8586 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

OFFICE OF PERSONNEL

MANAGEMENT

Science and Technology Reinvention

Laboratory Personnel Demonstration

Project at the Naval Sea Systems

Command Warfare Centers

AGENCY: Office of Personnel

Management.

ACTION: Notice of intent to implement

demonstration project.

SUMMARY: The National Defense

Authorization Act for fiscal year 1995

(Pub. L. 103-337) authorizes the

Secretary of Defense, with Office of

Personnel Management (OPM) approval,

to conduct a Personnel Demonstration

Project at Department of Defense (DoD)

laboratories designated as Science and

Technology Reinvention Laboratories.

The legislation requires that most

requirements of Section 4703 of Title 5

shall apply to the Demonstration

Project. Section 4703 requires OPM to

publish the proposed project plan in the

Federal Register. This notice meets that

requirement.

DATES: Comment date: Written

comments will be considered if received

no later than April 9, 1997. Hearing

date: A public hearing will be held on

the proposed project plan on: March 26,

1997, at the Indian Head Pavillion, 100

Walter Thomas Road, Indian Head, MD,

from 6:00 p.m. until testimony is

completed.

ADDRESSES: Comment address: Send

written comments to Shirley Scott,

Head, Demonstration Project Office,

NSWCDD, HR Department, 17320

Dahlgren Road, Dahlgren, VA 22448.

FOR FURTHER INFORMATION CONTACT:

Shirley Scott at (540) 653–4623.

SUPPLEMENTARY INFORMATION: A public

hearing will be held by OPM at the

Indian Head Pavillion, 100 Walter

Thomas Road, Indian Head, MD 20640,

during which interested persons or

organizations may present their written

or oral views concerning the proposed

Demonstration Project plan. So that

OPM may regulate the course of the

hearing and provide time for all who

wish to present comments, parties who

want to testify at the hearing are asked

to contact one of the persons listed

under FOR FURTHER INFORMATION

CONTACT: for a specific scheduled time.

Priority will be given to scheduled

parties; others will be heard in the

remaining available time. Each speaker’s

presentation will be limited to 10

minutes. In other respects, the hearing

will be informal. The hearing record

will be left open until April 9, 1997 to

allow additional written data, views and

arguments from the parties participating

in the hearing.

Dated: February 21, 1997.

Office of Personnel Management.

James B. King,

Director.

Table of Contents

I. Executive Summary

II. Introduction

A. Purpose

B. Problems With Present System

C. Changes Required/Expected Benefits

D. Participating Organizations/Mission

E. Participating Employees

F. Employee/Labor Participation

III. Methodology

A. Project Design

B. Personnel System Changes

1. Classification/Pay

2. Performance Development System

3. Incentive Pay System

4. Reduction-In-Force (RIF)

5. Competitive Examining/Distinguished

Scholastic Appointments

C. Project Implementation

D. Entry Into/Exit From The Project

E. Project Duration

IV. Evaluation Plan

V. Waivers of Law/Regulation

VI. Cost

VII. Project Oversight/Management

I. Executive Summary

The Naval Surface Warfare Center and

the Naval Undersea Warfare Center,

designated as Science and Technology

Reinvention Laboratories, wish to

conduct a Personnel Demonstration

Project similar in nature to that of the

1980 Demonstration Project approved

for the Naval Weapons Center, China

Lake, and Naval Ocean Systems Center,

San Diego. The Warfare Centers’ project

includes the following key project

components: A Broad Banding

Classification and Pay System for

‘‘white collar’’ employees; a

Performance Development System; an

Incentive Pay System; a new Reductionin-Force (RIF) system; and a

Competitive Examining and

Appointment System. The Warfare

Centers’ project addresses an

organization which is substantially

larger (over 23,000 employees), has

greater diversity of mission than

previous projects, and has extensive

union involvement at all major sites. In

addition, the project plan has been

developed with on-going involvement of

the various unions represented in the

Warfare Centers.

II. Introduction

A. Purpose

The overall goal of the Demonstration

Project is to implement a Human

Resource Management System that

facilitates mission execution and

organization excellence and responds to

today’s dynamic environment of

downsizing, restructuring and closures

by obtaining, developing, utilizing,

incentivizing and retaining high

performing employees; and adjusting

workforce levels to meet program and

organizational needs. The system to be

demonstrated has the flexibilities to

accommodate and support wide-ranging

activity missions, strategies and

cultures. It is responsive to business

considerations and permits a high

degree of control over workforce costs.

Clearly, it is more streamlined and

understandable for those who will use

it as well as those affected by it. Most

importantly, it is focused not just on the

needs of the organization, but also on

the needs of the people who are the

organization.

These objectives reflect the Federal

and DoD goals of creating a government

that works better and costs less, and a

flexible system that can reduce,

restructure or renew to meet diverse

mission needs, expand or contract a

workforce quickly, respond to workload

exigencies, and contribute to quality

products, people and workplaces. The

objectives also align with the Federal

and DoD values and guiding principles

of empowering employees to get results,

maximum flexibility tempered with

accountability, innovation and

continuous improvement, caring for

people during downsizing, and vital

partnerships and teaming with all the

stakeholders in the process.

B. Problems with Present System

The Warfare Centers find the current

Federal Personnel System to be

cumbersome, confusing, and unable to

provide the flexibility necessary to

respond to the current mandates of

downsizing, restructuring, and possible

closure while trying to maintain a high

level of mission excellence. The present

system—a patchwork of laws,

regulations, and policies—often inhibits

rather than supports the goals of

developing, recognizing, and retaining

the employees needed to realign the

organization with its changing fiscal and

production requirements.

The current Civil Service General

Schedule (GS) system has 15 grades

with 10 levels each and involves

lengthy, narrative, individual position

descriptions, which have to be classified

by complex, OPM-mandated position

classification standards. Because these

standards have to meet the needs of the

entire federal government, they are often

not relevant to the needs of the Warfare

Centers and are frequently obsolete.

Distinctions between levels are often not

meaningful. Currently, standards do not

provide for a clear progression beyond
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8587

the full performance level, especially for

science/engineering occupations where

career progression through technical as

well as managerial career paths is

important.

In addition, there are limited

mechanisms for dealing with an

employee who has been promoted out of

his/her level of expertise or who, after

a successful career, has been unable to

gain the skills required of a new work

environment. In most cases, the only

possible action may be a reduction in

grade. Under the current system a

demotion to a lower grade is considered

an adverse action even if there is no loss

in pay. Under the proposal, a reduction

in band level without a loss in pay will

not be considered an adverse action.

Performance Management systems

require additional emphasis on

continuous, career-long development in

a work environment characterized by an

ever increasing rate of change. Since

past performance and/or longevity are

the factors on which pay raises are

currently assessed, there is often no

positive correlation between

compensation and performance

contributions nor value to the

organization. These limited criteria do

not take into account the future needs

of the organization nor other culturally

relevant criteria which an organization

may wish to use as incentives.

The present Reduction in Force (RIF)

process is highly complicated and

relatively unresponsive to requirements

for rapid work force restructuring and

retention of employees with mission

appropriate skills. RIF is confused by an

augmented service credit for

performance that is based in a

performance appraisal system fraught

with contention. Round I adds

complexity, confusion, and uncertainty.

Cost savings expected from RIF are

drastically reduced by the inordinate

administrative costs of the process and

the likelihood that the employee

ultimately separated will be at a lower

grade than the originally targeted

position. Additionally there is the

expense of retained grade and retained

pay. Current RIF procedures impact

negatively on morale because of the

high number of people affected and

frequent misunderstandings of a

complicated system that leaves affected

employees wondering why they have

been ‘‘targeted’’.

And finally, the complexity of the

current examining system creates delays

in hiring. Line managers find the

complexity limiting as they attempt to

accomplish timely recruitment of

needed skills. To compete with the

private sector for the best talent

available, they need a process which is

streamlined, easy to administer, and

allows for timely job offers.

C. Changes Required and Expected

Benefits

The proposed Demonstration Project

responds to problems in the

classification system with a Broad

Banding Classification system for GS

employees; to problems in the current

performance management system with a

Performance Development and

Incentive Pay Systems; to the problems

of the existing RIF procedures with a

streamlined RIF system; and to

problems of complicated hiring and

examining procedures with a simplified

examining and appointment process.

D. Participating Organizations and

Mission

Both the Naval Surface Warfare

Center and the Naval Undersea Warfare

Center will participate in the project.

The Warfare Centers are comprised of a

total of seven Divisions with 14 major

sites nationwide. The sites are diverse

in employment profiles and size and

have bargaining unit populations

ranging from a small percentage to more

than half of the workforce. These

organizations operate throughout the

full spectrum of research, development,

test and evaluation, engineering and

fleet support.

The Warfare Centers are Defense

Business Operations Fund (DBOF)

activities. Under DBOF, the cost of

operating is paid by billing customers

for work performed. The Warfare

Centers seek to maximize management

flexibility to control expenditures since

the continued economic viability of a

DBOF activity depends in large measure

on remaining cost competitive with

other organizations.

E. Participating Employees

This Demonstration Project will

involve civilian personnel at all Warfare

Center sites. There are 14 major sites

(over 200 civilian personnel) and many

smaller sites. Currently 23,697 civilians

are employed as shown in Figure 1. The

intent of the plan is to cover all civilian

appropriated fund employees at all sites

with the exception of the members of

the Senior Executive Service. While the

Demonstration Project, and its five

components, cover all General Schedule

(GS) employees, the Federal Wage

System (FWS) employees are included

only for purposes of changes in the

Performance Development, ReductionIn-Force and Competitive Examining

systems. Likewise, Senior Level (SL)

and Scientific and Technical (ST)

employees are covered only under the

Incentive Pay, Performance

Development and Reduction-In-Force

systems. The Demonstration Project may

be implemented incrementally

throughout the Warfare Centers. The

Demonstration Project will be

implemented in bargaining units when

those units so request and a negotiated

agreement is reached. Approximately

fifty percent of the workforce is

represented by unions.

BILLING CODE 6325–01–P
8588 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

BILLING CODE 6325–01–C

F. Employee/Labor Participation

One of the keys to developing a

project plan sensitive to the multiplicity

of management and employee needs has

been the involvement of a Steering

Committee composed of representatives

from the Warfare Center Divisions and

six national unions having bargaining

units at the Warfare Center sites. The

American Federation of Government

Employees (AFGE), Metal Trades

Council (MTC), International

Association of Machinists (IAM),

National Association of Government

Employees (NAGE), the National

Federation of Federal Employees (NFFE)

and Fraternal Order of Police (FOP)

represent more than half of the more

than 25,000 employees in a variety of

occupational groups at Warfare Center

sites across the United States. Appendix

A further describes the employee/union

participation in this effort. The Steering

Committee developed a project plan

capable of meeting the seemingly

differing, sometimes conflicting, goals of

management and the unions. The

Steering Committee substantially altered

the original concept to address those

needs in order to provide a viable

implementation framework capable of

meeting the wide variety of cultures and

needs across the Warfare Center

spectrum. The Steering Committee is

also working to foster the establishment

of partnerships within the Warfare

Centers.

The Steering Committee agreed to the

following language with respect to the

implementation of the Demonstration

Project in the Warfare Center bargaining

units. ‘‘Essential to the success of the

Demonstration Project within a

collective bargaining unit is the explicit

choice of the parties to freely enter into

the project with mutual agreement on

all provisions associated with the

project. To that end, either party will

have the option NOT to enter the project

up to the point where both parties sign

a collective bargaining agreement

covering the Demonstration Project and,

if required, that agreement is ratified

and approved. Further the parties may

include in the contract provisions for

evaluating, modifying and leaving the

project during the life of the contract.’’

Any disputes or impasses that arise in

connection with the negotiation on the

implementation of the Demonstration

Project will be subject to mediation but

not binding impasse procedures. For

any bargaining subsequent to adoption

of the Demonstration Project, the parties

shall use impasse procedures defined in

5 U.S.C. 7119 unless alternative impasse

procedures have been negotiated. In the

event Executive Order 12871 is no

longer in effect, the parties within the

Demonstration Project will continue to

negotiate issues covered by 5 U.S.C.

7106(b)(1) to the extent those issues

impact on the provisions of the

Demonstration Project. Within

bargaining units, violations of

provisions of the Demonstration Project

may be covered by the negotiated

grievance procedure.

This Demonstration Project was

developed with management and union

input through a collaborative process;

however, it was agreed that union

participation did not necessarily

constitute full and complete

endorsement of all details of the project.

The Project will be implemented in

bargaining units only after there is full

agreement through the collective

bargaining process.

While understanding that each

bargaining unit will make its own

choice about participating in the

Demonstration Project, the Steering

Committee has endeavored to create a

project plan to fulfill the mutual

interests of management and employees

while supporting the long term objective

of vital, competitive Warfare Centers

capable of developing and delivering

the best possible technology to their

customers.

III. Methodology

A. Project Design

An overarching objective in the

project design has been the

development of a personnel system that

provides a maximum opportunity for

local ‘‘tailoring’’ to meet the variety of

requirements of organizations engaged

in missions ranging from theoretical

research into submarine vulnerability

and survivability to the storage of

torpedoes. While the Divisions seek to

recruit and retain world class engineers

and scientists in order to remain viable

as laboratories, they must also meet the

development and motivational needs of

an extraordinarily diverse workforce;

i.e., employees ranging from small arms

repairers in Crane, Indiana to program

analysts in Newport, Rhode Island. In

order to accomplish that end, the goal

is to begin the process of delegating

decision making to the people who

know the most about what they need

and how to get their work

accomplished: the Divisions and sites.
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8589

While much of the Demonstration

Project will be applied uniformly, there

are decisions which will be delegated to

the Divisions and activities so that the

needs and cultures of those

organizations may be taken into

account. Decisions at the local level will

be made through the collective

bargaining process.

B. Personnel System Changes

1. Classification and Pay

A fundamental element of the system

is a simplified white collar classification

and pay component. The proposed

broad banding scheme reduces the

fifteen GS grade levels and the Senior

Level (SL) and Scientific & Technical

(ST) pay levels, into five to six broad

pay bands. (See Figure 2) GS

occupations are further broken down

into three separate career paths:

Scientific and Engineering (ND),

Administrative and Technical (NT), and

General Support (NG).

The OPM-developed classification

standards are replaced by a small

number of one-page, generic benchmark

standards developed within the

Demonstration Project. These standards

also serve as the core of the position

description and replace lengthy

individually tailored position

descriptions. These generic level

descriptors encompass multiple series

and provide maximum flexibility for the

organization to assign individuals

consistent with the needs of the

organization, established level or rank

that the individual has achieved, and

the individual’s qualifications. Career

progression between levels will occur

by promotion, and pay progression

within levels will occur through

incentive pay. Warfare Centers’ long

experience with industrial funding will

ensure their ability to control costs, an

essential requirement in today’s

environment.

BILLING CODE 6325–01–P

BILLING CODE 6325–01–C

a. Career Paths. The Warfare Centers

request exemption from the current GS

classification system and substitute

career paths and band levels. The

designated career paths are: Scientific

and Engineering (ND), Administrative

and Technical (NT), and General

Support (NG). Like the China Lake

system, the GS classification series

would be retained. More detailed

descriptions of the career paths and the

classification series for each path are

provided below. The breakdown of

occupational series to career paths

reflects only those occupations which

currently exist within the two Warfare

Centers.

Additional series may be added as a

result of changes in mission

requirements or OPM recognized

occupations. These additional series

will be placed in the appropriate career

path consistent with the established

career path definitions.

Scientific and Engineering:

Professional engineering positions and

scientific positions in the physical,

biological, mathematical, and computer

sciences; and student positions for

training in these disciplines. Series and

titles included in the path are: 0401,

General Biological Science Series; 0403,

Microbiology Series; 0408, Ecology

Series; 0440, Genetics Series; 0460,

Forestry Series; 0471, Agronomy Series;

0499, Biological Science Student

Trainee Series; 0801, General

Engineering Series; 0803, Safety

Engineering Series; 0804, Fire

Protection Engineering Series; 0806,

Materials Engineering Series; 0807,

Landscape Architecture Series; 0808,

Architecture Series; 0810, Civil

Engineering Series; 0819,

Environmental Engineering Series;

0830, Mechanical Engineering Series;

0840, Nuclear Engineering Series; 0850,

Electrical Engineering Series; 0854,

Computer Engineering Series; 0855,

Electronics Engineering Series; 0861,

Aerospace Engineering Series; 0871,

Naval Architecture Series; 0892,

Ceramic Engineering Series; 0893,

Chemical Engineering Series; 0894,

Welding Engineering Series; 0896,
8590 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

Industrial Engineering Series; 0899,

Engineering and Architecture Student

Trainee Series; 1301, General Physical

Science Series; 1306, Health Physics

Series; 1310, Physics Series; 1313,

Geophysics Series; 1320, Chemistry

Series; 1321, Metallurgy Series; 1330,

Astronomy and Space Science Series;

1350, Geology Series; 1360,

Oceanography Series; 1372, Geodesy

Series; 1386, Photographic Technology

Series; 1399, Physical Science Student

Trainee Series; 1515, Operations

Research Series; 1520, Mathematics

Series; 1529, Mathematical Statistician

Series; 1530, Statistician Series; 1550,

Computer Science Series; 1599,

Mathematics and Statistics Student

Trainee Series.

Administrative and Technical:

Professional or specialist positions in

such administrative, technical and

managerial fields as finance,

procurement, human resources,

computer, legal, librarianship, public

information, safety, social sciences, and

program management and analysis;

nonprofessional technician positions

that support scientific and engineering

activities through the application of

various skills and techniques in

electrical, mechanical, physical science,

biology, mathematics, and computer

fields; and student positions for training

in these disciplines. Series and titles

included in this path are: 0018, Safety

and Occupational Health Management

Series; 0020, Community Planning

Series; 0028, Environmental Protection

Specialist Series; 0080, Security

Administration Series; 0099, General

Student Trainee Series; 0101, Social

Science Series; 0110, Economist Series;

0132, Intelligence Series; 0170, History

Series; 0180, Psychology Series; 0185,

Social Work Series; 0187, Social

Services Series; 0188, Recreation

Specialist Series; 0201, Personnel

Management Series; 0205, Military

Personnel Management Series; 0212,

Personnel Staffing Series; 0221, Position

Classification Series; 0230, Employee

Relations Series; 0233, Labor Relations

Series; 0235, Employee Development

Series ; 0260, Equal Employment

Opportunity Series; 0299, Personnel

Management Student Trainee Series;

0301, Miscellaneous Administration

and Program Series; 0334, Computer

Specialist Series; 0340, Program

Management Series; 0341,

Administrative Officer Series; 0342,

Support Services Administration Series;

0343, Management and Program

Analysis Series; 0346, Logistics

Management Series; 0391,

Telecommunications Series; 0399,

Administration and Office Support

Student Trainee Series; 0501, Financial

Administration and Program Series;

0505, Financial Management Series;

0510, Accounting Series; 0560, Budget

Analysis Series; 0599, Financial

Management Student Trainee Series;

0602, Medical Officer Series; 0610,

Nurse Series; 0690, Industrial Hygiene

Series; 0802, Engineering Technician

Series; 0809, Construction Control

Series; 0818, Engineering Drafting

Series; 0856, Electronics Technician

Series; 0895, Industrial Engineering

Technician Series; 0899, Engineering

and Architecture Student Trainee

Series; 0905, General Attorney Series;

0950, Paralegal Specialist Series; 0962,

Contact Representative; 1001, General

Arts and Information Series; 1010,

Exhibits Specialist Series; 1015,

Museum Curator Series; 1016, Museum

Specialist and Technician Series; 1020,

Illustrating Series; 1035, Public Affairs

Series; 1060, Photography Series; 1071,

Audiovisual Production Series; 1082,

Writing and Editing Series; 1083,

Technical Writing and Editing Series;

1084, Visual Information Series; 1101,

General Business and Industry Series;

1102, Contracting Series; 1103,

Industrial Property Management Series;

1104, Property Disposal Series; 1150,

Industrial Specialist Series; 1152,

Production Control Series; 1173,

Housing Management Series; 1176,

Building Management Series; 1199,

Business and Industry Student Trainee

Series; 1222, Patent Attorney Series;

1311, Physical Science Technician

Series; 1410, Librarian Series; 1412,

Technical Information Services Series;

1420, Archivist Series; 1521,

Mathematics Technician Series; 1601,

General Facilities and Equipment

Series; 1640, Facility Management

Series; 1654, Printing Management

Series; 1670, Equipment Specialist

Series; 1701, General Education and

Training Series; 1710, Educational and

Vocational Training Series; 1712,

Training Instruction Series; 1810,

General Investigating Series; 1811,

Criminal Investigating Series; 1910,

Quality Assurance Series; 2001, General

Supply Series; 2003, Supply Program

Management Series; 2010, Inventory

Management Series; 2030, Distribution

Facilities and Storage Management

Series; 2032, Packaging Series; 2050,

Supply Cataloging Series; 2101,

Transportation Specialist Series; 2130,

Traffic Management Series; 2150,

Transportation Operations Series; 2181,

Aircraft Operations Series.

General Support: Assistant and

clerical positions providing support in

such fields as budget, finance, supply,

human resources; positions providing

support through application of typing,

clerical, or secretarial knowledge and

skills; positions providing specialized

facilities support such as guards, police

officers and firefighters; and student

positions for training in these

disciplines. This path includes the

following series and titles: 0019, Safety

Technician Series; 0029, Environmental

Protection Assistant Series; 0081, Fire

Protection and Prevention Series; 0083,

Police Series; 0085, Security Guard

Series; 0086, Security Clerical and

Assistance Series; 0134, Intelligence Aid

and Clerk Series; 0186, Social Services

Aid and Assistant Series; 0189,

Recreation Aid and Assistant Series;

0203, Personnel Clerical and Assistance

Series; 0204, Military Personnel Clerical

and Technician Series; 0303,

Miscellaneous Clerk and Assistant

Series; 0304, Information Receptionist

Series; 0305, Mail and File Series; 0318,

Secretary Series; 0322, Clerk-Typist

Series; 0326, Office Automation Clerical

and Assistance Series; 0332, Computer

Operation Series; 0335, Computer Clerk

and Assistant Series; 0344, Management

Clerical and Assistance Series; 0350,

Equipment Operator Series; 0351,

Printing Clerical Series; 0356, Data

Transcriber Series; 0361, Equal

Opportunity Assistance Series; 0382,

Telephone Operating Series; 0390,

Telecommunications Processing Series;

0392, General Communications Series;

0394, Communications Clerical Series;

0399, Administration and Office

Support Student Trainee Series; 0462,

Forestry Technician Series; 0503,

Financial Clerical and Assistance Series;

0525, Accounting Technician Series;

0530, Cash Processing Series; 0540,

Voucher Examining Series; 0544,

Civilian Pay Series; 0561, Budget

Clerical and Assistance Series; 0640,

Health Technician; 0647, Diagnostic

Radiologic Technologist Series; 0679,

Medical Clerk Series; 0698,

Environmental Health Technician

Series; 0945, Clerk of Court Series; 0986,

Legal Clerical and Assistance Series;

1087, Editorial Assistance Series; 1105,

Purchasing Series; 1106, Procurement

Clerical and Technician Series; 1107,

Property Disposal Clerical and

Technician Series; 1411, Library

Technician Series; 1531, Statistical

Assistant; 1702, Education and Training

Technician Series; 2005, Supply

Clerical and Technician Series; 2091

Sales Store Clerical Series; 2102,

Transportation Clerk and Assistant

Series; 2131, Freight Rate Series; 2135,

Transportation Loss and Damage Claims

Examining Series; 2151, Dispatching

Series.
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b. Broad Bands and Levels of

Responsibility. A fundamental purpose

of broad banding is to make the

distinctions between levels easier to

discern and more meaningful. In that

regard, the 15 GS grade levels are

reduced to no more than six band levels,

each representing a defined level of

work. Within each career path, bands

typically include the following

categories of positions: student trainee

and/or entry level, developmental, full

performance level, and expert and/or

supervisor/manager.

With fewer band levels than GS

grades, the level of responsibility

reflected in each band typically

encompasses the responsibilities of two

or more GS grade levels. For example,

the responsibilities of a band level

covering work at the full performance

level may represent a synthesis of GS–

11 and GS–12 responsibilities. For the

NT career path, the responsibilities

associated with the top two bands do

not precisely align with equivalent GS

levels. Some GS–14 level

responsibilities band best with GS–13

while others band best with GS–15.

Although band VI of the ND career

path covers SL and ST positions, this

does not represent a requested change in

the basis for classification or allocation

of billets for these positions. The

authority to allocate new billets, classify

positions and set initial pay for

assignment to SL and ST positions

within the Warfare Centers will be

retained at the Assistant Secretary of the

Navy (Manpower and Reserve Affairs)

level. The intent of including these

positions in the SE career path was two

fold: (1) to emphasize the dual career

progression for scientists and engineers

in nonsupervisory and nonmanagerial

career paths; and (2) to include SL and

ST employees in all other aspects of the

Demonstration Project, i.e., performance

development, incentive pay and

reduction-in-force systems. Consistent

with our goal of developing,

recognizing, and retaining employees

needed to meet our changing

organizational needs, the Demonstration

Project seeks the authority to manage its

SL and ST workforce under the same

performance development and incentive

system as other employees. This

includes the authority at the Division

level to adjust the pay of SL and ST

employees up to Level IV of the

Executive Schedule. Incentive pay

decisions will be made against criteria

relevant to the needs of the organization

including the criticality and difficulty of

the position, critical skills, and current

salary level of the employees.

c. Simplified Classification Process. A

limited number of Warfare Center onepage generic, level descriptor that also

serve as the core of preclassified

position descriptions will be created

within the Demonstration Project. Those

descriptions may be further tailored

with an addendum to provide

information on Fair Labor Standards Act

(FLSA) coverage, selective placement

factors, specialized knowledge/skills/

abilities, etc. Within the Demonstration

Project, the term ‘‘classification of a

position’’ for positions covered by broad

banding is defined as the placement of

a position in its appropriate career path,

occupational series, and band level

based on the application of standards

(referred to as level descriptors or

benchmark standards) established at the

Warfare Center level. Line managers

will be meaningfully involved in the

classification process to make it more

relevant to their organization’s needs.

d. Simplified Assignment Process.

Today’s environment of downsizing and

workforce transition mandates that the

organization has maximum flexibility to

assign individuals. Broad banding can

be used to address these needs. As a

result of the assignment to a particular

level descriptor, the organization will

have maximum flexibility to assign an

employee within broad descriptions

consistent with the needs of the

organization, and the individual’s

qualifications and rank or level.

Subsequent assignments to projects,

tasks, or functions anywhere within the

organization requiring the same level

and area of expertise, and qualifications

would not constitute an assignment

outside the scope or coverage of the

current level descriptor. Such

assignments within the coverage of the

generic descriptors are accomplished as

realignments and do not constitute a

position change. For instance, a

technical expert can be assigned to any

project, task, or function requiring

similar technical expertise. Likewise, a

manager could be assigned to manage

any similar function or organization

consistent with that individual’s

qualifications. This flexibility allows a

broader latitude in assignments and

further streamlines the administrative

process and system.

e. Broad Bands and Salary Ranges.

The basis for the Demonstration Project

pay system is each band level having a

basic salary range that exactly

corresponds to salaries of three or more

GS grade levels. This continued linkage

with the GS system will result in

adjustments to the salary ranges through

future general and locality pay increases

under the General Schedule System. To

more closely replicate the salary overlap

found in the current GS system, there is

a one grade extended salary overlap

with each lower band for bands II and

above. (See Figure 3) The one exception

is the band for ST and SL positions (ND

VI). Consistent with law, the pay range

for these positions will continue to be

120% of GS 15/1 salary up to Executive

Level IV. The purpose of the salary

overlap is twofold. First, it is to provide

pay setting flexibilities and cost

containment opportunities in

promotions. This reduces the instances

of non discretionary promotion pay

increases of greater than 6% that may

otherwise be required to advance pay to

the lower end of the next higher band

level. The second purpose is to facilitate

an assignment back to the next lower

level without loss in pay when

appropriate.

BILLING CODE 6325–01–P
8592 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

BILLING CODE 6325–01–C

f. Locality Pay and Special Salary

Rates. For each band level, the basic

annual rate of pay will be adjusted to

reflect the appropriate locality pay

percentage. The maximum salary with

locality pay will be referred to as

‘‘locality pay point’’. When the special

salary rates authorized under the GS

system exceed the locality pay point,

the top of the applicable band will be

extended to the maximum special salary

rate authorized for that series and

geographic location. Placement within

this special rate extension will be

restricted to employees in a series

covered by that special rate. An

employee will be considered a special

rate employee only if his/her basic pay

falls within the extension, i.e., the basic

pay exceeds the locality pay point.

Consistent with the intent of locality

pay, special salary rate employees, as

defined above, will not be eligible for

locality pay adjustments. When the

locality pay point overtakes the

employee’s rate of basic pay through

general or locality pay increases, the

employee will no longer be considered

a special salary rate employee. In this

instance, the employee’s total adjusted

basic pay will be increased to the new

locality pay point. The employee’s new

adjusted salary will then be reallocated

into a new basic pay and a locality pay

adjustment rate. Pay retention

provisions and adverse action

procedures will not apply to the

reallocation of the employee’s salary as

the employee’s total adjusted salary will

remain the same.

g. Pay Administration. The following

definitions and policies will apply to

the movement of employees within the

Demonstration Project from one career

path or band level to another, or

placement in a Demonstration Project

Career Path from the GS, FWS, or other

personnel systems:

Advanced In-Hire Rate: Upon initial

appointment, the individual’s pay may

be set anywhere within the band level

consistent with the special

qualifications of the individual and the

unique requirements of the position.

These special qualifications may be in

the form of education, training,

experience, or any combination thereof

that is pertinent to the position in which

the employee is being placed.

Geographic Movement Within the

Demonstration Project: An employee

covered by broad banding who moves to

a new duty station in a different

geographic area and continues to be an

employee covered by the Warfare Center

Demonstration Project will have his/her

pay in the new area computed as

explained below. In all cases, the

geographic movement is processed

before any other simultaneous pay

action (e.g., promotion, reassignment,

downgrade, change in series, etc.)

effective on the same day.

1. Regular Range Employees. An

employee paid at a rate below the

locality pay point for his or her band

level will receive no change in his or

her rate of basic pay upon geographic

movement. The employee’s locality pay

adjustment will be recomputed using

the newly applicable locality pay

percentage, which may result in a

higher or lower locality pay adjustment

and, thus, a higher or lower adjusted

rate (locality rate or special rate, as

applicable). Exception: For employees

who would be eligible for a special rate

under the GS system and who are in the

regular range of a band with a special

rate extension, the new adjusted salary

following a geographic move may not be

less than the old adjusted salary

multiplied by the factor derived by

dividing the new adjusted band

maximum by the old adjusted band

maximum.

2. Special Rate Extension Employees.

For an employee being paid at a rate in

a special rate extension, the new

adjusted salary following a geographic
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8593

move is equal to the old adjusted salary

multiplied by the factor derived by

dividing the new adjusted band

maximum by the old adjusted band

maximum; however, the new adjusted

rate may not be less than the applicable

locality pay point in the new area.

3. Pay Protection Provision. A special

pay protection provision applies to

employees who (a) were entitled to a

special rate immediately before

conversion into the demonstration

project, (b) continue to meet the GS

special rate eligibility conditions, and

(c) are paid at a rate that equals or

exceeds the dollar amount of the preconversion special rate. For these

employees, the new adjusted rate

following a geographic move may not be

less than the dollar amount of the

employee’s pre-conversion special rate.

Adverse action and pay retention

provisions of Title 5, United States

Code, will not apply to any reduction in

basic pay due solely to the operation of

the above rules.

Promotion: Within the Demonstration

Project Broad Banding system a

promotion will be defined as the

movement of an employee from a lower

to a higher band level in the same career

path, or from one career path to another

wherein the band in the new career path

has a higher maximum salary than the

band from which the employee is

moving.

After the implementation of the

Demonstration Project, for an employee

moving from the GS, a promotion will

be defined as placement in a band level

which incorporates a GS grade level

which is higher than the employee’s

current grade.

For an employee moving from the

FWS, a promotion will be defined as

placement in the Demonstration Project

in a band level where the representative

rate of the highest GS grade covered (i.e.

step 04 of the highest GS grade) is

higher than the representative rate of the

employee’s current FWS grade (i.e. step

02).

Promotions will follow basic federal

merit promotion policy that provides for

competitive and non-competitive

promotions. Upon promotion, an

employee will normally receive an

increase of six percent unless a higher

increase is necessary to raise the

employee’s salary to the minimum

salary of the new band. The employee’s

total adjusted pay (basic pay and

locality pay; if any) will be used in

determining the amount of the

promotion increase and in setting the

employee’s adjusted pay in the higher

band. Decisions not to increase pay or

for increases of other than six percent or

to the minimum level of the band must

be approved at the Division level, unless

otherwise delegated to lower levels. In

no situation may an employee’s salary

upon promotion be established lower

than the minimum salary range of the

new band.

Factors to be used to help determine

the amount of the increase may include,

but are not limited to, the employee’s

directly related experience which may

be of immediate use in the new

position; the employee’s current pay;

and the relationship to salaries of other

similarly qualified employees.

Reassignment: For movement within

the Demonstration Project Broad

Banding system, a reassignment will be

movement to a position covered by the

same band level, or from one career path

to another when the salary range of the

new band level and the employee’s

current band level remains the same.

For an employee moving from the GS,

a reassignment will be defined as

placement in the Demonstration Project

in a band level where the highest GS

grade covered is the same as the

employee’s current GS grade.

For an employee moving from the

FWS, a reassignment will be defined as

placement in the Demonstration Project

in a band level where the representative

rate of the highest GS grade covered

(i.e., step 04 of the highest GS grade

included in that broad band) is the same

as the representative rate of the

employee’s current FWS grade.

Demotion or change to lower band

level: For movement within the

Demonstration Project Broad Banding

system, a demotion will be defined as

the movement of an employee from a

higher band to a lower band within the

same career path, or from one career

path to another where the band in the

new career path has a lower maximum

salary than the band from which the

employee is moving.

For an employee moving from the GS,

a demotion will be defined as placement

in the Demonstration Project in a band

level where the highest GS grade

covered is lower than the employee’s

current GS grade.

For employees moving from the FWS,

a demotion will be defined as placement

in the Demonstration Project in a band

level where the representative rate of

the highest GS grade covered (i.e. step

04 of the highest grade included in that

pay band) is lower than the

representative rate of the employee’s

current FWS grade.

Salary adjustment: A salary

adjustment is defined as an increase in

an employee’s base pay (by other than

the incentive pay process) within the

employee’s current band level to an

amount which does not exceed the top

of the band. The salary adjustment may

be used to adjust the pay of individuals

who have acquired a level of education

that would otherwise make the

employee qualified for an appointment

at a higher level and would be used in

lieu of a new appointment. For example,

this authority may be used to adjust the

pay of graduate level Cooperative

Education (COOP) students or

employees who have obtained an

advanced degree, e.g., Ph.D.

Other: Current provisions for Highest

Previous Rate, Pay Retention (except as

otherwise noted), Special Recruitment

and Relocation Bonuses, Retention

Allowances and Accelerated Promotions

will continue. The use of OPM’s

Operating Manual for ‘‘Qualification

Standards For General Schedule

Positions’’ will continue with minor

modifications; ‘‘Band’’ will be

substituted for ‘‘Grade’’ where

appropriate and the time in grade

requirement will be eliminated.

2. Performance Development System

The philosophical base of this

Demonstration Project is that employees

are valued and trusted and are the

organization’s most critical assets.

Accordingly, the primary objectives of

the Demonstration Project are to:

Develop employees to meet the

changing needs of the organization; to

help employees achieve their career

goals; to improve performance in

current positions; to retain high

performers, and to improve

communication with customers,

colleagues, managers and employees.

The system focuses on continuous

performance improvement and

minimizes administrative requirements.

On-going dialogue between the

employee and supervisor is

fundamental to this development focus,

and Performance Development

Resources are provided as part of the

system to facilitate this dialogue and

assist with diagnosis of performance

issues. The emphasis on continued

improvement is carried over into the

process for addressing performance

problems. The proposed system

substitutes an early intervention which

focuses immediately on a formal

performance plan designed to support

the employee’s success. A

determination of unacceptable

performance is made only if the

employee does not meet the

requirements for acceptable

performance detailed in that plan. The

following paragraphs describe the key

components of the Performance

Development System. Figure 4 depicts

the relationship of these components
8594 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

and their linkage with the Incentive Pay

system.

BILLING CODE 6325–01–P

BILLING CODE 6325–01–C

a. Performance Development

Resources. At the heart of the

performance development system is the

concept of providing organizational

resources to support the development

process. While the design of these

resources will be delegated to each

Division, they will typically consist of a

pool of people, including union

representatives, who act as a support

system to identify or help provide for

the needs of employees and managers in

the development process. Current

limitations regarding union involvement

in discussions concerning assigning and

directing employees will not prevent the

parties within the Demonstration Project

from developing appropriate procedures

for the Performance Development

Resources.

The Resources will be available to

facilitate communications around

expectations and needs, and help

supervisors and employees seek

agreement throughout all aspects of the

performance development process.

Should performance problems arise,

these resources will be particularly

useful in diagnosing issues impacting

performance (e.g., employee skills,

attitudes and motivation, clarity of job

expectations, systemic issues, access to

information and resources, relationships

with co-workers and supervisor, etc.)

and identifying options for addressing

these issues (e.g., development

opportunities, tools or equipment to

support improved performance,

reassignment of the employee to a

position that better matches his/her

capabilities and interests, etc.). They

will also make referrals to others who

may be helpful, and identify systemic or

organization wide issues which may be

affecting performance.

Supervisors are expected to utilize the

Resources for assistance in preventing

and alleviating performance problems.

Employees may also use the resources to

assist them in correcting self-identified

performance problems, in development

planning to enhance their career

opportunities consistent with the needs

of the organization, and to facilitate

communication and feedback with their

supervisors, etc.

b. Two Level Rating System. The

system employs a two level rating

system: ‘‘acceptable’’ and

‘‘unacceptable’’ performance.

‘‘Acceptable’’ performance is defined as

‘‘performance that fulfills the

requirements for which the position

exists.’’ An employee’s performance

may not be determined ‘‘unacceptable’’

unless the employee has been placed on

and failed a performance plan.

Employee performance ratings will be

documented annually.

c. Establishing Performance

Expectations. Clear, mutually

understood performance expectations

that are linked to organizational goals,

strategies and values are fundamental to

successful individual and organizational

performance. The outcome of this

component of the Performance

Development System is clear

communication of the products and/or

services to be delivered by the

employee(s), and the success criteria

against which those outputs will be

assessed. Documentation of outputs and

success criteria is expected when

necessary to facilitate mutual

understanding of performance

expectations.

The most effective means of creating

a common understanding is through a

process in which the supervisor and
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8595

employee(s) discuss requirements and

establish performance goals and

expectations. Employees and

supervisors are expected to actively

participate in these discussions to seek

clarity regarding expectations and

identify potential obstacles to meeting

goals. In addition, employees should

explain (to the extent possible) what

they need from their supervisor to

support goal accomplishment. The

timing of these goal setting discussions

will vary based on the nature of work

performed, but will occur at least

annually. More frequent, task specific,

discussions of expectations may be

more appropriate in some organizations.

In cases where work is accomplished by

a team, team discussions regarding goals

and expectations may be appropriate;

however, expectations for individual

contributions to the team goals should

always be clearly specified. Either the

supervisor, the employee, or the union

may enlist the assistance of the

Performance Development Resources to

facilitate effective dialogue with regard

to these issues.

Documentation of performance

expectations is a helpful mechanism for

ensuring clarity of understanding and

providing a focus for later discussions

on progress and developmental needs.

As a minimum, formal documentation

of expectations is required when an

employee begins a new or substantially

different job. Documentation in other

situations is based on the needs and

desires of the employee and supervisor,

and may rely on other existing

documentation (e.g., project plans,

process documentation, customer

requirements, etc.) No prescribed format

is required for such documentation; the

employee and supervisor are

encouraged to seek agreement on what

form of documentation will meet their

needs and who will be responsible for

producing it. The assistance of the

Performance Development Resources

may be enlisted by either party to

support their efforts to reach agreement.

In bargaining units, documentation

procedures will be subject to bargaining.

Current limitations regarding union

involvement in decisions concerning

assigning and directing employees will

not prevent the parties within the

Demonstration Project from developing

appropriate procedures for documenting

performance discussions.

d. On-going Performance Dialogue. To

facilitate performance development,

employees and supervisors will engage

in on-going dialogue. Ideally this

dialogue will occur as part of normal

day-to-day interactions for the purpose

of ensuring a common understanding of

expectations, reviewing whether

expectations are being met, providing

support in identifying resources or

solving problems, providing coaching

on complex or sensitive issues,

providing information to increase the

understanding of the project context,

and keeping the supervisor informed of

progress. In addition to this on-going

interaction, however, it is expected that

periodically a more formal dialogue will

occur focused on reviewing progress,

discussing customer feedback, exploring

process improvements that could

remove obstacles to effective

performance, and identifying

developmental needs to support

continual improvement and career

growth. The employee and supervisor

should seek agreement on the frequency

and form for both the formal and

informal dialogues to ensure they will

meet their needs. Either the supervisor,

the employee or the union may call

upon the Performance Development

Resources to facilitate communications

or conflict resolution around these

issues. In cases where work is

accomplished by a team, team meetings

may be an appropriate forum for some

of this interaction; however, team

discussions do not eliminate the need

for the supervisor to have some form of

individual dialogue with each

employee.

The expected outcomes from this ongoing dialogue component are plans to

support the continuous improvement of

individual and organizational

performance. Documentation of these

discussions and resulting plans is

encouraged to the extent that it

contributes to clarity of understanding

and facilitates later review of progress

on continuous improvement efforts. The

nature and content of such

documentation is based on the needs

and desires of the employee and

supervisor. No prescribed format is

required for such documentation; the

employee and supervisor are

encouraged to seek agreement on what

form of documentation will meet their

needs and who will be responsible for

producing it. The assistance of the

Performance Development Resources

may be enlisted by either party to

support their efforts to reach agreement.

In bargaining units, these procedures

are subject to bargaining. Current

limitations regarding union involvement

in decisions concerning assigning and

directing employees will not prevent the

parties within the Demonstration Project

from developing appropriate procedures

for ongoing performance dialogues and

for documenting performance

discussions.

e. Feedback from Multiple Sources.

The primary purpose of feedback in the

Performance Development System is to

provide employees with information

regarding how well their performance is

meeting customer requirements in order

to help the employees continually

improve their performance. The outputs

expected from this component are data

and customer feedback which enable

review of performance against success

criteria. These data provide input to the

review and continuous performance

improvement planning discussed as part

of the on-going dialogue component.

The responsibility for employee

development and continuous

improvement is jointly held between the

supervisor and employee. They are

expected to work together to identify

internal and external customers and to

define and implement a process by

which the employee can regularly

receive feedback. A variety of

mechanisms may be appropriate, such

as customer surveys, process measures

which track customer requirements, and

discussions with customers. Supervisors

are expected to facilitate this process

and work with employees to interpret

the feedback and establish improvement

goals. Performance Development

Resources may be helpful during this

process. Their assistance may be

requested by the supervisor, the

employee or the union. Current

limitations regarding union involvement

in decisions concerning assigning and

directing employees will not prevent the

parties within the Demonstration Project

from developing appropriate

mechanisms and procedures for

obtaining feedback from multiple

sources.

Managers and supervisors are also

expected to obtain feedback from their

customers, including their employees,

and to use that feedback as a basis for

establishing both personal and

organizational performance

development goals. The use of an

anonymous instrument is appropriate

for providing feedback to supervisors

and managers on the impact of their

behavior. The use of these instruments

will help focus attention on desired

leadership behaviors, structure the

feedback in a constructive manner, and

offset the power imbalance that often

prevents supervisors from getting useful

feedback from their employees. When

necessary, supervisors and managers

may choose to use the Performance

Development Resources to help support

their own developmental needs.

f. Performance Plan. When an

employee has continued performance

difficulties, the organization will

provide a formal Performance Plan to

support the supervisor and employee in

resolving the performance problems.
8596 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

Use of the Performance Development

Resources will be an integral part of this

effort. Supervisors are expected to call

on the Resources for assistance in

preventing or alleviating performance

problems before the need for formal

action arises. When there is an

indication that performance is not

consistently meeting customer

requirements, supervisors are expected

to call on the Resources to analyze the

causes of the difficulty and develop an

approach for resolving it. Development

of a formal Performance Plan is

indicated if and when it is determined

that the employee’s performance (vs.

system performance) is a contributor to

the problem and informal intervention

has not been successful in correcting the

problem. Use of the Performance

Development Resources is expected

throughout the period of the

Performance Plan in an attempt to

facilitate a solution to the problem. The

Performance Plan must be written, and

will clearly document organizational

expectations for successful job

performance, specify accountability,

identify developmental resources to

correct any skill deficiencies, define the

time frame of the performance plan,

specify organizational support that will

be provided and how performance

results will be monitored. In addition,

the Plan will clearly specify the

potential consequences if performance

is not acceptable. Periodic discussions

between the supervisor and employee

must occur during the time frame of the

Performance Plan to review progress;

these discussions must be documented.

Current limitations regarding union

involvement in decisions concerning

assigning, directing, removing or

reducing in grade employees will not

prevent the parties within the

Demonstration Project from developing

appropriate procedures and

documentation in connection with

Performance Plans. (Note: Nothing in

this subsection will preclude action

under Title 5, United States Code,

Chapter 75, when appropriate.)

g. Accountability for Performance. An

employee will be given a rating of

unacceptable only if and when the

employee is unable to successfully

complete the Performance Plan. When

an employee’s performance is rated as

unacceptable, one of four actions will be

taken: (1) removal from the Federal

Service, (2) placement in a lower band

level with a corresponding reduction in

pay (demotion), (3) reduction in pay

while remaining in the same band level,

or (4) placement in a lower band level

with no reduction in pay (demotion).

For the third category of action, the

amount of reduction in pay will be up

to, but may not exceed, the maximum

amount of incentive pay (see below) that

the employee could be eligible to

receive during the current payout

period, i.e., up to the equivalent of 4

continuing pay points as of the most

recent payout cycle. Following the pay

reduction, the objective is to restore

performance and pay commensurate

with it. A formal Development Plan will

be established to maximize the

opportunity for success in the

assignment by clearly identifying

performance expectations and defining

a plan to achieve them within an

appropriate time frame, not to exceed 12

months. The activity’s Performance

Development Resources will be utilized

throughout this process. If and when

performance improves during the period

in which the employee is otherwise

ineligible for incentive pay, some or all

of the reduced pay may be restored.

Such restoration is not retroactive and is

separate and apart from incentive pay.

For the fourth category of action, the

employee may be moved to the next

lower band level provided no loss in

pay results and the employee’s pay does

not exceed the top of the lower band

level. Within the Demonstration Project,

this would not be considered an adverse

action and would not be appealable

through a statutory appeals process

except for preference eligible

employees. Employees will be provided

with a written notice of the decision and

preference eligibles will be notified of

their right to appeal the action to the

Merit Systems Protection Board. Current

limitations regarding union involvement

in decisions concerning reducing

employees in grade will not prevent the

parties within the Demonstration Project

from developing procedures for the nonadverse reduction in band level. The

decision to reduce an employee to a

lower band level with no reduction in

pay will be subject to review under

existing grievance or alternative dispute

resolution procedures.

3. Incentive Pay System

The Incentive Pay System provides a

mechanism for encouraging and

rewarding performance contributions

and other outcomes resulting from the

continuous improvement focus of the

performance development system.

Incentive Pay for Employees Covered

by Broad Banding: Supervisors will

conduct an annual review of each

employee’s salary and decide how total

compensation should be adjusted to

reflect the employee’s performance

contribution to the organization. The

adjustment may be made as a

continuing increase to base pay and/or

as a one-time cash bonus to adjust total

compensation. The philosophical

foundation for incentive pay is

described below:

BILLING CODE 6325–01–P
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8597

BILLING CODE 6325–01–C

a. Eligibility. All employees who are

making positive performance

contributions as demonstrated by

acceptable performance will share in

incentive pay with the amounts and

time intervals set by the Divisions and

sites. Employees receiving an

unacceptable rating since the last

incentive payout are ineligible for the

next incentive pay consideration.

b. Incentive Pay Pool. Payments under

the Incentive Pay System are made from

the incentive pay pool. Within the
8598 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

incentive pay pool, there are separate

funds for continuing pay increases and

bonus payments. The incentive pay pool

is not used to fund promotions between

pay bands. It is also not used to fund

general pay increases, special rate

increases, or locality pay increases;

rather, employees will continue to

receive any such increases consistent

with other employees outside the

demonstration project.

The incentive pay pool will be

operated within the parameters of the

overall finance system governing the

Warfare Centers. As a Defense Business

Operating Fund (DBOF) activity, the

Warfare Centers are 100 percent

industrially funded and operate as ‘‘notfor-profit’’ competitors within the

Department of Defense. Under DBOF,

the Centers are reimbursed for their

work by their customers through

billings based on stabilized rates. The

assistant Secretary of the Navy for

Financial Management and Comptroller

oversees the establishment of these

stabilized rates through reviews of

Biannual Financial Management Budget

submissions, which are highly visible at

all Command levels. This funding

process imposes a discipline in

controlling costs (including salary

expenditures) for the Warfare Centers

that is not present under appropriated

funded organizations.

The size of the continuing pay fund

is based on appropriate factors,

including the following:

a. historical spending for within-grade

increases, quality step increases, and inlevel career promotions (with dynamic

adjustments to account for changes in

law or in staffing factors e.g., average

starting salaries and the distribution of

employees among job categories and

band levels);

b. labor market conditions and the

need to recruit and retain a skilled

workforce to meet the business needs of

the organization; and

c. the fiscal condition of the

organization.

Given the implications of base pay

increases on long-term pay and benefit

costs, the amount of the continuing pay

fund will be derived after a cost analysis

with documentation of the missiondriven rationale for the amount. Any

decision to substantially reduce the

amount of funds devoted to continuing

pay increases would typically occur

only in lieu of more drastic cost cutting

measures (e.g., RIF or furlough). As part

of the evaluation of the project, average

salary (base pay) will be tracked over

time using two comparison groups: (1)

the original two Navy Demonstration

labs in China Lake and San Diego, and

(2) a comparison group constructed

using OPM’s Central Personnel Data

File.

The size of the bonus pay fund will

be based on appropriate factors,

including the following:

a. historical spending for performance

awards, special act awards, and awards

for beneficial suggestions;

b. the organization’s fiscal condition

and financial strategies; and

c. employee retention rates.

The decision process for defining the

size of the incentive pay pool and the

two funds within that pool will be

established at the Division/site level.

The design of the decision process,

insofar as it affects bargaining unit

employees, will be subject to collective

bargaining.

d. Delegated Criteria Setting. The

criteria and process for incentive pay

will be substantially defined at the

Division/site level. The incentive pay

decision may be based on some

combination of past, present and future

performance. Examples of criteria may

include criticality of skills, difficulty of

position, criticality of position,

individual or team contributions,

suggestions for improving system or

organization processes, length and/or

quality of experience, current total

compensation, etc. The criteria and

process for incentive pay distribution

for bargaining unit employees are

subject to collective bargaining. Current

limitations regarding union involvement

in decisions concerning assigning and

directing employees will not prevent the

parties from developing the criteria and

process for incentive pay decisions.

(Note: The movement of an employee

within a band based on the execution of

an incentive pay decision is not a

‘‘classification’’ action.)

e. Pay points. The payout process will

utilize a point system to distribute

incentive pay increases. A maximum of

four (4) points will be available, thus

each employee performing in an

acceptable manner will be eligible to

receive 0,1,2,3 or 4 pay points in the

form of continuing pay, bonus pay or

some combination.

For FWS employees, cash awards

continue to be available under the

existing Incentive Awards system based

on performance and special acts.

f. Communication and

Documentation. It is important that

employees understand what is expected

in order to receive a pay increase.

Supervisors will interpret organizational

criteria for their employees to clarify

how it applies to their work and have

periodic assessment discussions with

employees to prevent surprise decisions

at the time of payout. These assessment

discussions should normally be held

separately from performance

development dialogues. Supervisors and

employees are encouraged to seek

agreement on their documentation

needs. In addition, supervisors are

expected to document their payout

recommendation decisions and to

discuss their decision rationale with

employees. In bargaining units,

documentation procedures will be

subject to bargaining. Current

limitations regarding union involvement

in decisions concerning assigning and

directing employees will not prevent the

parties from developing documentation

procedures for the communication and

documentation of incentive pay

discussions and decisions.

g. Reconsideration of Incentive Pay

Decisions. Employees will have the

opportunity for a reconsideration of

incentive pay decisions. While the

specific purpose of the reconsideration

is to address employee concerns about

such decisions, the process is also

intended to facilitate communication

and understanding between employees

and supervisors/managers concerning

performance contributions and their

impact on pay decisions. In addition,

the process seeks to identify possible

systemic problems that need to be

addressed. In that regard,

reconsideration is considered a positive

and integral component of an effective

incentive pay system by providing a

mechanism to support continuous

improvement. Accordingly, employees

will not be discouraged from requesting

reconsideration. Neither will they be

subjected to reprisal or stigma. The

specific process for reconsideration will

be defined at the Division/site level.

Current limitations regarding union

involvement in decisions concerning

assigning and directing employees will

not prevent the parties from developing

procedures for the reconsideration of

incentive pay decisions. That process

will include, but will not necessarily be

limited to, the following characteristics:

It should be administratively

streamlined; provide expedited

resolution; maintain appropriate

confidentiality; be fair and impartial;

address assertions of harmful error

involving issues of process and

procedure; and ensure that management

payout decisions reflect reasonableness

in judgment in evaluating applicable

criteria.

h. Guidance on Managing Incentive

Pay. Each Division is expected to

develop policies and criteria to guide

the implementation of the incentive pay

system which are consistent with their

mission, strategies and organizational

values, and supportive of the Naval Sea

Systems Command and Warfare Center
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8599

strategic plans. Some Divisions may rely

on individual management judgment

based on general guidance, while other

Divisions may define a more mechanical

process based on highly objective

criteria. Additional guidance may be

provided by major organizational

components (e.g., departments or

directorates) to tailor or interpret the

command-level criteria for their specific

mission and strategies. Each major

organizational component will have

authority to manage the incentive pay

allocation derived from the salaries of

employees in that component.

Departments/Directorates may further

delegate authority to manage a prorated

portion of the fund to the next lower

echelon. Supervisors and managers

within the unit will be assessing the

nature of each employee’s contribution,

consistent with the organization’s policy

and criteria as reflected in the written

guidance. They will then make

recommendations to a second level

reviewer regarding the number of pay

points to be awarded to each employee

(i.e., 0 to 4 points) and the nature of

incentive pay (i.e., continuing pay and/

or bonus pay). Decisions regarding

approval/disapproval of

recommendations will be made at the

organizational level to which authority

has been delegated to manage the pay

pool; typically this will be the second or

third level reviewer. In cases where

work is accomplished by a team, the

team members may be involved in

formulating the recommendation for

distribution of incentive pay.

4. Reduction in Force (RIF)

Flexible and responsive alternatives

are needed to restructure an

organization in a short period of time.

The current RIF system is complicated,

costly, and relatively unresponsive to

the needs of the organization.

The proposed RIF system will have a

single round of competition to replace

the current ‘‘two round’’ process. Once

the position to be abolished has been

identified, the incumbent of that

position may ‘‘displace’’ another

employee when the incumbent has a

higher retention standing and is fully

qualified for the position occupied by

the employee with a lower standing.

Retention standing is based on tenure,

veteran’s preference, length of service,

and performance. However, there will

be no augmented service credit based on

performance ratings. An employee rated

as unacceptable during the 12 month

period preceding the effective date of a

RIF may only displace an employee

rated unacceptable during that same

period. The same ‘‘undue disruption’’

standard currently utilized will serve as

the criteria to determine if an employee

is fully qualified. The displaced

individual may similarly displace other

employees. If/when there is no position

in which an employee can be placed by

this process or assigned to a vacant

position, that employee will be

separated.

Displacement is limited to one broad

band level below the employee’s present

level. A preference eligible employee

with a compensable service connected

disability of 30 percent or more may

displace up to two broad band levels (or

the equivalent of five General Schedule

grades) below the employee’s present

level. Employees not covered by broad

banding (FWS), may ‘‘displace’’ up to

three grades/intervals (five grades/

intervals for preference eligibles with a

service connected disability of 30

percent or more).

The new system will eliminate

retained grade but will preserve retained

pay.

All positions included in the

Demonstration Project within an activity

at a specific geographic location will be

considered a separate competitive area.

5. Competitive Examining and

Distinguished Scholastic Appointments

The Warfare Center needs a process

which will allow for the rapid filling of

vacancies, is less labor intensive, and is

responsive to our needs. Restructuring

the examining process and providing an

authority to appoint candidates meeting

distinguished scholastic achievements

will help achieve these goals. When a

Division implements the Demonstration

Project for some portion of their

workforce, this component may be

available for all occupations. This will

eliminate the imposition of multiple

examining and appointment systems on

the public and will strengthen

efficiencies gained under the

Demonstration Project. To further

minimize resource requirements and the

complexities inherent in administering

two different sets of examining and

hiring processes, this component may

also be applied to GS and FWS

positions in activities for which the

Warfare Center Divisions provide

human resource services.

a. Delegated Examining Authority.

The Warfare Centers propose to

demonstrate a streamlined examining

process for both permanent and nonpermanent positions. This authority will

be further delegated to the Division

level. This authority will apply to all

positions with exception of positions in

the Senior Executive Service, to Senior

Level (ST/SL) positions, to the

Executive Assignment System or

positions of Administrative Law Judge.

This authority will include the

coordination of recruitment and public

notices, the administration of the

examining process, the administration

of veteran’s preference, the certification

of candidates, and selection and

appointment consistent with merit

principles.

b. Description of Examining Process:

The primary change in the examining

process to be demonstrated is the

grouping of eligible candidates into

three Quality Groups using numerical

scores and the elimination of

consideration according to the ‘‘rule of

three’’.

For each candidate, minimum

qualifications will be determined using

OPM’s Operating Manual for

‘‘Qualification Standards For General

Schedule Positions’’/’’Job Qualification

Systems For Trades and Labor

Occupations (Handbook X–118C)’’

including any selective placement

factors identified for the position.

Candidates who meet basic (minimum)

qualifications will be further evaluated

based on knowledge, skills and abilities

which are directly linked to the

position(s) to be filled. Based on this

assessment, candidates will receive a

numerical score of 70, 80, or 90. No

intermediate scores will be granted

except for those eligibles who are

entitled to veterans preference.

Preference eligibles meeting basic

(minimum) qualifications will receive

an additional 5 or 10 points (depending

on their preference eligibility) which is

added to the minimum scores identified

above. Candidates will be placed in one

of three quality groups based on their

numerical score, including any veterans

preference points: Basically Qualified

(score of 70 and above), Highly

Qualified (score of 80 and above), or

Superior (score of 90 and above). The

names of preference eligibles shall be

entered ahead of others having the same

numerical.

For scientific/engineering and

professional positions at the equivalent

of GS–9 and above, candidates will be

referred by quality groups in the order

of the numerical ratings, including any

veterans preference points. For all other

positions, i.e., other than scientific/

engineering and professional positions

at the equivalent of GS–9 and above,

preference eligibles with a compensable

service-connected disability of 10

percent or more who meet basic

(minimum) eligibility will be listed at

the top of the highest group certified.

In selecting the top candidate,

selecting officials should be provided

with a reasonable number of qualified

candidates from which to choose. All

candidates in the highest group will be
8600 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

certified. If there is an insufficient

number of candidates in the highest

group, candidates in the next lower

group may be certified in rank order.

When two or more groups are certified,

candidates will be identified by quality

group (i.e., Superior, Highly Qualified,

Basically Qualified) in the order of their

numerical scores. In making selections,

to pass over any preference eligible(s) to

select a nonpreference eligible requires

approval under current pass over or

objection procedures.

c. Distinguished Scholastic

Achievement Appointment: The Warfare

Centers further propose to establish a

Distinguished Scholastic Achievement

Appointment using an alternative

examining process which provides the

authority to appoint undergraduates and

graduates through the doctoral level

who meet basic eligibility as determined

by using OPM’s Operating Manual for

‘‘Qualification Standards For General

Schedule Positions’’ plus any

previously established selective

placement factors, if applicable and the

following scholastic standards:

• 3.5 grade-point average (GPA) or

above on a 4.0 scale for required courses

in the major field of study, or for all

course work; or

• graduated in the top 10% of their

graduating class.

At the undergraduate level, the GPA

may be based on 4 years of education or

on those courses completed during the

final 2 years of the curriculum.

Veterans preference procedures will

apply when selecting candidates under

this authority. Preference eligibles who

meet the above criteria will be

considered ahead of nonpreference

eligibles. In making selections, to pass

over any preference eligible(s) to select

a nonpreference eligible requires

approval under current objection

procedures.

This authority allows for the

competitive appointment to positions at

the equivalent of GS–7 through GS–11,

and GS–12 for positions involved in

research. Distinguished Scholastic

Achievement Appointments will enable

the Warfare Centers to respond quickly

to hiring needs with eminently qualified

candidates possessing distinguished

scholastic achievements.

C. Project Implementation

While many of the basic elements of

each component of the project will be

implemented uniformly at all sites

through policies established at the

Warfare Center level, a number of

policies, procedures, or processes will

be delegated to the Division and/or site

levels. This permits the system to be

operationally defined, within a Warfare

Center directed framework, to fit the

culture and needs of the local

organizations. In bargaining units, the

project will be implemented only after

there is full agreement through the

collective bargaining process.

D. Entry Into and Exit From the Project

1. Initial Conversion of Current

Workforce. For the most part, current

GS/GM employees will be converted

automatically from their current grades

to the appropriate career paths and band

levels. However, the Warfare Centers

consider it essential to the success of the

project that employees, upon entering

the project, feel that they are not losing

a pay entitlement accrued under the GS

system. Accordingly, current employees

of the Warfare Centers will be ‘‘made

whole’’ through a one year ‘‘buy-in’’

period. On the day of conversion,

employees typically will receive base

pay increases for prorated step increase

equivalents. Employees at the 10th step

are not eligible for the increase. Further,

during the first 12 months following

conversion, employees will receive pay

increases for non-competitive

promotion equivalents when the grade

level of the promotion is encompassed

within the same band, the employee’s

performance warrants the promotion

and promotions would have otherwise

occurred during that period. Employees

who receive an in-level promotion at the

time of conversion will not receive a

prorated step increase equivalent.

Additionally, in many cases,

employees who are today covered by a

local or national special salary rate will

no longer be considered a special rate

employee under the Demonstration

Project and will thus gain eligibility for

full locality pay. To control conversion

costs and to avoid a salary increase

windfall for these employees, the

adjusted salaries of these employees

will not change. Rather, the employees

will receive a new basic pay rate

computed by dividing their adjusted

basic pay by the locality pay factor for

their area. A full locality adjustment

will then be added to the new basic pay

rate. Adverse action and pay retention

provisions will not apply to the

conversion process as there will be no

change in total salary.

2. New and Transfer Employees. New

hires, including employees transferring

from other Federal activities, will be

converted into the Demonstration

Project in the career path and at the

level and pay consistent with the duties

and responsibilities of the position and

individual qualifications.

3. Exit From the Demonstration

Project. Employees who leave the

Demonstration Project broad banding

system to accept federal employment in

the traditional Civil Service system will

have their pay set by the gaining

activity. To assist activities in setting

pay and in determining whether such

placement constitutes a promotion,

reassignment, or change to lower grade,

the employee’s band and salary level

will be converted to a General Schedule

equivalent grade prior to leaving the

Demonstration Project in the following

manner:

Employees who exit the

Demonstration Project will be

tentatively converted to a GS grade most

comparable to the employee’s current

Demonstration Project level and salary.

In instances where the current salary is

in the area between two overlapping GS

grades within the same level, the

converted grade is either (1) the higher

of the two overlapping GS grades if the

current salary meets or exceeds Step 4

of the higher GS grade, or (2) the lower

of the overlapping grades if the current

salary is less than Step 4 of the higher

GS grade. In those instances where the

current salary falls below the

established GS salary range for the

lowest GS grade covered by that

Demonstration Project band level, the

converted grade is the lowest GS grade

level in that band. In those situations

where an employee has not been

promoted or placed in a lower pay band

while covered by the Demonstration

Project, the employee will be converted

at a level which is no lower than the GS

grade held immediately prior to entering

the Demo project. This converted GS

grade is the GS equivalent grade and is

not necessarily the grade the employee

will have upon transfer or reassignment

outside the Demonstration Project.

An employee’s pay within the

converted GS grade is set by converting

the demonstration project adjusted rate

of pay to a rate on the highest applicable

adjusted rate range for the converted GS

grade (including locality rates and

special rates, as applicable). For

example, if the highest applicable

adjusted rate range under the GS pay

system for a particular employee is a

special rate range, the adjusted project

rate (locality rate or special rate) is

converted to the lowest special rate in

that range that equals or exceeds the

project rate; from this converted special

rate, the employee’s unadjusted GS rate

and locality rate would be derived. This

pay conversion is done before

processing any geographic movement or

other pay-related action coinciding with

the employee’s conversion out of the

demonstration project.

When an employee transfers to

another activity, the employee’s rating
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8601

of record will be transferred. When the

gaining activity uses other than a two

level performance system, the employee

may be provided a supplementary

performance assessment using the

gaining organizations appraisal criteria.

If the employee requests such an

appraisal, the employee will be

responsible for providing the criteria to

the supervisor for completion. Gaining

organizations are not bound to use this

supplementary performance appraisal in

any formal actions.

E. Project Duration

The initial implementation period for

the Project will be five years. At that

time, the entire demonstration project

will be reexamined to determine

whether to continue, modify or

terminate the Project.

IV Evaluation Plan

Chapter 47 (Title 5 U.S.C.) requires

that an evaluation system be

implemented to measure the

effectiveness of the proposed personnel

management interventions. An

evaluation plan for the entire laboratory

demonstration program covering 24

DOD labs was developed by a joint

OPM/DOD Evaluation Committee. A

Comprehensive evaluation plan was

submitted to the Office of Defense

Research & Engineering in 1995 and

subsequently approved. (Proposed Plan

for Evaluation of the Department of

Defense S&T Laboratory Demonstration

Program, Office of Merit Systems

Oversight & Effectiveness, June 1995).

The overall evaluation effort will be

coordinated and conducted by OPM’s

Personnel Resources and Development

Center(PRDC). The primary focus of the

evaluation is to determine whether the

waivers granted result in a more

effective personnel system than the

current as well as an assessment of the

costs associated with the new system.

The present personnel system with its

many rigid rules and regulations is

generally perceived as an impediment to

mission accomplishment. The

Demonstration Project is intended to

remove some of those barriers and

therefore, is expected to contribute to

improved organizational performance.

While it is not possible to prove a direct

causal link between intermediate and

ultimate outcomes (improved personnel

system performance and improved

organizational effectiveness), such a

linkage is hypothesized and data will be

collected and tracked for both types of

outcome variables.

An intervention impact model

(Appendix B) will be used to measure

the effectiveness of the various

personnel system changes or

interventions. Additional measures will

be developed as new interventions are

introduced or existing interventions

modified consistent with expected

effects. Measures may also be deleted

when appropriate. Activity specific

measures may also be developed to

accommodate specific needs or interests

which are locally unique.

The evaluation model for the

Demonstration Project identifies

elements critical to an evaluation of the

effectiveness of the interventions. The

overall evaluation approach will also

include consideration of contact

variables that are likely to have an

impact on project outcomes: e.g., HRM

regionalization, downsizing, crossservice integration, and the general state

of the economy. However, the main

focus of the evaluation will be on

intermediate outcomes, i.e., the results

of specific personnel system changes

which are expected to improve human

resources management. The ultimate

outcomes are defined as improved

organizational effectiveness, mission

accomplishment and customer

satisfaction.

Data from a variety of different

sources will be used in the evaluation.

Information from existing management

information systems supplemented with

perceptual data will be used to assess

variables related to effectiveness.

Multiple methods provide more than

one perspective on how the

demonstration project is working.

Information gathered through one

method will be used to validate

information gathered through another.

Confidence in the findings will increase

as they are substantiated by the different

collection methods. The following types

of data will be collected as part of the

evaluation: (1) Workforce data; (2)

personnel office data; (3) employee

attitudes and feedback using surveys,

structured interviews and focus groups;

(4) local activity histories; (5) core

measures of laboratory effectiveness.

V. Waivers of Law and Regulation

A. Waivers to Title 5, United States

Code

Chapter 33, Section 3317(a):

Competitive service, certification from

register (in so far as ‘‘rule of three’’ is

eliminated under the Demonstration

project).

Chapter 33, Section 3318(a): In so far as

‘‘rule of three’’ is eliminated under

the Demonstration project.

Chapter 43, Section 4301: Definitions

Chapter 43, Section 4302: Establishment

of performance appraisal systems.

Chapter 43, Section 4303: Modified to

the extent that an employee may be

removed, reduced in band level with

a reduction in pay, reduced in pay

without a reduction in band level or

reduced in band level without a

reduction in pay based on

unacceptable performance. For

employees who are reduced in band

level without a reduction in pay,

Sections 4303(b) and 4303(e) do not

apply.

Chapter 43, Section 4303(b)(1)(A)(ii):

Requirement for critical elements.

Chapter 51, Section 5101–5111:

Purpose, definitions, basis,

classification of positions, review,

authority—To the extent that white

collar employees will be covered by

broad banding. Pay category

determination criteria for Federal

Wage System positions remain

unchanged.

Chapter 53, Section 5301; 5302(1), (8),

and (9); Section 5303; and Section

5304: Pay Comparability System. (To

the extent necessary to allow

Demonstration project employees

covered by broad banding to be

treated as General Schedule

employees and to allow basic rates of

pay under the Demonstration project

to be treated as scheduled rates of

basic pay.) (This waiver does not

apply to Federal Wage System (FWS)

employees. This waiver does not

apply to SL/ST employees who

continue to be covered by these

positions, as appropriate.)

Section 404 of the Federal Employees

Pay Comparability Act of 1990 (PL

101–509): Special Pay Adjustments

for Law Enforcement Officers in

Selected Cities. (To the extent

necessary to allow law enforcement

officers under the demonstration

project to be treated as law

enforcement officers under the

General Schedule.)

Chapter 53, Section 5305: Special Pay

Authority. (This waiver does not

apply to FWS employees.)

Chapter 53, Sections 5331–5336:

General Schedule Pay Rates.

Chapter 53, Section 5362: Grade

Retention.

Chapter 53, Section 5363: Pay

Retention. (Only to the extent

necessary to provide that pay

retention does not apply to—(1)

conversions from General Schedule

special rates to Demonstration project

pay and reallocations of

Demonstration project pay rates

within special rate extensions to

locality adjusted pay rates due to

promotions or general or locality pay

increases, as long as the employee’s

total rate of pay is not reduced; and

(2) reductions in basic pay due solely

to the operation of the pay setting
8602 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

rules for geographic movement within

the Demonstration Project.)

Chapter 55, Section 5545(d): Hazardous

Duty Differential. ( Only to the extent

necessary to allow Demonstration

project employees covered by broad

banding to be treated as General

Schedule employees.) (This waiver

does not apply to FWS and SL/ST

employees.)

Chapter 57, Sections 5753, 5754, and

5755: Recruitment; Relocation

Bonuses; Retention Allowances;

Supervisory Differentials: (Only to the

extent necessary to allow employees

and positions under the

Demonstration project covered by

broad banding to be treated as

employees and positions under the

General Schedule.) (This waiver does

not apply to FWS employees. This

waiver does not apply to SL/ST

employees who continue to be

covered by these provisions, as

appropriate.)

Chapter 59, Section 5941: Allowances

based on living costs and conditions

of environment; employees stationed

outside continental United States or

Alaska (Only to the extent necessary

to provide that COLA’s paid to

employees under the demonstration

project are paid in accordance with

regulations prescribed by the

President (as delegated to OPM)).

(This waiver does not apply to FWS

employees. This waiver does not

apply to SL/ST employees who

continue to be covered by these

provisions, as appropriate.)

Chapter 71, Section 7106(a)(2): In so far

as provision on assigning and

directing, documenting performance

discussions, Performance

Development Resources, Performance

Plans, criteria and process for

incentive pay, and communication

and documentation requirements for

incentive pay and reconsideration of

incentive pay decisions; and, in so far

as provision on reducing employees

in grade may prevent the parties from

negotiating procedures for nonadverse assignment of employees to a

lower pay band.

Chapter 71, Section 7119(b)(1): In so far

as provision for either party to request

impasse proceedings would be

contrary to provisions of the

Demonstration project.

Chapter 75, Section 7512(3): To the

extent necessary to exclude

reductions in band level not

accompanied by a reduction in pay

taken under Chapter 43.

Chapter 75, Section 7512(4): Adverse

Action. (Only to the extent necessary

to provide that adverse action

provisions do not apply to—(1)

conversions from General Schedule

special rates to Demonstration project

pay and reallocations of

Demonstration project pay rates

within special rate extensions to

locality adjusted pay rates due to

promotions or general or locality pay

increases, as long as the employee’s

total rate of pay is not reduced; and

(2) reductions in basic pay due solely

to the operation of the pay setting

rules for geographic movement within

the demonstration project.)

B. Waivers to Title 5, Code of Federal

Regulations

Part 300, Sections 300.601 through .605:

Time in grade restrictions are

eliminated in the Demonstration

project.

Part 332, Section 332.401(b): Only to the

extent that for non-professional or

scientific positions equivalent to GS–

9 and above, preference eligibles with

a compensable service-connected

disability of 10 percent or more who

meet basic (minimum) qualification

requirements will be entered at the

top of the highest group certified

without the need for further

assessment.

Part 332, Section 332.402: ‘‘Rule of

three’’ will not be used in the

Demonstration project.

Part 332, Section 332.404: Order of

selection is not limited to highest

three eligibles.

Part 351, Section 351.402(b):

Competitive area to the extent that the

Demonstration project will be a

separate competitive area within the

activity.

Part 351, Sections 351.403(a) and (b):

Competitive levels to the extent that

there is no requirement for the

establishment of competitive levels in

the Demonstration project.

Part 351, Section 351.404(a) and (b):

Retention register to the extent that

the requirement to establish separate

retention registers by competitive

level is eliminated.

Part 351, Section 351.501(a)(3): For

order of retention, delete ‘‘as

augmented by credit for performance

under Section 351.504.

Part 351, Section 351.504: Credit for

performance to the extent that the

Demonstration project eliminates

service credit for performance.

Part 351, Section 351.601 through .608:

References to competitive levels are

eliminated.

Part 351, Section 351.701(b) and (c)

Assignment rights (bump and retreat).

To the extent that the distinction

between bump and retreat is

elimininated and the placement of

‘‘white collar’’ Demonstration Project

employees is restricted to no more

than one broad band level below the

employee’s current level, except that

for a preference eligible with a

compensable service connected

disability of 30 percent or more, the

limit is two broad band levels (or the

equivalent of five General Schedule

grades) below the employee’s present

level.’’

Part 430, Subpart B: Performance

appraisal for General Schedule,

Prevailing Rate and certain other

employees: Employees under the

Demonstration project will not be

subject to the requirements of this

subpart.

Part 432: Modified to the extent that an

employee may be removed, reduced

in band level with a reduction in pay,

reduced in pay without a reduction in

band level and reduced in band level

without a reduction in pay based on

unacceptable performance. Also

modified to delete referenced to

critical element. For employees who

are reduced in band level without a

reduction in pay, Sections 432.105

and 432.106(a) do not apply, except

that such sections continue to apply

to preference eligible employees.

Part 432, Section 432.104 and .105:

Proposing and Taking Action Based

on Unacceptable Performance: In so

far as references to ‘‘critical elements’’

are deleted and adding that the

employee may be ‘‘reduced in grade

or pay or removed’’ if performance

does not improve to acceptable levels

after a reasonable opportunity. In

addition, requirements waived to the

extent that a reduction in band level

is taken based on skill utilization

criteria when there is no reduction in

pay.

Part 511, Section 511.201: Coverage of

and exclusions from the General

Schedule. (To the extent that White

Collar positions are covered by broad

banding. Pay category determination

criteria for Federal Wage System

positions remain unchanged.)

Part 511, Section 511.601: Classification

appeals—modified to the extent that

white collar positions established

under 5 U.S.C. 4703, although

specifically excluded from Title 5, are

covered by the classification appeal

process outlined in this section, as

amended below.

Part 511, Section 511.603(a): Right to

appeal—substitute ‘‘band’’ for grade.

Part 511, Section 511.607(b): Non

Appealable Issues—add to the list of

issues which are neither appealable

nor reviewable, ‘‘the assignment of

series under 5 U.S.C. 4703 to

appropriate career paths.’’
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8603

Part 530, Subpart C: Special Salary

Rates.

Part 531, Subparts B, D, and E:

Determining The Rate of Basic Pay,

Within-Grade Increases, and Quality

Step Increases.

Part 531, Subpart C and F: Special Pay

Adjustments for Law Enforcement

Officers and Locality-Based

Comparability Payments. (Only to the

extent necessary to allow

Demonstration Project employees

covered by broad banding to be

treated as General Schedule

employees and to allow basic rates of

pay under the demonstration project

to be treated as scheduled annual

rates of pay.) (This waiver does not

apply to FWS employees. This waiver

does not apply to SL/ST employees

who continue to be covered by these

provisions, as appropriate.)

Part 536: All provisions pertaining to

grade retention.

Part 536, Section 536.104: Pay

Retention. (Only to the extent

necessary to provide that pay

retention does not apply to—(1)

conversions from General Schedule

special rates to Demonstration project

pay and reallocations of

Demonstration project pay rates

within special rate extensions to

locality adjusted pay rates due to

promotions or general or locality pay

increases, as long as the employee’s

total rate of pay is not reduced; and

(2) reductions in basic pay due solely

to the operation of the pay setting

rules for geographic movement within

the Demonstration Project.)

Part 550, Section 550.703: Severance

Pay. (Modify the definition of

‘‘reasonable offer’’ by replacing ‘‘two

grade or pay levels’’ with ‘‘one band

level’’ and ‘‘grade or pay level’’ with

‘‘band level’’.) (This waiver does not

apply to FWS employees.)

Part 550, Section 550.902, definition of

‘‘employee’’: Hazardous Duty Pay.

(Only to the extent necessary to treat

demonstration project employees

covered by broad banding as General

Schedule employees.) (This waiver

does not apply to FWS and SL/ST

employees.)

Part 575, Subparts A, B, C, and D:

Recruitment Bonuses, Relocation

Bonuses, Retention Allowances, and

Supervisory Differentials. (Only to the

extent necessary to allow employees

and positions under the

demonstration project covered by

broad banding to be treated as

employees and positions under the

General Schedule.) (This waiver does

not apply to FWS employees. This

waiver does not apply to SL/ST

employees who continue to be

covered by these provisions, as

appropriate.)

Part 591, Subpart B: Cost-of-Living

Allowances and Post DifferentialNonforeign Areas. (To the extent

necessary to allow demonstration

project employees covered by broad

banding to be treated as employees

under the General Schedule.) (This

waiver does not apply to FWS

employees. This waiver does not

apply to SL/ST employees who

continue to be covered by these

provisions, as appropriate.)

Part 752: Section 752.401(a)(3): To the

extent necessary to exclude

reductions in band level not

accompanied by a reduction in pay

taken under Chapter 43.

Part 752: Section 752.401(a)(4): Adverse

Action. (Only to the extent necessary

to provide that adverse action

provisions do not apply to—(1)

conversions from General Schedule

special rates to Demonstration project

pay and reallocations of

Demonstration project pay rates

within special rate extensions to

locality adjusted pay rates due to

promotions or general or locality pay

increases, as long as the employee’s

total rate of pay is not reduced; and

(2) reductions in basic pay due solely

to the operation of the pay setting

rules for geographic movement within

the demonstration project.)

VI. Cost

The goal of this Demonstration Project

is the implementation of a system in

which payroll costs and resource

utilization can be controlled consistent

with the organization’s larger fiscal

strategies. This is especially critical in

our industrially funded (DBOF)

environment. The continued economic

viability of the DBOF activities depends

in large measure on controlling

expenditures and remaining cost

competitive with other organizations.

This Demonstration Project proposes a

system of pay incentives and processes

that are flexible and can operate in

harmony with the organization’s

operational needs and the financial

needs of the larger organization. The

costs of project implementation will be

borne by the Divisions/sites.

Costs associated with the

development of the Demonstration

project include software automation,

training and project evaluation. All

funding will be provided through the

Warfare Centers budget. Training costs

will be approximately $192K per

thousand employees. The timing of the

expenditure will be site specific and

dependent upon the implementation

schedules. Because automation

requirements will be minimized as a

result of system similarities to existing

Navy Demonstration Projects, costs are

estimated at $100K for the first two

years of project implementation.

Evaluation costs are estimated at

approximately $60K per year.

VII. Project Oversight and Management

Project oversight and management

will be carried out by the Warfare

Center’s Executive Group, composed of

the Commanders and Technical

Directors of the two Warfare Centers.

They will be assisted by the

Demonstration Project Management

Office and the Steering Committee. (See

Figure 5)

The Steering Committee, chaired by a

senior executive or senior Navy officer

appointed by the Executive Group, is

comprised of a senior member of each

Division of the Warfare Centers, and a

member from the American Federation

of Government Employees, Metal Trades

Council, International Association of

Machinists, National Association of

Government Employees, National

Federation of Federal Employees, and

Fraternal Order of Police. This group

serves as an advisory body to the

Executive Group which makes final

decisions on the Demonstration Project

proposal and implementation. The role

of the Steering Committee is to aggregate

and analyze incoming data from formal

and informal evaluations and make

recommendations. It may also include

facilitating information sharing,

mediating impasses, and promotion of

partnership roles.

BILLING CODE 6325–01–P
8604 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

BILLING CODE G325–01–C

Appendix A: Employee/Union

Involvement Methodology

From the inception of the Naval Sea

Systems Command Warfare Centers’

Personnel Demonstration Project,

employee involvement in crafting the

Project Proposal was viewed as essential

to producing a plan that considered the

needs of all parties. National union

representatives participated as members

of the Steering Committee which

developed the Personnel Demonstration

Project Proposal and will be overseeing

its implementation. While the process

that produced the Project Proposal was

a collaborative one, union participation

did not necessarily constitute full and

complete endorsement of all details of

the Proposal.

At the Warfare Centers’ various

Divisions and sites, employees and

unions are involved through a variety of

communications strategies. Within the

Divisions, communications teams

composed of a cross section of the

workforce have been formed for the

purpose of disseminating information

about the project as well as a focal point

for employee questions. Further,

Divisions are establishing groups or

committees to help guide the

implementation of the Project

throughout the organization. This model

of broad participation is envisioned to

continue throughout the life of the

Demonstration Project.

Unions Represented

Dahlgren, VA—American Federation of

Government Employees

White Oak, MD—American Federation

of Government Employees; Metal

Trades Council

Panama City, FL—National Federation

of Federal Employees

Crane, IN—American Federation of

Government Employees; Fraternal

Order of Police

Louisville, KY—International

Association of Machinists &

Aerospace Workers

Carderock, MD—Metal Trades Council;

Federal Firefighters Association;

Pattern Maker Association

Annapolis, MD—National Federation of

Federal Employees

Philadelphia, PA—Metal Trades

Council; Fraternal Order of Police;

International Association of

Firefighters

Ft. Lauderdale, FL—American

Federation of Government Employees

Port Hueneme, CA—National

Association of Government

Employees; Federal Union of

Scientists and Engineers

Indian Head, MD—American Federation

of Government Employees;

International Association of

Firefighters; International Association

of Machinists and Aerospace Workers

McAlester, OK—American Federation of

Government Employees

Keyport, WA—Metal Trades Council

Newport, RI—National Association of

Government Employees; Federal

Union of Scientists and Engineers

New London, CT—National Association

of Government Employees

Appendix B: Project Evaluation and

Oversight

Intervention Impact Model—DOD Lab

Demonstration Program

1. COMPENSATION

Intervention Expected effects Measures Data sources

a. Broad banding .......................... —Increased organizational flexibility.—Perceived flexibility .................... —Attitude survey.

—Reduced administrative workload, paperwork reduction.—Actual perceived time savings .. —Personnel office data, PME results, attitude survey.

—Advanced in-hire rates .............. —Starting salaries of banded v.

non-banded employees.

—Workforce data.
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8605

1. COMPENSATION—Continued

Intervention Expected effects Measures Data sources

—Slower pay progression at entry

levels.

—Progression of new hires over

time by band, career path.

—Workforce data.

—Increased pay potential ............. —Mean salaries by band, career

path, demographics.

—Workforce data.

—Increased satisfaction with advancement.—Employee perceptions of advancement.—Attitude survey.

—Increased pay satisfaction ......... —Pay satisfaction, internal/external equity.—Attitude survey.

—Improved recruitment ................ —Offer/acceptance ratios—Percent declinations.—Personnel office data.

—No change in high grade (GS–

14) distribution.

—Number/percentage of high

grade salaries pre/post banding.

—Workforce data.

b. Conversion buy-in ..................... —Employee acceptance ............... —Employee perceptions of equity,

fairness.

—Attitude survey.

—Cost as a percent of payroll ...... —Workforce data.

2. PERFORMANCE MANAGEMENT

Intervention Expected benefits Measures Data sources

a. Cash awards/bonuses .............. —Reward/motivate performance .. —Perceived motivational power ... —Attitude survey.

—To support fair and appropriate

distribution of awards.

—Amount and number of awards

by career path, demographics.

—Workforce data.

—Perceived fairness of awards .... —Attitude survey.

—Satisfaction with monetary

awards.

—Attitude survey.

b. Performance/contribution based

pay progression.

—Increased pay-performance link —Perceived pay-performance link —Attitude survey.

—Perceived fairness of ratings ..... —Attitude survey.

—Improved performance feedback —Satisfaction with ratings ............ —Attitude survey.

—Employee trust in supervisors ... —Attitude survey.

—Adequacy of performance feedback.—Attitude survey.

—Decreased turnover of high performers; increased turnover of

low performers.

—Turnover by performance rating

category.

—Workforce data.

—Differential pay progression of

high/low performers.

—Pay progression by performance rating category, career

path.

—Workforce data.

—Alignment of organizational and

individual performance expectations and results.

—Linkage of performance expectations to strategic plans/goals;

performance expectations; perceived involvement.

—Performance expectations, strategic plans; attitude survey/

focus groups.

—Increased employee involvement in performance planning

and assessment.

—Performance management procedures.—Attitude survey/focus groups;

personnel regulations.

c. New appraisal process ............. —Reduced administrative burden —Employee and supervisor perception of revised procedures.—Attitude survey.

—Improved communication .......... —Perceived fairness of process ... —Focus group.

d. Performance development ........ —Better communication of performance expectations.—Feedback and coaching procedures used.—Focus groups.

—Improved satisfaction and quality of workforce.—Organizational commitment ....... —Attitude surveys.

—Perceived workforce quality ...... —Attitude survey.

3. ‘‘WHITE COLLAR’’ CLASSIFICATION

Intervention Expected effects Measures Data sources

a. Improved classification systems

with generic standards.

—Reduction in amount of time

and paper-work spent on classification.

—Time savings; reduction of

paper work/number of personnel actions (classification/promotions).

—Personnel office data.

—Ease of use ............................... —Managers’ perceptions of time

savings, ease of use, improved

ability to recruit.

—Attitude survey.

—Improved recruitment of employees with appropriate skills.—Perceived quality of recruits ...... —Focus groups/Interviews.

—GPA’s of new hires, education

levels.

—Personnel office data.
8606 Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices

3. ‘‘WHITE COLLAR’’ CLASSIFICATION—Continued

Intervention Expected effects Measures Data sources

b. Classification authority delegated to managers.—Increased supervisory authority/

accountability.

—Perceived authority .................... —Attitude survey.

—Decreased conflict between

management and personnel

staff.

—Number of classification disputes/appeals pre/post.—Personnel records.

—Management satisfaction with

service provided by personnel

office.

—Attitude survey.

—No negative impact on internal

pay equity.

—Internal pay equity ..................... —Attitude survey.

c. Dual career ladder .................... —Increased flexibility to assign

employees.

—Assignment flexibility ................. —Focus groups, surveys.

—Sup/non-sup ratios .................... —Workforce data.

—Improved internal mobility ......... —Perceived internal mobility ........ —Attitude survey.

—Increased pay equity ................. —Perceived pay equity ................. —Attitude survey.

—Flatter organization .................... —Supervisory/non-supervisory ratios.—Workforce data.

—Improved quality of supervisory

staff.

—Employee perceptions of quality

of supervisors.

—Attitude survey.

4. STAFFING/RECRUITMENT

Intervention Expected benefits Measures Data

Competitive examining and categorical grouping.—Improved hiring process ............ —Management satisfaction with

hiring process, time to hire, perceived quality of new hires.

—Attitude survey.

—increased quality of hires .......... —GPA’s of new hires, education

levels.

—Personnel office data (from

issue of Form 52 to referral of

candidates).

—Increased timeliness .................. —Time to fill positions .................. —Attitude survey.

—No negative impact on fairness

of process, openness to competition.

—Candidate/employee satisfaction.

5. RIF

Intervention Expected effects Measures Data sources

Modified RIF .................................. —Prevent loss of high performing

employees with needed skills.

—Separated employees by demographics, performance.—Workforce data; attitude survey/

focus groups.

—Contain cost and disruption ...... —Satisfaction with RIF process .... —Attitude survey/focus groups.

—Cost comparisons of traditional

v. modified RIF; time to conduct

RIF; number of appeals/reinstatements.

—Rightsizing and documenting

systems/personnel office/budget

data.

6. COMBINATION OF ALL INTERVENTIONS

Intervention Expected effects Measures Data sources

All .................................................. —Improved organizational effectiveness.—Combination of personnel

measures.

—All data sources.

—Improved management of R&D

workforce.

—Employee/management satisfaction.—Attitude survey.

—Improved planning ..................... —Planning procedures ................. —Strategic planning documents.

—Improved cross functional coordination.—Perceived effectiveness of planning procedures.—Attitude survey; organizational

charts.

—Actual/perceived coordination ... —Attitude survey.

—Increased product success ....... —Customer satisfaction ................ —Customer satisfaction surveys.

—Cost of innovation ..................... —Project training/development

cost (staff salaries, contract

cost, Training hours per employee).

—Demo project office records;

contract documents.
Federal Register / Vol. 62, No. 37 / Tuesday, February 25, 1997 / Notices 8607

7. CONTEXT

Intervention Expected effects Measures Data sources

a. Regionalization ......................... —Reduced servicing ratios/cost ... —HR servicing ratios .................... —Attitude survey.

—No negative impact on service

quality.

—Average cost per employee

served.

—Workforce data.

—Service quality, timeliness ......... —Attitude survey/ focus groups.

b. GPRA ........................................ —Improved organizational performance.—Other measures to be developed.—As established.

[FR Doc. 97–4761 Filed 2–21–97; 1:08 pm]

BILLING CODE 6325–01–P