face of America’s workforce is changing. A model once attractive for employing the most talented members of the workforce, the 

Federal civil service now appears unreflective of new job seekers’ 

expectations by today’s standards. The current General Schedule 

pay system and performance review methods are antiquated. We at 

FMA support any changes that establish increased flexibilities, accountability and performance results. NSPS promised to deliver on 

these personnel components but ultimately failed to live up to its 

billing. 

In my written statement, I detailed FMA’s position on a wide 

range of topics including performance management and managerial 

training. I would like to focus my oral statement on one aspect of 

the NSPS transition, mainly the repeal and its impact on employees. 

The Fiscal Year 2010 National Defense Authorization Act stated 

that all employees must transition out of NSPS by January 1, 2012 

and provided DOD 6 months to report to Congress on its plans for 

conversion. Enactment of the law signified the end of the controversial pay-for-performance system, but it marked only the beginning 


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of a long, tenuous process of determining how to manage the 

226,000 Federal employees who served under NSPS. 

Under GS pay retention rules, those NSPS employees whose pay 

exceeds Step 10 of their corresponding GS grade will receive only 

half the annual pay raise until the GS system catches up with 

them, if it ever does. To date, of the 53,000 employees who have 

transitioned out of NSPS, 21 percent—or over 11,000 employees— 

are currently under pay retention. If this formula holds true for all 

NSPS employees returning to the General Schedule, nearly 37,000 

employees could be negatively impacted. 

DOD is taking strides to reclassify all NSPS employees regardless of pay status as prescribed under the law. The onus is on senior DOD leadership to properly classify these employees prior to 

their slated transition dates. We remain concerned that the expediency with which DOD is returning NSPS employees to the General 

Schedule will impede leadership from taking the time to classify 

these positions adequately. 

The Department stated that it expects employees will be concerned about pay and that it intends to study this issue after classifications are finalized. We caution that by waiting until the classifications are over the employees will, at the very least, be subject 

to pay retention for 1 year. We also worry that this problem will 

be ignored once the transition is complete. 

We regret the Transition Office is unable to provide concrete 

numbers on how many people will be affected by pay retention as 

we believe the numbers will have a direct impact on any possible 

solutions. If we are in fact faced with a situation where tens of 

thousands of employees are placed on retained pay, we believe you 

will be dealing with a disgruntled and demoralized workforce 

which has now been shifted in and out of different pay systems 

within 3 years. 

Many of these dedicated employees, myself included, have 

crunched the numbers and determined that the General Schedule 

will not catch up with them by the time they are eligible to retire. 

As such, pay retention not only affects the current pay received by 

these employees but could also negatively impact their high-3 average salaries, which is used to calculate retirement benefits. Many 

of these employees feel they are being punished for performing 

above average work under a system in which they did not ask to 

participate. We believe, and will continue to stress, that no employee should lose current, future or retirement pay when converting back to the General Schedule. 

Language included in the House version of the Fiscal Year 2011 

NDAA requests that DOD report to Congress by November 15, the 

agency’s plans for a nationwide January 2011, pay adjustment, including information on employees under pay retention. We believe 

this is a step forward but lends little time for congressional action 

before the January 2011 pay cycle. 

We at FMA believe there are many options the Pentagon and 

Congress could pursue to mitigate the effects of retained pay. 

While pay retention may be inevitable in certain situations, we lay 

out several avenues DOD and Congress should consider in our 

written testimony. 


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1The prepared statement of John Gage, submitted by Ms. Viers appears in the Appendix on 

page 70. 

Many FMA members were pleased with Congress’ decision to end 

the National Security Personnel System. It is not our desire to 

delay or halt the rollback of the controversial system. However, 

more attention must be paid to the impact the transition has on 

employees who keep DOD functioning. 

We appreciate the attention the Subcommittee is placing on this 

issue, and we hope this hearing will be the jumping-off point for 

further discussions on pay retention. 

Thank you again for the opportunity to express our views, and 

I am happy to answer any questions you may have. 

Senator AKAKA. Thank you very much, Ms. Niehaus. 

Ms. Viers, will you please proceed with your testimony? 

TESTIMONY OF PATRICIA VIERS,1 PRESIDENT, LOCAL 1148, 

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, 

AFL-CIO 

Ms. VIERS. Thank you, Mr. Chairman and Senator Voinovich. 

Greetings from Columbus, Ohio. On behalf of the American Federation of Government Employees (AFGE), which represents 600,000 

Federal workers including 260,000 in the Department of Defense, 

I appreciate the opportunity to testify today on the National Security Personnel System and performance management in the Federal Government. 

During the lifetime of NSPS, DOD did not convert bargaining 

unit employees to the system, first because of litigation over the 

regulations and then, after the Congress required DOD to operate 

within 5 U.S.C. Chapter 71, the Department chose to avoid negotiations over NSPS by continuing not to convert bargaining unit 

employees. As a result, AFGE has very few employees we represent 

who are under NSPS, and therefore we have little direct experience 

with the system. 

The only reason we do have some bargaining unit employees in 

NSPS is because its lack of fairness and transparency made the 

employees understand they needed a union, and they organized 

after being converted to the system. 

We understand there are some complaints by employees who converted back to the GS system and are in a pay retention status 

that will temporarily limit future pay increases. Although we do 

not wish to see any employee disadvantaged by their conversion 

out of NSPS, I think it is important to put this situation into perspective. Employees have made enough additional money under 

NSPS that they have to be on pay retention when they are put 

back into the appropriate GS grade already got what could be considered an early raise and have benefited from being at these higher pay levels for some length of time. Fortunately, they will continue to benefit because their pay will not be lowered; it just may 

not rise as quickly as it did under NSPS. 

AFGE was greatly concerned, as you know, Mr. Chairman, with 

whether the NSPS pay system was being fairly administered to all 

employees. DOD’s own internal evaluation of NSPS showed the disparate impact of NSPS raises based on factors having nothing to 


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do with performance. The report, done by SRA International and 

released last June, show inequities based on race, salary, position 

and where in the DOD hierarchy one worked. 

Perhaps the most damning statistic was that the percentage salary increases and the percentage value of bonuses were more correlated with income level than with performance level. Higher 

level, higher paid employees got higher performance ratings and 

payouts than lower level, lower paid employees. The disparity was 

especially great between employees earning $100,000 or more and 

employees earning $60,000 or less. 

Further, in general, being a racial minority had a negative effect 

on one’s rating and payout, and being black had a more negative 

effect than membership in other racial groups. 

So we know that a significant number of good employees lost 

money under NSPS. 

I am pleased to note that AFGE and the unions from the United 

Defense Workers Coalition have met several times recently with 

Mr. James to discuss the authorities granted in the NDAA 2010. 

We have jointly agreed to convene a conference to develop ideas for 

the new systems authorized by the law. The unions are presently 

developing our ideas for a joint design for the conference to share 

with DOD. We are optimistic that this better process will result in 

a far superior product than was ever a possibility under NSPS. 

Specifically, AFGE believes that performance management need 

not be as complicated as many systems are. First, employees must 

be told what is expected of them and what they need to do to meet 

those expectations. What does the employee need to do to be in 

good standing and avoid being not in good standing? And, of course 

this should not just be a one-way lecture but a real discussion 

about the job, the mission, the tools, the assignments, the employee’s strengths and weakness, and how he or she can expand the 

former and improve the latter. 

There also needs to be a recognition and award system for exceptional performance, as well as for smaller but also valuable contributions. AFGE has negotiated such systems with many other 

agencies which meets the needs of the Agency and the worker, to 

create workforce incentives that are meaningful, evolving and up to 

the minute. We are eager to establish similar, successful recognition and awards programs through our negotiations with DOD. 

I want to emphasize a point that you, Mr. Chairman, and Senator Voinovich have made many times before. Supervisors have not 

been adequately trained to develop and motivate employees nor are 

they supported when they do take the time to discuss performance 

with employees, document performance, or fight for the rewards or 

remedial actions they believe their employees need and deserve. 

There never seems to be enough money allocated to develop employee skills or to reward them for their high performance. Training money is one of the first victims of budget cuts, and award 

money is close behind. Developing employees through career ladder 

programs, training programs, recognition and enhancement of their 

talents, and career mobility must emphasized. But if this is to be 

zero-sum budget game where some employees are rewarded only 

because other good employees are losing, we will never succeed in 


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improving performance management in the delivery of government 

services. 

Through collective bargaining and labor management forums, we 

can create better systems to evaluate performance, reward it and 

develop employees for the future needs of the organization. We will 

continue to work closely with DOD and OPM, so that our bargaining units can bring their ideas and interests into achieving our 

agencies’ missions and serving the American public. 

This concludes my statement. I will be happy to respond to any 

questions. 

Senator AKAKA. Thank you very much, Ms. Viers. 

Mr. Junemann, in the past, you repeatedly criticized NSPS for 

its lack of transparency. As DOD considers a new performance 

management system and OPM contemplates a possible governmentwide reform, I would like to know what features you believe 

any new system must include to make it as transparent and understandable as possible. 

Mr. JUNEMANN. Thank you, Senator. As we discussed before with 

your Subcommittee, training is essential—training not only among 

the employees but of the supervisors. I have a lot of experience 

with pay-for-performance systems in the private sector as well, and 

when they succeed is because the employees have belief in them, 

that they have belief that their performance will be fairly evaluated. So they know that. Part of that is that they have to know 

that their supervisor has been properly trained to evaluate them. 

What happens in too many cases is that the supervisor ignores 

his or her obligation to do the evaluation until the day before. So, 

if my evaluation is due on July 1, my supervisor starts thinking 

about it on June 30. And if that happens, then the system will not 

work. 

So what has to happen is the employee has to be assured that 

his or her performance is being evaluated all the way through, so 

that they know again that when they get evaluated they will be 

comfortable, that they know what is expected of them, that their 

supervisor will be monitoring their work, the projects that they 

have worked on, all the way through until finally the evaluation 

comes, and there should be no surprises. 

Senator AKAKA. Thank you very much. 

Mr. JUNEMANN. If that is in the system, it should work. Training, 

and that is part of the transparency, the training and the acceptance by the employees involved, that the training has been done, 

not only of them to do the work better but of their supervisors to 

evaluate them. That is essential. 

Senator AKAKA. Thank you very much, Mr. Junemann. 

Ms. Niehaus, I believe that one reason that NSPS was not successful was that it was not easily understood by employees or supervisors. The NDAA included some safeguards for any new performance management system at DOD, including requiring training and transparency measures. What should be done to ensure 

that employees and supervisors truly understand and accept any 

new performance management system? 

Ms. NIEHAUS. I believe training is key, sir, in the understanding 

and acceptance of any personnel system. I believe that initial trainVerDate Nov 24 2008 11:19 Nov 04, 2010 Jkt 058031 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\DOCS\58031.TXT SAFFAIRS PsN: PAT

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ing is necessary for any new system, and I believe follow-up training is also necessary. 

I was one of the trainers at Travis Air Force Base for both performance management under NSPS and for other provisions under 

NSPS. One of the things that we found was that employees who 

were engaged during the training fared much better under the system because they understood it better. So I believe that if employees participate in the training, they will do better. 

We also had training for employees under NSPS in how to write 

their self-assessments, and we have reports from employees. I did 

not track it as far as checking the ratings of the employees, but I 

did track it by anecdotal evidence from the individuals who attended that training, and they felt more comfortable that their 

supervisors received better self-assessments which enabled the supervisors to perform better assessments of their performance. 

So I think that training on all aspects and more than just once 

is necessary for any new personnel system to succeed. 

Senator AKAKA. Thank you. 

Earlier, we heard what steps DOD has taken to comply with the 

NDAA’s requirement that employees and their representatives be 

involved in the design of any new performance management system 

at DOD. I would like to hear from both of you on this issue as well. 

Thus far, do you believe DOD has sufficiently included you in this 

process? 

And I am asking this of Mr. Junemann and Ms. Viers. 

Mr. JUNEMANN. Sure. Thank you, Mr. Chairman. 

Yes, where we represent DOD people, and we represent all four 

Navy shipyards, I think 19 Army Corps facilities, we have been engaged pretty much with supervision on reevaluation again at local 

levels. 

Some of it, I mean this is sort of the bad part, is that supervision 

had a requirement to do performance evaluations under GS before 

NSPS was enacted. They simply were not doing it. 

Then when we saw NSPS come along, that one of the failings of 

it was they had a requirement to do it before, and it was being 

done. 

So now here is a new requirement under a different law, almost 

as if Congress was being asked to legislate good management. So 

now that they are under the GS system again the locals are working with their separate human resources (HRs) to make sure that 

it is done right this time. 

That is looking at the failings that happened, not because of the 

GS system but because of the employees working in it—management, supervisors and the employees themselves. Like, collectively, 

we were not doing this. We all knew we were not doing it, regardless what the statute said. So now we have a real bite at the apple. 

Let’s make it work this time. 

So there are programs going on at the local level. 

Specifically, if you wanted to ask me what is happening at Portsmouth Naval Shipyard or what is happening at Pearl Harbor or 

what is happening at, say, an Army Corps facility in Portland, I 

would have to get back with you on that. 

Senator AKAKA. Thank you. Ms. Viers, your comments. 


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Ms. VIERS. Thank you, Mr. Chairman. AFGE feels strongly that 

we are being engaged in this process. We also strongly supported 

granting DOD the flexibilities in performance management and 

hiring in the NDAA 2010. 

We believe that Mr. Grimes is correct when he says NSPS performance management system improved communications between 

supervisors and employees. We hope to build on that in this process, and we hope it will lay a foundation for developing a new performance management system that is accountable to employees, 

the Department and the warfighters that we are so proud to support. 

Senator AKAKA. Yes. 

Ms. Niehaus, you testified that FMA has not yet had the opportunity to provide feedback on any future personnel system. I would 

like to hear your views on this issue as well. 

Ms. NIEHAUS. We have met with Mr. Berry and Mr. James on 

the potential for FMA’s involvement in the development of the new 

personnel system under DOD. 

We were invited to participate in the Future Search Conference 

that was cancelled almost immediately after being scheduled, and 

it has not yet been rescheduled, but we have been assured that we 

will be invited to participate in it at that time. 

Senator AKAKA. Well, thank you very much. 

Senator Voinovich, your questions. 

Senator VOINOVICH. I am interested in the observations about 

the NSPS system. When we got involved in it, I knew that labor 

unions had a real concern about the impact on their members. In 

fact, I echoed some of your concerns in comments that I submitted 

during that formal notice and comment period for the NSPS rule. 

Ms. Viers, thank you. Nice to have you here from Columbus, and 

I think you and I talked about this at one time. But at the time, 

we thought your members would be involved, and then they ultimately were not. 

But, as you know, the Department decided to exclude bargaining 

units, and this development left a pay-for-performance system that 

would ultimately affect only 913 unionized employees who elected 

to organize after joining NSPS, or less than one-half of 1 percent 

of the 225,000 employees covered by NSPS. 

And I have already mentioned the fact that I think if people were 

really unhappy with the NSPS they would have done the same 

thing they did at GAO and said, look, we do not like this. We are 

going to form a union. But, in general, they did not. 

Even before the problematic pay disparities correlated with race, 

gender and job assignment were revealed, your organizations continued to oppose NSPS and called for its repeal. 

And we now see similar opposition to the Defense Civilian Intelligence Personnel System despite a recent report by the National 

Academy of Public Administration that found implementation flaws 

in an otherwise ‘‘fundamentally sound system, conforms to accepted 

principles for designing performance-based compensation systems.’’ 

So a skeptic might argue that the unions are opposed to NSPS 

or any kind of performance—I know you are opposed to NSPS, but 

any kind of flexibilities or performance evaluation. So, Ms. Viers, 


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I am really pleased to hear that you think that a system can be 

put in place. 

And I am hopeful that in the dialogue—Ms. Niehaus, you mentioned you met with Mr. Barry and Mr. Grimes—that there be a 

robust discussion of this and some consensus about how we go forward with the NDAA authorities because I think it is not only 

going to be important to your members, but it is also going to be 

important to our national security and to the future of our Country. 

I was interested, Ms. Niehaus, when you were saying that you 

are really concerned that even with retained pay status, that a lot 

of your folks are never going to get caught up. And you heard some 

people out there say they got too much; they ought to be happy 

with it. 

But what impact do you think that is going to have on some of 

your people, that this will be their three highest years? Do you 

think some of them are going to tip their hat and say I am out of 

here? 

I mean you talked about 11,000 so far. If you follow the numbers, 

it could be 37,000 people—— 

Ms. NIEHAUS. Yes, sir. 

Senator VOINOVICH [continuing]. That are going to be on retained 

pay status. I would suspect they may be some of the best performers in the Federal Government. What are they going to do? 

Ms. NIEHAUS. The indication we have had from many of our 

members is that they are already seeking employment outside the 

Department of Defense, which we find very discouraging. 

I believe that some will do just exactly what you said. They will 

retire rather than remain on pay retention. 

It is disheartening that they will not continue because I do believe, as you said, they are the best employees in the Department 

of Defense because they were required to perform at successively 

higher levels in order to maintain those high ratings after the first 

year. 

Senator VOINOVICH. Mr. Junemann, you had how many members 

in NSPS? 

Mr. JUNEMANN. We had 94 in NSPS. 

Senator VOINOVICH. OK. So that is 94 that you can identify. 

Did any of your members benefit from NSPS, i.e., take advantage 

of their high performance and got a better pay increase? 

Mr. JUNEMANN. Yes, to my knowledge, the workers at Omaha. I 

think there is about 40 at an Army Corps facility at Omaha, Nebraska, who actually joined the union to get out of NSPS, but they 

received higher than, I guess expected raises. I do not have the 

numbers right in front of me. 

Senator VOINOVICH. Well, the thing is that they were part of the 

NSPS system, but they also joined the union. 

Mr. JUNEMANN. Yes, sir. 

Senator VOINOVICH. Just for the record, that is 94 people. I 

would be really interested in the statistics in terms of your 94 

members, how many of them got an increase in pay because of the 

system. And I am sure some of them are unhappy because they did 

not think they got as much as they were entitled to. 

But it would be very interesting, I think, because you have 94 

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spond to me in writing about just what happened to your 94 members in terms of this system. 

I guess all I can say at this stage of the game is this: I am leaving the Senate. As Senator Akaka says, we have spent 10 years 

trying to improve conditions for Federal workers. We have passed 

more Federal workforce legislation than any similar period. We 

have tried to make the Federal Government as competitive as we 

can, even for people coming in at the mid-level. 

Under the old regime, if you are here a year you got 1 week of 

annual leave, you are here 3 years you get 3 weeks, and then you 

had to be here for 15 years before you got a month. And we 

thought that was not competitive, that you are not going to be able 

to draw people, and so we changed how leave is accrued. 

Or the student loan repayment program that was capped at 

$40,000 and $6,000 a year, and we bumped the program up to a 

$60,000 cap, and $10,000 a year to try to make the Federal Government as competitive as we can possibly be. 

So I just hope that you all work together and come up with something that you are happy with, that is fair, but that the folks, they 

ought to know if they really work their butt off and do a great job, 

that it is going to be recognized because we have had too many 

people that have left the Federal Government. They just finally 

throw up their hands and say: I am leaving. Everybody has got to 

get treated the same, and that is not a place for me. 

Maybe some of them interpret things differently, but I know too 

many people that have left the system because of the fact that they 

felt that it did not reward them for the work that they were doing 

and that the system really ground itself down to the lowest common denominator. Let’s come to work, put in your time and go 

home. 

Not to take anything away from our Federal workers. I know, 

Ms. Viers, you work at DOD. I know you work hard. I am not taking anything away from them, but I just think that there is that 

feeling of, I would like to be recognized, I would like to be rewarded. 

And I think a performance management system is good. I think 

you laid that out—I think you did, Ms. Viers. People ought to know 

where they stand. They want to know they are not performing 

poorly. They want to know, what do you expect of me? Am I doing 

good? Am I doing bad? And if I am doing bad, what can I do to 

correct my situation, so I can do better? 

We all want to be recognized for doing a good job. Some just 

want to be recognized. So I think that is what this is all about 

here—to try and come up with a system that will get that done and 

where people will feel good about coming to work every day and do 

everything that they can with the talent God gave them, to make 

a contribution to our Country. 

Senator AKAKA. Thank you, Senator Voinovich. 

Senator VOINOVICH. Do you want to comment, Mr. Junemann? 

Mr. JUNEMANN. Yes, Senator, I will be happy to provide you with 

that. We actually have talked to a good share of the 94 people 

about what do you feel about retention, what do you feel about 

what is going to happen here. 


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And I should tell you from my end, again we have even outside 

of the Federal Government, we represent like 25,000 engineers, 

technicians and scientists at Boeing that are all under a pay-forperformance system. We represent about 1,000 workers at General 

Electric that are under pay-for-performance. I helped, and it works. 

I helped to organize a group of engineers at United Airlines 

where I had to write a letter to every employee guaranteeing them 

that, or assuring them that the union would work hard to put a 

pay-for-performance into the contract if we ended up getting a 

union there. So we are not opposed to it. We are in favor of something that works. 

At Boeing, we do not even have seniority, at least until I think 

it is like 10 years. But the evaluation is what determines retention 

and transfer rights and promotion rights. So it is not like we are 

not in favor of it at all, but it has to be open. 

I had members come to me while we were going through the 

Meet and Confer process and all the other stuff that was going on 

in the mid part of this decade, and they retired. They were deathly 

afraid of what was going to happen to them and their rights under 

NSPS if that was implemented, and it is not because they were 

poor performers and thought they might get caught. They just had 

no idea what this wave was going to do to them once it washed 

over. 

Senator VOINOVICH. Thank you. 

Senator AKAKA. Thank you. 

Let me ask a few more questions. Ms. Viers, I was glad to see 

in your testimony that you are at least cautiously optimistic that 

labor organizations and DOD can work together to create a more 

effective performance management system than under NSPS. I 

hope labor and management will be able to work together to accomplish this goal. 

What specific steps will your union take to educate your members about the new performance management system once it is developed, so it can be implemented smoothly? 

Ms. VIERS. Senator, thank you for the opportunity to respond to 

that question. I can tell you that we will, as long as the employees 

know they have a voice in designing the system, which they will, 

we will get that message out to them. It is their input that we are 

bringing to the table, to DOD, so they obviously have ownership. 

When they have ownership in a system, specifically a performance 

management system, that is a positive thing. So we will do everything we can to get the message out to our constituents. 

Senator AKAKA. Thank you. 

Mr. Junemann, I would like to hear from you on this question 

as well. 

Mr. JUNEMANN. Yes, Mr. Chairman. Thank you. So we are currently working with the Federal Mediation and Conciliation Service 

(FMCS) and the Federal Labor Relations Authority (FLRA) who 

have training programs that are going on, not only with labor but 

with supervisors and managers as well, and this is going on 

throughout the Country. We are participating in those. 

Additionally, especially within the Navy Sea System Command 

(NAVSEA), we are doing a lot of work, partnership ventures with 

management on a national, as well as on a local, level. Part of that, 


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I mean really a lot of it is just bringing success to the mission of 

each organization. 

So we are heavily engaged in that. We believe in that very 

strongly, and the mission of the organization is also lifting up the 

people who work there. So it is going to be part of the overall effort 

to do that. 

Senator AKAKA. Thank you. 

Ms. Niehaus, you state in your testimony that many supervisors 

reported that NSPS was too burdensome and they did not have the 

time to provide employees with written job objectives or performance ratings as required. What suggestions do you have to establish an efficient and practical system for appraising employee performance that would have better buy-in from supervisors? 

Ms. NIEHAUS. I think that a system that enables a supervisor to 

structure an employee’s position and their goals for that employee 

without having to work through a long process to get there. Many 

of the supervisors that I have personally been contacted by were 

concerned that the performance appraisal application tool, the 

automated system that was used under NSPS, appeared very cumbersome and not user friendly to them. Some of those supervisors 

had never had to work with automated systems for performance 

management. So I think perhaps more intensive training on whatever system is going to be used would be better for supervisors. 

I think the basic premise of writing an individual’s objectives 

each year is a good one. 

I think meeting with employees and giving them feedback is absolutely necessary, and I think that is part of a supervisor’s position. I do think that in some areas under the GS system, supervisors were not doing that, and I think that it was a detriment to 

the employee and to the supervisor because there was no way to 

track whether they were doing it or not. 

So I think in some respects, and I have to say some of our members felt that because they did not have to do it under the GS system they should not have to under the NSPS system, which I have 

to admit I disagree with. 

Senator AKAKA. Well, thank you, and I want to thank our witnesses for attending this hearing and providing thoughtful testimony and answers to our questions. 

As the largest Federal agency, the Department of Defense should 

serve as a model for the other agencies. I am pleased with the 

steps DOD has taken to transition employees out of NSPS, both 

quickly and thoughtfully. I am also glad to hear that DOD and 

OPM are working with employees and supervisors as performance 

management changes are considered at DOD and governmentwide. 

I look forward to working with DOD and OPM in the coming 

months on these very important matters. 

Again, thank you for being here. The hearing record will be open 

for 2 weeks for additional statements or questions other members 

may have pertaining to the hearing. 

And I want to take this time to say thank you very much to Senator Voinovich’s staff and my staff, and the hard work that they 

have put into these hearings, I really appreciate it. 

This hearing is adjourned. 

[Whereupon, at 4:09 p.m., the Subcommittee was adjourned.] 


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