11982 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

OFFICE OF PERSONNEL

MANAGEMENT

Proposed Laboratory Personnel

Management Demonstration Project;

Missile Research, Development and

Engineering Center, Department of the

Army, U.S. Army Missile Command

(MICOM), Redstone Arsenal, Alabama

AGENCY: Office of Personnel

Management.

ACTION: Notice of Intent to Implement

Demonstration Project.

SUMMARY: Title VI of the Civil Service

Reform Act, 5 U.S.C. 4703, authorizes

the Office of Personnel Management

(OPM) to conduct demonstration

projects that experiment with new and

different personnel management

concepts to determine whether such

change in personnel policy or

procedures would result in improved

Federal personnel management.

Public Law 103–337, October 5, 1994,

permits the Department of Defense

(DoD), with the approval of the OPM, to

carry out personnel demonstration

projects generally similar in nature to

the China Lake demonstration project at

DoD Science and Technology (S&T)

Reinvention Laboratory sites. The Army

is proposing five demonstration sites

initially: the Army Research Laboratory,

U.S. Army Waterways Experiment

Station, Medical Research Materiel

Command, the Missile Research,

Development and Engineering Center,

and the Aviation Research,

Development, and Engineering Center.

This proposal is for the Missile

Research, Development, and

Engineering Center (MRDEC).

DATES: To be considered, written

comments must be submitted on or

before May 20, 1997; a public hearing

will be scheduled as follows: Tuesday,

April 29, 1997, at 10:00 a.m. in

Redstone Arsenal, Alabama. At the time

of the hearings, interested persons or

organization may present their written

or oral comments on the proposed

demonstration project. The hearing will

be informal.

Anyone wishing to testify should

contact the person listed under FOR

FURTHER INFORMATION CONTACT, and state

the hearing location, so that OPM can

plan the hearings and provide sufficient

time for all interested persons and

organizations to be heard. Priority will

be given to those on the schedule, with

others speaking in any remaining

available time. Each speaker’s

presentation will be limited to ten

minutes. Written comments may be

submitted to supplement oral testimony

during the public comment period.

ADDRESSES: Comments may be mailed to

Fidelma A. Donahue, U.S. Office of

Personnel Management, 1900 E Street,

NW, room 7460, Washington, DC 20415;

public hearing will be held at the U.S.

Army Missile Command, Sparkman

Auditorium, Martin Road, Building

5304, Redstone Arsenal, Alabama.

FOR FURTHER INFORMATION CONTACT: (1)

On proposed demonstration project: Dr.

William H. Leonard, U.S. Army Missile

Command, ATTN: AMSMI–RD,

Redstone Arsenal, AL 35898–5400, 205–

876–1442; (2) On proposed

demonstration project and public

hearing: Fidelma A., Donahue, U.S.

Office of Personnel Management, 1900 E

Street, NW, Room 7460, Washington,

DC 20415, 202–606–1138.

SUPPLEMENTARY INFORMATION: Since

1966, many studies of Department of

Defense (DoD) laboratories have been

conducted on laboratory quality and

personnel. Almost all of these studies

have recommended improvements in

civilian personnel policy, organization,

and management. The proposed project

involves simplified job classification,

paybanding, streamlined hiring

processes, pay-for-performance

management system, expanded

developmental opportunity, and

modified Reduction-In-Force (RIF)

procedures.

Office of Personnel Management.

James B. King,

Director.

Table of Contents

I. Executive Summary

II. Introduction

A. Purpose

B. Problems with the Present System

C. Changes Required/Expected Benefits

D. Participating Organization

E. Participating Employees

F. Labor Participation

G. Project Design

H. Personnel Management Board

III. Personnel System Changes

A. Broadbanding

B. Pay-for-Performance Management

System

C. Classification

D. Hiring and Appointment Authorities

E. Employee Development

F. Revised Reduction-in-Force (RIF)

Procedures

IV. Training

V. Conversion

VI. Project Duration

VII. Evaluation Plan

VIII. Demonstration Project Costs

IX. Required Waivers to Laws and

Regulations

Appendix A: Occupational Series by

Occupational Family

Appendix B: Project Evaluation and

Oversight

Appendix C: Performance Elements

Appendix D: Benchmark Performance

Standards

I. Executive Summary

This project was designed by the

Department of the Army, with

participation of and review by the

Department of Defense (DoD) and the

Office of Personnel Management (OPM).

The purpose of the project is to achieve

the best workforce for the MRDEC

mission, adjust the workforce for

change, and improve workforce quality.

The foundations of this project are

based on the concept of linking

performance to pay for all covered

positions; simplifying paperwork and

the processing of classification and

other personnel actions; emphasizing

partnerships among management,

employees, and unions representing

covered employees; and delegating

classification and other authorities to

line managers. Additionally, the

research intellect of the MRDEC

workforce will be revitalized through

the use of expanded opportunities for

employee development. These

opportunities will reinvigorate the

creative intellect of the research and

development community.

Development and execution of this

project will be in-house budget neutral,

based on a baseline of September 1995

in-house costs and consistent with the

Department of the Army (DA) plan to

downsize laboratories. Army managers

at the DoD S&T Reinvention Laboratory

sites will manage and control their

personnel costs to remain within

established in-house budgets. An inhouse budget is a compilation of costs

of the many diverse components

required to fund the day-to-day

operations of a laboratory. These

components generally include pay of

people (labor, benefits, overtime,

awards), training, travel, supplies, noncapital equipment, and other costs

depending on the specific function of

the activity.

This project will be under the joint

sponsorship of the Assistant Secretary

of the Army for Research, Development

and Acquisition and the Assistant

Secretary of the Army for Manpower

and Reserve Affairs. The Commander,

U.S. Army Materiel Command, will

execute and manage the project. Project

oversight within the Army will be

achieved by an executive steering

committee made up of top-level

executives, co-chaired by the Deputy

Assistant Secretary of the Army for

Research and Technology and the

Deputy Assistant Secretary of the Army

(Civilian Personnel Policy)/Director,

Civilian Personnel. Oversight external to

the Army will be provided by the
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11983

Department of Defense and the Office of

Personnel Management.

II. Introduction

A. Purpose

The purpose of the project is to

demonstrate that the effectiveness of

Department of Defense (DoD)

laboratories can be enhanced by

allowing greater managerial control over

personnel functions and, at the same

time, expanding the opportunities

available to employees through a more

responsive and flexible personnel

system. The quality of DoD laboratories,

their people, and products has been

under intense scrutiny in recent years.

This perceived deterioration of quality

is due, in substantial part, to the erosion

of control which line managers have

over their human resources. This

demonstration, in its entirety, attempts

to provide managers, at the lowest

practical level, the authority, control,

and flexibility needed to achieve quality

laboratories and quality products.

B. Problems With the Present System

The MRDEC products contribute to

the readiness of U.S. forces and to the

stability of the American economy. To

do this, the MRDEC must acquire and

retain an enthusiastic, innovative, and

highly educated and trained workforce,

particularly scientists and engineers.

The MRDEC must be able to compete

with the private sector for the best talent

and be able to make job offers in a

timely manner with the attendant

bonuses and incentives to attract high

quality employees. Today, industry

laboratories can make an offer of

employment to a promising new hire

before the government can prepare the

paperwork necessary to begin the

recruitment process.

Currently, jobs are described using a

cumbersome classification system that

is overly complex and specialized. This

hampers a manager’s ability to shape the

workforce and match the positions

while making best use of employees.

Managers must be given local control of

positions and their classification to

move both their employees and

vacancies within their organization to

other lines of the business activities to

match the life cycle needs of supported

customers.

These issues work together to hamper

supervisors in all areas of human

resource management. Hiring

restrictions and overly complex job

classifications, coupled with poor tools

for rewarding and motivating employees

and a system that does not assist

managers in removing poor performers

builds stagnation in the workforce and

wastes valuable time.

C. Changes Required/Expected Benefits

This project is expected to

demonstrate that a human resource

system tailored to the mission and

needs of the MRDEC will result in: (a)

Increased quality in the total workforce

and the products they produce; (b)

increased timeliness of key personnel

processes; (c) increased retention of

high quality employees and separation

rates of poor quality employees; and (d)

increased customer satisfaction with the

MRDEC and its products by all

customers it serves.

The MRDEC demonstration program

builds on the successful features of

demonstration projects at China Lake

and the National Institute of Standards

and Technology (NIST). These

demonstration projects have produced

impressive statistics on the job

satisfaction for their employees versus

that for the federal workforce in general.

Therefore, in addition to expected

benefits mentioned above, the MRDEC

demonstration expects to find more

satisfied employees on many aspects of

the demonstration including pay equity,

classification decisions, and career

development opportunities. A full range

of measures will be collected during

project evaluation (Section VII).

D. Participating Organization

MRDEC has approximately 1881

employees covered by the project.

Approximately 99 percent of the

employees are located at Redstone

Arsenal, Alabama, with the remaining

located at the following sites: Andover,

Massachusetts; Tucson, Arizona;

Orlando, Florida; and Dallas, Texas.

E. Participating Employees

The demonstration project includes

civilian appropriated funded employees

in the competitive and excepted service

paid under the General Schedule (GS)

pay systems. Scientific and Technical

(ST) employees will be included for

employee development, performance

appraisal, and award provisions only;

their classification, staffing, and

compensation, however, will not

change. Senior Executive Service

employees, Federal Wage System

employees, and employees in the

Quality Assurance Specialist

(Ammunition Surveillance) (QASAS)

career program will not be covered in

the demonstration project. Additionally,

DA interns will not be converted to the

demonstration until they complete their

intern program. Personnel added to the

laboratory in like positions covered by

the demonstration (either through

appointment, promotion, reassignment,

change to a lower grade or where their

functions and positions have been

transferred into the laboratory) will be

converted to the demonstration project.

Successor organizations which may

result from actions associated with the

1995 Base Realignment and Closure

Commission will continue coverage in

the demonstration project.

F. Labor Participation

The American Federation of

Government Employees (AFGE)

represents many GS employees at

MRDEC. The MRDEC is continuing to

fulfill its obligations to consult and/or

negotiate with the AFGE, in accordance

with 5 U.S.C. 4703 (F) and 7117. The

participation with the AFGE is within

the spirit and intent of Executive Order

12871.

The AFGE represents all professional

and nonprofessional employees except

those who are supervisors or managers.

AFGE Local 1858 has been involved

with and has participated in the

development of the project since its

inception. The union is an integral part

of this personnel demonstration and

will be a full partner in arriving at major

decisions involving program

implementation.

G. Project Design

An Integrated Process Team approach

was used at the U.S. Army Missile

Command to develop the attributes of

this personnel demonstration proposal.

The team was lead by MRDEC

management, and team members came

from managers and associates from the

MRDEC, AFGE Local 1858, the Civilian

Personnel Office, and several other

major functional organizations within

the Missile Command.

This personnel system design has

been subjected to critical reviews by

Executive Steering Groups within the

MRDEC and the Missile Command.

Additionally, negotiations with AFGE

Local 1858 have influenced the design

in areas of significant concern to

bargaining unit employees. A survey,

designed by AFGE Local 1858, was

conducted to elicit RDEC employee

opinions and preferences on key

features of the proposal.

The design was preceded by an

exhaustive study of broadbanding

systems currently practiced in the

Federal sector. A first generation design

was briefed to the MRDEC workforce

with the assistance of AFGE Local 1858.

During these briefing sessions,

employees were provided a copy of the

first generation proposal, a set of

anticipated questions and answers, and

a list of points of contact for concerns
11984 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

and questions. Later design generations

have evolved from critical reviews by

headquarters elements of the

Department of the Army, Department of

Defense, and the Office of Personnel

Management. Additionally, consultation

was provided by the designers of the

broadbanding systems practiced by the

Navy China Lake experiment and the

National Institute of Standards and

Technology.

H. Personnel Management Board

The MRDEC intends to establish an

appropriate balance between the

personnel management authority and

accountability of supervisors and of the

oversight responsibilities of a Personnel

Management Board (PMB). The Director

will delegate management and oversight

of the Project at MRDEC to a Personnel

Management Board whose members,

Chairperson, and staff will be appointed

by the Director. The union may provide

a representative to observe all

deliberations of the PMB, and this

representative may vote on those issues

that are not exclusively management

responsibilities. The PMB will be tasked

with the following:

1. Overseeing the civilian pay budget,

2. Determining the composition of the

pay-for-performance pay pools in

accordance with the guidelines of this

proposal and internal procedures,

3. Administering funds allocation to

pay pool managers,

4. Reviewing operation of MRDEC pay

pools,

5. Reviewing hiring and promotion

salaries as well as exceptions to pay-forperformance salary increases,

6. Providing guidance to pay pool

managers,

7. Monitoring award pool distribution

by organization or any other special

categorization,

8. Selecting participants for the

Expanded Developmental Opportunity

Program, long term training, and any

special developmental assignments,

9. Managing promotions to stay

within ‘‘high grade’’ controls,

10. Addressing in-house budget

neutrality issues to include tracking of

average salaries,

11. Assessing the need for changes to

demonstration procedures and policies.

III. Personnel System Changes

A. Broadbanding

Occupational Families

Occupations at the MRDEC will be

grouped into occupational families.

Occupations will be grouped according

to similarities in type of work,

customary requirements for formal

training or credentials, and in

consideration of the business practices

at the MRDEC. The common patterns of

advancement within the occupations as

practiced at DoD Laboratories and in the

private sector will also be considered.

The current occupations and grades

have been examined, and their

characteristics and distribution have

served as guidelines in the development

of the four occupational families

described below:

1. Engineers and Scientists (E&S).

This occupational family includes all

technical professional positions, such as

engineers, physicists, chemists,

metallurgists, mathematicians, and

computer scientists. Predominantly,

specific course work or educational

degrees are required for these

occupations.

2. E&S Support. This occupational

family contains positions that directly

support the E&S mission: it includes

specialized functions in such fields as

technical information management,

librarians, equipment specialists,

quality assurance, and engineering and

electronics technicians. Employees in

these jobs may or may not require

college course work. However, training

and skills in the various electrical,

mechanical, chemical or computer crafts

and techniques are generally required.

3. Business Management. This

occupational family contains

specialized functions in such fields as

finance, procurement, accounting,

administrative computing, and

management analysis. Analytical ability

and specialized knowledge in

administrative fields or special degrees

are required.

4. General Support. This occupational

family is composed of positions for

which minimal formal education is

needed, but for which special skills,

such as office automation or shorthand,

are usually required. Clerical work

usually involves the processing and

maintenance of records. Assistant work

requires knowledge of methods and

procedures within a specific

administrative area. Other support

functions include the work of

secretaries, guards, and mail clerks.

Paybands

Each occupational family will be

composed of discrete paybands (levels)

corresponding to recognized

advancement within the occupations.

These paybands will replace grades.

They will not be the same for all

occupational families. Each

occupational family will be divided into

four to five paybands; each payband

covering the same pay range now

covered by one or more grades. A salary

overlap, similar to the current overlap

between GS grades, will be maintained.

Ordinarily an individual will be hired

at the lowest salary in a payband.

Exceptional qualifications, specific

organizational requirements, or other

compelling reasons may lead to a higher

entrance level within a band.

The proposed paybands for the

occupational families and how they

relate to the current GS grades are

shown in Figure 1. Application of the

Fair Labor Standards Act (FLSA) within

each payband is also shown in Figure 1.

This payband concept has the following

advantages:

1. It may reduce the number of

classification decisions required during

an employee’s career.

2. It simplifies the classification

decision-making process and

paperwork. A payband covers a larger

scope of work than a grade, and thus

will be defined in shorter and simpler

language.

3. It supports delegation of

classification authority to line managers.

4. It provides a broader range of

performance-related pay for each level.

In many cases, employees whose pay

would have been frozen at the top step

of a grade will now have more potential

for upward movement in the broader

payband.

5. It prevents the progression of low

performers through a payband by mere

longevity, since job performance serves

as the basis for determining pay.

The MRDEC broadbanding plan

expands the broadbanding concept used

at China Lake and NIST by creating

Payband V of the Engineers and

Scientists occupational family. This

payband is designed for Senior

Technical Managers and Senior

Scientists/Engineers.

Current OPM guidelines covering the

Senior Executive System and Scientific

and Professional (ST) positions do not

fully meet the needs of MRDEC. The

SES designation is appropriate for

executive level managerial positions

whose classification exceeds the GS–15

grade level. The primary knowledges

and abilities of SES positions relate to

supervisory and managerial

responsibilities. Positions classified as

ST are designed for bench research

scientists and engineers. OPM

guidelines state that the duties and

responsibilities of ST positions must not

include any managerial or supervisory

responsibility.

MRDEC currently has several

division/office chief positions that have

characteristics of both SES and ST

classifications. These division/office

chiefs in MRDEC are responsible for

supervising other GS–15 positions,
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11985

including function supervisors and nonsupervisory researcher engineers and

scientists. MRDEC management

considers the primary requirement for

division/office chiefs to be

knowledgeable of and have expertise in

the specific scientific and technology

areas related to the mission of their

organizations. The ability to manage,

while important, is considered

secondary. Historically, these positions

have been filled by employees who

possess primarily scientific/engineering

credentials and who are considered

experts in their field by the scientific

community. While it is clear these

positions warrant classification beyond

the GS–15 level, attempts to classify

most of the positions as SES have been

difficult because the size of the

organizations and their location in the

Center are not competitive with other

SES level positions. Classification of the

positions as ST is also not an option

because supervisory responsibilities

cannot be ignored.

As preeminent scientists and

engineers, incumbents of ST positions

are responsible for specific research and

development efforts that are continuing

and long range, generally requiring the

efforts of a team. These ST positions

usually serve as team leaders which

means there is some responsibility for

assigning work, coordinating results,

and redirecting efforts. It is

administratively convenient for these

research team leaders to also participate

in performance management. The

restriction of including supervisory

authorities in ST jobs has forced

MRDEC to exclude any mention of the

team leader responsibilities in these

position descriptions for fear that they

will be interpreted as characteristic of

SES rather than ST positions.

Consequently, MRDEC has some

positions that do not strictly conform to

OPM definitions of either the SES or ST.

The purpose of Payband V is to

overcome the difficulties identified

above by creating a category for two

types of positions—the Senior Technical

Manager (with full supervisory

authority) and the Senior Engineer/

Scientist (less than full supervisory

authority or no supervisory authority).

Current GS–15 division/office chiefs

will convert into the demonstration

project at Payband IV. After conversion

they will be reviewed against

established criteria added to determine

if they should be reclassified to Payband

V. Other positions possibly meeting

criteria for classification to Payband V

will be reviewed on a case-by-case basis.

The proposed salary range is the same

as currently exists for ST positions

(minimum of 120% of the minimum

rate of basic pay for GS–15 with a

maximum of the basic rate of pay

established for Level IV of the Executive

Schedule).

Vacant positions in Payband V will be

competitively filled to ensure that

selections are made from among the

world’s preeminent researchers and

technical leaders in the specialty fields.

MRDEC will capitalize on the

efficiencies that can accrue from central

recruiting by continuing to use the

expertise of the Army Materiel

Command SES Office as the recruitment

agent. Panels will be created to assist in

filling Payband V positions. Panel

members will be selected from a pool of

current MRDEC SES members, ST

employees and those in Payband V, and

an equal number of individuals of

equivalent stature from outside the

Center to ensure impartiality, breadth of

technical expertise, and a rigorous and

demanding review. The panel will

apply criteria developed largely from

the current OPM Research Grade

Evaluation Guide for positions

exceeding the GS–15 level. The same

procedure will be used for evaluating

Senior Technical Manager positions

except the rating criteria will be

adjusted to account for the difference in

the positions, such as greater emphasis

on technical program management and

supervisory abilities.

The final component of Payband V is

the management of all Payband V assets.

Specifically, this includes authority to

classify, create, abolish positions as

circumstances warrant; recruit and

reassign employees in this payband; set

pay and to have their performance

appraised under this project’s Pay for

Performance System. This authority will

be executed within parameters to be

established at the DA level, to include

controls on the numbers of Payband V

positions and recruitment/promotion

criteria. The specific details regarding

the control and management of Payband

V assets will be included in the

demonstration’s operating procedures.

The laboratory wants to demonstrate

increased effectiveness by gaining

greater managerial control and

authority, consistent with merit,

affirmative action, and equal

employment opportunity principles.

BILLING CODE 6325–01–P
11986 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

Fair Labor Standards Act

Fair Labor Standards Act (FLSA)

exemption and nonexemption

determinations will be made consistent

with criteria found in 5 CFR part 551.

Pay increases for employees receiving

retained rates will be determined in

accordance with 5 U.S.C. 5363 except

that those with a U rating will receive

no pay increase. There are eight

paybands (see Figure 1) where

employees can be either exempt or

nonexempt from overtime provisions.

For these eight paybands supervisors

with classification authorities will make

the determinations on a case-by-case

basis by comparing the duties and

responsibilities assigned, the

classification standards for each

payband, and the FLSA criteria under 5

CFR part 551. Additionally, the advice

and assistance of the Civilian Personnel

Advisory Center/Civilian Personnel

Operations Center (CPAC/CPOC) will be

obtained in making determinations as

part of the performance review process.

The benchmark position descriptions

will not be the sole basis for the

determination. Basis for exemption will

be documented and attached to each

description. Exemption criteria will be

narrowly construed and applied only to

those employees who clearly meet the

spirit of the exemption. Changes will be

documented and provided to the CPAC/

CPOC, as appropriate.

Simplified Assignment Process

Today’s environment of downsizing

and workforce transition mandates that

the MRDEC have increased flexibility to

assign individuals. Broadbanding can be

used to address this need. As a result of

the assignment to a particular level

descriptor, the organization will have

increased flexibility to assign an

employee, without pay change, 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 without the need to

process a personnel action. For instance,

a technical expert can be assigned to

any project, task, or function requiring

similar technical expertise. 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.

Promotion

A promotion is a move of an

employee to (1) a higher payband in the

same occupational family or (2) a

payband in another occupational family

in combination with an increase in the

employee’s salary. Positions with

known promotion potential to a specific

band within an occupational family will

be identified when they are filled. Not

all positions in an occupational family

will have promotion potential to the

same band. Movement from one

occupational family to another will
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11987

depend upon individual knowledge,

skills, and abilities, and needs of the

organization.

Promotions will be processed under

competitive procedures in accordance

with merit principles and requirements

and the local merit promotion plan. The

following actions are excepted from

competitive procedures:

(a) Re-promotion to a position which

is in the same payband and

occupational family as the employee

previously held on a permanent basis

within the competitive service.

(b) Promotion, reassignment,

demotion, transfer or reinstatement to a

position having promotion potential no

greater than the potential of a position

an employee currently holds or

previously held on a permanent basis in

the competitive service.

(c) A position change permitted by

reduction in force procedures.

(d) Promotion without current

competition when the employee was

appointed through competitive

procedures to a position with a

documented career ladder.

(e) A temporary promotion, or detail

to a position in a higher payband, of 180

days or less.

(f) Reclassification to include impact

of person on-the-job promotions.

(g) A promotion resulting from the

correction of an initial classification

error or the issuance of a new

classification standard.

(h) Consideration of a candidate not

given proper consideration in a

competitive promotion action.

(i) Impact of person on the job and

Factor IV process (application of the

Research Grade Evaluation Guide,

Equipment Development Grade

Evaluation Guide, Part III, or similar

guides) promotions.

Link Between Promotion and

Performance

Career ladder promotions and

promotions resulting from the addition

of duties and responsibilities are

examples of promotions that can be

made noncompetitively. Promotions can

be made noncompetitively when

contributions and achievements are

such that a higher payband is achieved

when comparing the overall position to

the Equipment Development Grade

Evaluation Guide, Part III or the

Research Grade Evaluation Guide. To be

promoted noncompetitively from one

band to the next, an employee must

meet the minimum qualifications for the

job and have a current performance

rating of B or better (see Performance

Evaluation) or equivalent under a

different performance management

system. Selection of employees through

competitive procedures will require a

current performance rating of B or

better.

B. Pay-for-Performance Management

System

Performance Evaluation

Introduction

The performance evaluation system

will link compensation to performance

through annual performance appraisals

and performance scores. The

performance evaluation system will

allow optional use of peer evaluation

and/or input from subordinates as

determined appropriate by the

Personnel Management Board. The

system will have the flexibility to be

modified, if necessary, as more

experience is gained under the project.

Performance Objectives

Performance objectives are statements

of job responsibilities based on the work

unit’s mission, goals and supplemental

benchmark position descriptions.

Employees and supervisors will jointly

develop performance objectives which

will reflect the types of duties and

responsibilities expected at the

respective pay level. In case of

disagreements, the decision of the

supervisor will prevail. Performance

objectives deal with outputs and

outcomes of a particular job. The

performance objectives, representing

joint efforts of employees and their

rating chains, should be in place within

30 days from the beginning of each

rating period.

Performance Elements

Performance elements are generic

attributes of job performance, such as

technical competence, that an employee

exhibits in performing job

responsibilities and associated

performance objectives. New

performance elements and rating forms

will be designed to implement a new

scoring and rating system. The new

performance evaluation system will be

based on critical and non-critical

performance elements defined in

Appendix C. Each performance element

is assigned a weight between a specified

range. The total weight of all elements

in a performance plan is 100 points. The

supervisor assigns each element some

portion of the 100 points in accordance

with its importance for mission

attainment. As a general rule, essentially

identical positions will have the same

critical elements and the same weight.

These weights will be developed along

with employee performance objectives.

Mid-Year Review

A mid-year review between a

supervisor and employee will be held to

determine whether objectives are being

met and whether ratings on performance

elements are above an unsatisfactory

level. Performance objectives should be

modified as necessary to reflect changes

in planning, workload, and resource

allocation. The weights assigned to

performance elements may be changed

if necessary. Additional reviews may be

held as deemed necessary by the

supervisor or requested by the

employee. The supervisor will provide

periodic feedback to the employee on

their level of performance. If the

supervisor determines that the

employee is not performing at an

acceptable level on one or more

elements, the supervisor must alert the

employee and document the problem(s).

This feedback will be provided at any

time during the rating cycle.

Performance Appraisal

A performance appraisal will be

scheduled for the final weeks of the

annual performance cycle, although an

individual performance appraisal may

be conducted at any time after the

minimum appraisal period of 120 days

is met. The performance appraisal

process brings supervisors and

employees together for formal

discussions on performance and results

in (1) written appraisals, (2)

performance ratings, (3) performance

scores, and (4) other individual

performance-related actions as

appropriate. A performance appraisal

shall consist of two meetings held

between employee and supervisor: the

performance review meeting and the

evaluation feedback meeting.

Performance Review Meeting Between

Employee and Supervisor

The review meeting is to discuss job

performance and accomplishments.

Supervisors will not assign performance

scores or performance ratings at this

meeting. The supervisor notifies the

employee of the review meeting in time

to allow the employee to prepare a list

of accomplishments. Employees will be

given an opportunity at the meeting to

give a personal performance assessment

and describe accomplishments. The

supervisor and employee will discuss

job performance and accomplishments

in relation to the performance elements,

objectives, and planned activities

established in the performance plan.

Evaluation Feedback Meeting Between

Employee and Supervisor

In this second meeting between

employee and supervisor, the supervisor
11988 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

informs the employee of management’s

appraisal of the employee’s performance

on performance objectives, and the

employee’s performance score and

rating on performance elements. During

this second meeting, the supervisor and

employee will discuss and document

performance objectives for the next

rating period.

Performance Scores

The overall score is the sum of

individual performance element scores.

Employees will receive an academictype rating of A, B, C, or U depending

upon the score attained. These summary

ratings are representative of pattern E (a

4 level system) in summary level chart

in 5 CFR 430.208(d)(1). This rating will

become the rating of record, and only

those employees rated C or higher will

receive general increases, performance

pay increases (i.e., basic pay increases),

and/or performance bonuses. A rating of

A will be assigned for scores from 85 to

100 points, B for scores from 70 to 84,

C for scores from 50 to 69, and U for

scores from 0 to 49 or a failure to

achieve at the 50% level of any critical

element. The academic-type ratings will

be used to determine performance

payouts and to award additional RIF

retention years as follows:

Rating Compensation

RIF retention

yrs

added

A ....................... 4 shares+c* ...... 10

B ....................... 2 shares+c ....... 7

C ....................... 1 share+c ......... 3

U ....................... 0 ....................... 0

*c=GS General Increase (Title 5, Section

5303).

Selection of the weighted points to

assign to an employee’s performance on

performance elements is assisted by use

of benchmark performance standards

(Appendix D). These benchmark

performance standards are modified

versions of the performance standards

used by the National Institute of

Standards and Technology (NIST),

National Bureau of Standards. Each

benchmark performance standard

describes the level of performance

associated with a particular point on a

rating scale. Supervisors may add

supplemental standards to the

performance plans of the employees

they supervise to further elaborate the

benchmark performance standards.

Performance-Based Actions

MRDEC will implement a process to

deal with poor performers. This process

may lead to involuntary separations,

with grievance or appeal rights. The

process may start at any time during the

rating period, not necessarily at the end

of an appraisal period. This process

begins when the supervisor identifies a

deficiency(ies) which causes the level of

performance to be at the U

(unsatisfactory) level based on a

composite score that is less than 50 for

all elements or a score on any critical

element of less than 50 percent.

When the employee’s performance is

determined to be unsatisfactory at the

close of the annual rating period, the

Unsatisfactory (U) rating will become

the rating of record for all matters

relating to pay or Reduction-in-Force

(RIF).

There are two processes to deal with

poor performers:

1. Change in Assignment—Because it

is recognized that employees may be

assigned to a position for which they are

not suited, an attempt will be made to

place poor performers in a position

better suited to their skills and

capabilities. The offer of change in

assignment will be contingent upon the

employee’s concurrence and will be

either within the same band or in the

next lower payband. If reassigned, the

employee will receive written

notification that they will be given a

reasonable opportunity period of no less

than 30 calendar days in length, to

demonstrate performance at a level that

is at least equal to that of a summary

level C rating. The period of time

considered to be reasonable will be

determined, in part, by whether the

employee’s reassignment is to a

substantially similar or the same

position under a different supervisor, or

in a different office, or in a substantially

different position. Essential training and

mentoring will be provided as

appropriate during this opportunity

period. Failure to achieve a level of

performance that is at least equal to that

of a summary level C rating (following

the above-referenced opportunity

period) will place the employees in Step

3 of this process. There will be no

further opportunity period.

2. Performance Improvement Plan

(PIP)—If the employee does not accept

an offer of change in assignment, or if

there is no appropriate, available

position to assign an employee, the

supervisor will develop a PIP that will

be monitored for a reasonable period of

time (no less than 30 calendar days).

When an employee is placed in a PIP,

the employee will be informed in

writing, that unless their level of

performance improves to, and is

sustained at a level at least equal to that

of a summary level C rating, the

employee may be removed from the

position (change in assignment,

reduction in pay, or removal from the

Federal service).

If, during or at the conclusion of the

PIP, the employee’s level of

performance improves to a level at least

equal to that of a summary level C rating

and is again determined to deteriorate to

below level C in any area during one

year from the beginning of the PIP, the

MRDEC may initiate action to remove

the employee from the position with no

additional opportunity to improve. An

employee whose level of performance

improves to a level at least equal to that

of a summary level C rating for one year

from the beginning of the PIP, and then

deteriorates to below level C again, in

any area, during succeeding rating

periods, will be placed in a second PIP

before initiating action to remove the

employee from the position.

If and when performance improves

during the period in which the

employee is otherwise ineligible for the

general increase, then the general

increase shall be restored. Such

restoration is not retroactive and is

separate and apart from incentive pay.

3. Removal—If the employee fails to

demonstrate a level of performance at

least equal to that of a summary level C

rating after completing either Step 1 or

Step 2, the employee will be given a

written notice of proposed removal from

the position. The notice period will be

a minimum of 30 calendar days and the

employee will have a reasonable period

of time in which to reply. The employee

will be given a written notice of

decision to include all applicable

grievance and appeal rights.

Note: Performance-based adverse actions

may be taken under 5 U.S.C., Chapter 75,

rather than Chapter 43.

A decision to remove an employee for

poor performance may be based only on

those instances of poor performance that

occurred during the opportunity period

(Step 1) or during the one-year period

ending on the date of proposed removal

(Step 2). The notice of decision will

specify the instances of poor

performance on which the action is

based and will be given to the employee

at or before the time the action will be

effective.

The MRDEC will preserve all relevant

documentation concerning an action

taken for poor performance and make it

available to review by the affected

employee or designated representative.

At a minimum, the record will consist

of a copy of the notice of proposed

action; the employee’s written reply, if

provided, or a summary if the employee

makes an oral reply. Additionally, the

record will contain the written notice of

decision and the reasons therefore,
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11989

along with any supporting material

including documentation regarding the

opportunity afforded the employee to

demonstrate improved performance. An

employee who sustains their

performance at a level at least equal to

a summary level C rating for one year,

will have all relevant documentation

removed from their record.

Employee Relations

Employees covered by the project will

be evaluated under a performance

evaluation system that affords grievance

or appeal rights comparable to those

provided currently.

Senior Executive Service and 5 U.S.C.

3104 (ST) Employees

Members of the SES will remain

under the current SES performance

appraisal system. Title 5 U.S.C. 3104

(ST) employees will be included in the

project performance evaluation system,

but will not be in the project pay-forperformance system.

Awards

The MRDEC currently has an

extensive awards program consisting of

both internal and external awards. Onthe-spot, special act (which are both

performance related and

nonperformance related), and other

internal awards (both monetary and

nonmonetary) will continue under the

project, and may be modified or

expanded as appropriate. MACOM, DA,

and DoD awards and other honorary

noncash awards will be retained.

Teams may distribute an award pool

among themselves where appropriate.

Thus, a team leader or supervisor may

allocate a sum of money to a team for

outstanding completion of a special

task, and the team may decide the

individual distribution of the total

dollars among themselves.

The MRDEC Director will have the

authority to grant awards to covered

employees of up to $10,000 for a special

act. The scale of the award will be

determined using criteria in AR 5–17.

AFGE Local 1858 will be notified and

provided an opportunity to comment on

proposed special act awards for

bargaining unit employees before the

effective date of the award. The name of

proposed special act awardees will not

be released to the union for privacy act

purposes.

Members of the SES will remain

under their current awards system and

will not participate in the project

performance recognition bonus awards

program. Title 5 U.S.C. 3104 (ST)

employees will be eligible for cash

awards.

Pay Administration

Introduction

The objective is to establish a pay

system that will improve the ability of

the MRDEC to attract and retain quality

employees. The new system will be a

pay-for-performance system and, when

implemented, will result in a

redistribution of pay resources based

upon individual performance.

Pay-for-Performance

MRDEC will use a simplified

performance appraisal system that will

permit both the supervisor and the

employee to focus on quality of the

work. The proposed system will permit

the manager/supervisor to base

incentive pay increases entirely on

performance or value added to the goals

of the organization. This system will

allow managers to withhold pay

increases from nonperformers, thereby

giving the nonperformer the incentive to

improve performance or leave

government service. For example,

employees with ratings of U will receive

no performance pay increase, general

increase, or performance bonus. This

action may result in the employee’s pay

falling below the minimum rate of their

current payband because the minimum

rate is increased by the general increase

(5 U.S.C. 5303). Under these transitory

conditions, the employee’s payband

designator will remain the same. Since

there is no reduction in band level or

pay, there is no adverse action.

Pay for performance has two

components: performance pay increases

and/or performance bonuses. All

covered employees will be given the full

amount of locality pay adjustments

when they occur regardless of

performance. The funding for

performance pay increases and/or

performance bonuses is composed of

money previously available for withingrade increases, quality step increases,

promotions from one grade to another

where both grades are now in the same

payband, and for some performance

awards. Additionally, funds will be

obtained from performance pay

increases withheld for poor performance

(see Performance Evaluation).

Performance Pay Pool

The performance pay pool is

composed of a base pay fund and a

bonus pay fund. The payouts made to

employees from the performance pay

pool will be a mix of base pay increases

and bonus payments, subject to the

amounts available in the respective

funds. The funding for the base pay

fund is composed of money previously

available for within-grade increases,

quality step increases, and promotions

between grades that are banded under

the demonstration project. The bonus

pay fund is separately funded within

the constraints of the organization’s

overall performance award budget.

Some portion of the performance award

budget will be reserved for special ad

hoc awards—e.g., suggestion awards or

special act awards—and will not be

included as part of the performance pay

pool.

The MRDEC Budget Office, in

consultation with AFGE Local 1858 and

supporting personnelists, will calculate

the total performance pay pool funds

and allocate pay pools to Major

Organizational Units or teams as

appropriate.

Performance Pay Increases and/or

Performance Bonuses

A pay pool manager is accountable for

staying within pay pool limits. The pay

pool manager assigns performance pay

increases and/or performance bonuses

to individuals on the basis of an

academic-type rating, the value of the

performance pay pool resources

available, and the individual’s current

basic rate of pay within a given

payband. A pay pool manager may

request approval from the Personnel

Management Board (PMB) or its

designee to grant a performance pay

increase to an employee that is higher

than the compensation formula for that

employee to recognize extraordinary

achievement or to provide accelerated

compensation for local interns.

Performance payouts will be

calculated for each individual based

upon a performance pay pool value that

will be initially 3 percent (e.g., 2.0%

performance pay + 1.0% performance

bonus) of the combined basic rates of

pay of the assigned employees. This

percentage, a payout factor, will be

adjusted as necessary to compensate for

changing employee demographics

which impact the elements used in the

GS system, such as the amount of step

raises, quality step increases, and

promotions. Performance payouts will

be calculated so that a pay pool manager

will not exceed the resources that are

available in the pay pool. An

employee’s performance payout is

computed as follows:
11990 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

Performance Payout = Pool Value *SAL * N

SUM (SALj* Nj); j = 1 to n

Where:

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

n=Number of employees in pay pool

N=Number of shares earned by an

employee based on their

performance rating (0 to 4)

SAL=An individual’s basic rate of pay

SUM=The summation of the entities in

parenthesis over the range indicated

F=Payout Factor

Once the individual performance

payout amounts have been determined,

the next step is to determine what

portion of each payout will be in the

form of a base pay increase as opposed

to a bonus payment. A base pay share

factor is derived by dividing the amount

of the base pay fund by the amount of

the total performance pay pool. This

factor is multiplied by the individual

performance payout amounts to derive

each individual’s projected base pay

increase. Certain employees will not be

able to receive the projected base pay

increase due to base pay caps. Base pay

is capped when an employee reaches

the maximum rate of pay in an assigned

payband, when the midpoint principle

applies (see below), and when the 50

percent rule applies (see below).

If the organization determines it is

appropriate, it may reallocate a portion

(up to the maximum possible amount)

of the unexpended base pay funds for

capped employees to uncapped

employees. This reallocation must be

made on a proportional basis so that all

uncapped employees receive the same

percentage increase in their base pay

share (unless the reallocation

adjustment is limited by a pay cap). Any

dollar increase in an employee’s

projected base pay increase will be

offset, dollar for dollar, by an

accompanying reduction in the

employee’s projected bonus payment.

Thus, the employee’s total performance

payout is unchanged.

A midpoint principle will be used to

determine performance pay increases.

This principle requires that employees

in all paybands must receive a B rating

or higher to advance their basic rate of

pay beyond the midpoint dollar

threshold of their respective paybands.

If the performance payout formula

yields a basic pay increase for a C-rated

employee that would increase their

basic rate of pay beyond the midpoint

dollar threshold, then their basic rate of

pay will be adjusted to the midpoint

dollar threshold and the balance

converted to a performance bonus. Once

an employee has progressed beyond the

midpoint dollar threshold, future

performance pay increases will require

a B rating or greater. If an employee

attains a C rating and is beyond the

midpoint dollar threshold, incentive

pay increases will be restricted to

performance bonuses only.

Annual performance pay increases

will be limited to (1) 50 percent of the

difference between the particular

maximum band rate and the employee’s

current basic rate of pay, or (2) the

projected performance pay increase,

whichever is less, with the balance

converted to a performance bonus. This

means that employees whose pay has

reached the upper limits of a particular

payband will receive most performance

incentives as a performance bonus.

Performance bonuses will not become a

part of employee basic rate of pay.

Supervisory Pay Adjustments

Supervisory pay adjustments may be

used at the discretion of the MRDEC

Director, to compensate employees

assuming positions entailing

supervisory responsibilities.

Supervisory pay adjustments are

increases to the supervisor’s basic rate

of pay, ranging up to 10 percent of that

pay rate, subject to the constraint that

the adjustment may not cause the

employee’s basic rate of pay to exceed

the payband maximum rate. Only

employees in supervisory positions with

formal supervisory authority meeting

that required for coverage under the

OPM GS Supervisory Guide may be

considered for the supervisory pay

adjustment. Criteria to be considered in

determining the pay increase percentage

include the following organizational

and individual employee factors: (1)

Needs of the organization to attract,

retain, and motivate high quality

supervisors; (2) budgetary constraints;

(3) years of supervisory experience; (4)

amount of supervisory training received;

(5) performance appraisals and

experience as a group or team leader; (6)

their organizational level of supervision;

and (7) managerial impact on the

organization. The supervisory pay

adjustment will not apply to 5 U.S.C.

3104 (ST) positions.

Conditions, after the date of

conversion into the demonstration

project, under which the application of

a supervisory pay adjustment may be

considered are as follows:

(1) New hires into supervisory

positions will have their initial rate of

basic pay set at the supervisor’s

discretion within the pay range of the

applicable payband. This rate of pay

may include a supervisory pay

adjustment determined using the ranges

and criteria outlined above.

(2) A career employee selected for a

supervisory position that is within the

employee’s current payband may also be

considered for a supervisory pay

adjustment.

If a supervisor is already authorized a

supervisory pay adjustment and is

subsequently selected for another

supervisory position, within the same

payband, then the supervisory pay

adjustment will be redetermined.

Within the demonstration project

rating system, the performance element

‘‘Supervision/EEO’’ is identified as a

critical element. Changes in the rating

value for this element awarded to a

supervisor with a supervisory pay

adjustment may generate a review of the

adjustment and may result in an

increase or decrease to that adjustment.

Decrease to a supervisory pay

adjustment is not an adverse action if

this action results from changes in

supervisory duties or supervisory

ratings.

Supervisors, upon initial conversion

into the demonstration project into the

same, or substantially similar position,

will be converted at their existing basic

rate of pay and will not be offered a

supervisory pay adjustment.

The initial dollar amount of the

adjustment will be removed when the

employee voluntarily leaves the

supervisory position. The cancellation

of the adjustment under these

circumstances is not an adverse action

and is not appealable. If an employee is

removed from a supervisory position for

personal cause (performance or

conduct), the adjustment will be

removed under adverse action

procedures. However, if an employee is

removed from a non-probationary

supervisory position for conditions

other than voluntary or for personal

cause, then the pay retention provisions

of 5 CFR part 536 will prevail.

Supervisory Pay Differentials

Supervisory differentials may be used,

at the discretion of the MRDEC Director,

to incentivize and reward supervisors

who are in paybands III and IV of the

E&S occupational family in supervisory

positions with formal supervisory

authority meeting that required for

coverage under the OPM GS

Supervisory Guide. A supervisory pay
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11991

differential is a cash incentive that may

range up to 10 percent of the

supervisor’s basic rate of pay. It is paid

on a pay period basis and is not

included as part of the supervisor’s

basic rate of pay. Criteria to be

considered in determining the amount

of this supervisory pay differential

includes those identified for

Supervisory Pay Adjustments.

The supervisory pay differential may

be considered, either during conversion

into or after initiation of the

demonstration project, if the supervisor

has subordinate employees in the same

payband. The differential must be

terminated if the employee is removed

from a supervisory position, regardless

of cause.

As specified in Supervisory Pay

Adjustments, after initiation of the

demonstration project, all personnel

actions involving a supervisory

differential will require a statement

signed by the employee acknowledging

that the differential may be terminated

or reduced at the MRDEC Director’s

discretion. The termination or reduction

of the differential is not an adverse

action and is not subject to appeal.

Pay and Compensation Ceilings

An employee’s total monetary

compensation paid in a calendar year

may not exceed the basic rate of pay

paid in level I of the Executive Schedule

consistent with 5 U.S.C. 5307 and 5 CFR

part 530, subpart B.

In addition, each payband will have

its own pay ceiling, just as grades do in

the current system. Pay rates for the

various paybands will be directly keyed

to the GS rates. Except for retained rates,

basic pay will be limited to the

maximum rates payable for each

payband.

Pay Setting for Promotion

Upon promotion to a higher payband,

an employee will be entitled to a 6%

pay increase or the lowest level in the

payband to which promoted, whichever

is greater. Highest previous rate also

may be considered in setting pay upon

promotion, under rules similar to the

highest previous rate rules in 5 CFR

531.203(c) and (d).

C. Classification

Introduction

The objectives of the new

classification system are to simplify the

classification process, make the process

more serviceable and understandable,

and place more decision-making

authority and accountability with line

managers. All positions listed in

Appendix A will be in the classification

structure. Provisions will be made for

including other occupations as

employment requirements change in

response to changing technical

programs.

Occupational Series

The present GS classification system

has over 400 occupations (also called

series), which are divided into 22

groups. The occupational series will be

maintained. New series, established by

OPM, may be added as needed to reflect

new occupations in the work force.

Appendix A lists the occupational series

currently represented at the MRDEC by

occupational family.

Classification Standards

MRDEC will use a classification

system that is a modification of the

system now in use at the U.S. Navy,

Naval Command, Control and Ocean

Surveillance Center, San Diego,

California. The present classification

standards will be used to create local

benchmark position descriptions for

each payband, reflecting duties and

responsibilities comparable to those

described in present classification

standards for the span of grades

represented by each payband. There

will be at least one benchmark position

description for each payband. A

supervisory benchmark position

description will be added to those

paybands that include supervisory

employees. Present titles and series will

continue to be used in order to

recognize the types of work being

performed and educational backgrounds

and requirements of incumbents.

Locally developed specialty codes and

OPM functional codes will be used to

facilitate titling, making qualification

determinations, and assigning

competitive levels to determine

retention status.

Position Descriptions and Classification

Process

The MRDEC Director will have

delegated classification authority and

may redelegate this authority to

subordinate managers. New benchmark

position descriptions will be developed

to assist managers in exercising

delegated position classification

authority. Managers will identify the

occupational family, job series, the

functional code, the specialty code,

payband level, and the appropriate

acquisition codes. The manager will

document these decisions on a cover

sheet similar to the present DA Form

374.

Specialty codes will be developed by

Subject Matter Experts (SMEs) to

identify the special nature of work

performed. Functional codes are those

currently found in the OPM

Introduction to the Classification

Standards which define certain kinds of

activities, e.g., Research, Development,

Test and Evaluation, etc., and covers

Engineers & Scientists.

Classification Appeals

An employee may appeal the

occupational family, occupational

series, or payband of his or her position

at any time. The employee may

accomplish this by exercising any of the

following options: (a) The employee

must formally raise the areas of concern

to supervisors in the immediate chain of

command, either verbally or in writing,

(b) If the employee is not satisfied with

the supervisory response, the employee

may appeal to the appellate level within

DoD or may appeal directly to OPM, (c)

If the employee elects to first appeal to

DoD but is not satisfied with this

response, he/she may appeal to the

Office of Personnel Management.

Appellate decisions from OPM are final.

The evaluation of a classification

appeal, is based on the MRDEC

Personnel Demonstration Project

Classification Standards.

D. Hiring and Appointment Authorities

1. Hiring Authority

A candidate’s basic eligibility will be

determined using Office of Personnel

Management’s (OPM) Qualification

Standards Handbook for General

Schedule Positions. Candidates must

meet the minimum standards for entry

into the payband. For example if the

payband includes positions in grades

GS–5 and GS–7, the candidate must

meet the qualifications for positions at

GS–5 level. Specific experience/

education required will be determined

based on whether a position to be filled

is at the lower or higher end of the band.

Selective placement factors can be

established in accordance with the OPM

Qualification Handbook, when judged

to be critical to successful job

performance. These factors will be

communicated to all candidates for

particular position vacancies and must

be met for basic eligibility. Under the

demonstration authority, the MRDEC

will modify qualification standards only

as authorized in the General Policies

and instructions (paragraph 8) of the

Qualification Standard Handbook.

2. Appointment Authority

Under the demonstration project,

there will continue to be career and

career conditional appointments and

temporary appointments not to exceed

one year. These appointments will use
11992 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

existing authorities and entitlements.

Non-permanent positions (exceeding

one year) needed to meet fluctuating or

uncertain workload requirements will

be filled using a Contingent Employee

appointment authority.

Employees hired for more than one

year, under the contingent employee

appointment authority, are given term

appointments in the competitive service

for no longer than five years. The

MRDEC Director is authorized to extend

a contingent appointment one

additional year. These employees are

entitled to the same rights and benefits

as term employees and will serve a one

year trial period. The Pay-forPerformance Management System

described in III.B applies to contingent

employees.

Appointments will be made under the

same appointment authorities and

processes as regular term appointments,

but recruitment bulletins must indicate

that there is a potential for conversion

to permanent employment.

Employees hired under the contingent

employee authority may be eligible for

conversion to career-conditional

appointments. To be converted, the

employee must (1) have been selected

for the term position under competitive

procedures, with the announcement

specifically stating that the individual(s)

selected for the term position(s) may be

eligible for conversion to careerconditional appointment at a later date;

(2) served two years of substantially

continuous service in the term position;

(3) be selected under merit promotion

procedures for the permanent position ;

and (4) have a current rating of B or

better.

Employees serving under regular term

appointments at the time of conversion

to the Demonstration Project will be

converted to the new contingent

employee appointments provided they

were hired for their current positions

under competitive procedures. These

employees will be eligible for

conversion to career-conditional

appointment if they have a current

rating of B or better (or one of the top

two ratings on the current evaluation

system), and are selected under merit

promotion procedures for their

permanent position after having

completed two years of continuous

service. Time served in temporary or

term positions prior to conversion to the

contingent employee appointment is

creditable to the requirement for two

years of continuous service stated

above, provided the service was

continuous.

3. Extended Probationary Period

The current one year probationary

period will be extended to two years for

all newly hired employees in the

Engineers and Scientists, E&S Support,

and Business Management occupational

families. The purpose of extending the

probationary period is to allow

supervisors an adequate period of time

to fully evaluate an employee’s ability to

complete a cycle of work (such as

research, program development and

execution, and technology transfer) and

to fully evaluate an employee’s

contribution and conduct. Employees in

the General Support occupational

family will serve a one year

probationary period.

Aside from extending the time period,

all other features of the current

probationary period are retained

including the potential to remove an

employee without providing the full

substantive and procedural rights

afforded a non-probationary employee.

Any employee appointed prior to the

implementation date will not be

affected. The two year probation will

apply to new hires or those who do not

have reemployment rights or

reinstatement privileges.

Probationary employees will be

terminated when the employee fails to

demonstrate proper conduct, technical

competency, and/or adequate

contribution for continued employment.

When the MRDEC decides to terminate

an employee serving a probationary

period because his/her work

performance or conduct during this

period fails to demonstrate their fitness

or qualifications for continued

employment, it shall terminate his/her

services by written notification of the

reasons for separation and the effective

date of the action. The information in

the notice as to why the employee is

being terminated shall, as a minimum,

consists of the manager’s conclusions as

to the inadequacies of their performance

or conduct.

4. Supervisory Probationary Periods

Supervisory probationary periods will

be made consistent with 5 CFR part 315,

Subchapter 315.901. Employees that

have successfully completed the initial

probationary period will be required to

complete an additional one year

probationary period for the initial

appointment to a supervisory position.

If, during the probationary period, the

decision is made to return the employee

to a nonsupervisory position for reasons

solely related to supervisory

performance, the employee will be

returned to a comparable position of no

lower payband and pay than the

position from which they were

promoted.

5. Voluntary Emeritus Program

Under the demonstration project, the

Center Director will have the authority

to offer retired or separated individuals

(engineers and scientists) voluntary

assignments in the Center. This

authority will include individuals who

have retired or separated from Federal

service. Voluntary Emeritus Program

assignments are not considered

‘‘employment’’ by the Federal

government (except for purposes of

injury compensation). Thus, such

assignments do not affect an employee’s

entitlement to buyouts or severance

payments based on an earlier separation

from Federal service. The Voluntary

Emeritus Program will ensure continued

quality research while reducing the

overall salary line by allowing higher

paid individuals to accept retirement

incentives with the opportunity to

retain a presence in the scientific

community. The program will be of

most benefit during manpower

reductions as senior S&Es could accept

retirement and return to provide

valuable on-the-job training or

mentoring to less experienced

employees. Voluntary service will not

be used to replace any employee.

To be accepted into the emeritus

program, a volunteer must be

recommended by Center managers to

the Center Director. Everyone who

applies is not entitled to a voluntary

assignment. The Center Director must

clearly document the decision process

for each applicant (whether accepted or

rejected) and retain the documentation

throughout the assignment.

Documentation of rejections will be

maintained for two years.

To ensure success and encourage

participation, the volunteer’s federal

retirement pay (whether military or

civilian) will not be affected while

serving in a voluntary capacity. Retired

or separated federal employees may

accept an emeritus position without a

break or mandatory waiting period.

Volunteers will not be permitted to

monitor contracts on behalf of the

government or to participate on any

contracts or solicitations where a

conflict of interest exists. The same

rules that currently apply to source

selection members will apply to

volunteers.

An agreement will be established

between the volunteer, the Center

Director and the CPAC/CPOC Director.

The agreement will be reviewed by the

local Legal Office for ethics

determinations under the Joint Ethics

Regulation. The agreement must be
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11993

finalized before the assumption of

duties and shall include:

(a) A statement that the voluntary

assignment does not constitute an

appointment in the civil service and is

without compensation, and any and all

claims against the Government (because

of the voluntary assignment) are waived

by the volunteer,

(b) A statement that the volunteer will

be considered a federal employee for the

purpose of injury compensation,

(c) Volunteer’s work schedule,

(d) Length of agreement (defined by

length of project or time defined by

weeks, months, or years),

(e) Support provided by the Center

(travel, administrative, office space,

supplies),

(f) A one page Statement of Duties and

Experience,

(g) A provision that states no

additional time will be added to a

volunteer’s service credit for such

purposes as retirement, severance pay,

and leave as a result of being a member

of the Voluntary Emeritus Program,

(h) A provision allowing either party

to void the agreement with 10 working

days written notice, and

(i) The level of security access

required (any security clearance

required by the assignment will be

managed by the Center while the

volunteer is a member of the Voluntary

Emeritus Program).

E. Employee Development

1. Expanded Developmental

Opportunity Program

The MRDEC Expanded

Developmental Opportunity Program

will be funded by the MRDEC, and it

will cover all demonstration project

employees in the Engineers and

Scientists and the E&S Support

occupational families. An expanded

developmental opportunity

complements existing developmental

opportunities such as (1) long term

training, (2) one year work experiences

in an industrial setting via the Relations

With Industry Program, (3) one year

work experiences in laboratories of

allied nations via the Science and

Engineer Exchange Program, (4)

rotational job assignments within the

MRDEC, (5) up to one year

developmental assignments in higher

headquarters within the Army and

Department of Defense, and (6) self

directed study via correspondence

courses and local colleges and

universities.

Each developmental opportunity

period should benefit the MRDEC, as

well as increase the employee’s

individual effectiveness. Various

learning or uncompensated

developmental work experiences may

be considered, such as advanced

academic teaching or research, or onthe-job work experience with public or

non-profit organizations. Employees

will be eligible after completion of

seven years of Federal service. Final

approval authority will rest with the

MRDEC Director, and selection of an

employee to be granted an expanded

developmental opportunity will be on a

competitive basis. An expanded

developmental opportunity period will

not result in loss of (or reduction in)

pay, leave to which the employee is

otherwise entitled, or credit for time or

service. Employees accepting an

expanded developmental opportunity

do not have to sign a continued service

agreement cited in 5 U.S.C. 4108(a)(1)

(Supplement 1995).

The opportunity to participate in the

Expanded Developmental Opportunity

Program will be announced annually.

Instructions for application and the

selection criteria will be included in the

announcement. Final selection for

participation in the program will be

made by the Personnel Management

Board. The position of employees on an

expanded developmental opportunity

may be backfilled with employees

temporarily promoted or contingent

employees or employees assigned via

the simplified assignment process in

III.A. However, that position or its

equivalent must be made available to

the employee returning from the

expanded developmental opportunity.

2. Training for Degrees

Degree training is an essential

component of an organization that

requires continuous acquisition of

advanced and specialized knowledge.

Degree training in the academic

environment of laboratories is also a

critical tool for recruiting and retaining

employees with or requiring critical

skills. Constraints under current law

and regulation limit degree payment to

shortage occupations. In addition,

current government wide regulations

authorize payment for degrees based

only on recruitment or retention needs.

Degree payment is not permitted for

non-shortage occupations involving

critical skills.

The MRDEC proposes to expand the

authority to provide degree payment for

purposes of meeting critical skill

requirements, to ensure continuous

acquisition of advanced and specialized

knowledge essential to the organization,

and to recruit and retain personnel

critical to the present and future

requirements of the organization. Degree

payment may not be authorized where

it would result in a tax liability for the

employee without the employee’s

express and written consent. It is

expected that the degree payment

authority will be used primarily and

largely for advanced degrees, except

where an undergraduate program is

necessary to the attainment of an

advanced degree or credits. Any

variance from this policy must be

rigorously determined and documented.

The MRDEC will develop guidelines

to ensure competitive approval of

degree payment and that such decisions

are fully documented. In addition, this

proposal shall be implemented

consistent with 5 U.S.C. 4107(b)(2).

F. Revised Reduction-in-Force (RIF)

Procedures

Introduction

Modifications include limiting

competitive area to occupational

families and increasing the emphasis on

performance in the RIF Process.

Retention criteria are in the following

order; tenure, veterans’ preference,

service credit adjusted by a sum of the

last three performance ratings. Current

reduction in force regulations/

procedures have been adjusted in the

context of the occupational family and

the payband classification system. Also

regulations are being modified by

substituting ‘‘same payband’’ for ‘‘same

grade’’ and ‘‘one payband lower’’ for

‘‘three grades lower.’’

Competitive Areas

Each of the four occupational families

will be a separate competitive area and

each competitive area will cover all

geographic locations. Bumps and

retreats will occur only within the

competitive area and only to positions

for which the employee is qualified in

the same or next lower payband.

Competitive levels will be established

based on the payband, classification

series, and where responsibilities are

similar enough in duties, qualification

requirements, pay schedules, and

working conditions so that an employee

may be reassigned to any of the other

positions within the level without

requiring significant training or causing

undue interruption. Separate

competitive levels will be established

for positions in the competitive and

excepted service; for positions filled on

a full-time, part-time, intermittent,

seasonal, or on-call basis; and separate

levels will be established for positions

filled as a trainee or developmental.

Retention

Competing employees are listed on a

retention register in the order shown
11994 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

below. Each tenure group has three

subgroups (30% or higher compensable

veterans, other veterans, and nonveterans) and employees appear on the

retention register in that order. Within

each subgroup, employees are in order

of years of service adjusted to include

performance credit.

Tenure I (Career employees)

Tenure II (Career-Conditional

employees)

Tenure III (Contingent employees)

In the Demonstration Project an

employee can bump into a position, in

the same occupational family in the

same payband or one below, that is

currently held by another employee in

a lower retention subgroup. An

employee may retreat within the same

occupational family in the same band or

one payband below the one that is

currently held by another employee in

the same subgroup who has lower

adjusted RIF service computation date.

A preference eligible with a

compensable service-connected

disability of 30 percent or more may

displace employees in positions

equivalent to five GS grades below the

minimum grade level of his/her current

band.

An employee with a current annual

performance rating of U has assignment

rights only to a position held by another

employee who has a U rating. An

employee who has been given a written

decision of removal because of

unacceptable performance will be

placed at the bottom of the retention

register for his/her competitive level.

Link Between Performance and

Retention

An employee will have additional

years of service added to the service

computation date for retention

purposes. The credit is applied for each

of the last three annual performance

ratings of record, received over the last

four years, for a potential credit of 30

years. If an employee has less than three

annual performance ratings of record,

then for each missing rating, a rating of

C will be assumed. Ratings given under

nonDemo systems will be converted to

the demo rating scheme and provided

the equivalent rating credit.

Rating A adds 10 years

Rating B adds 7 years

Rating C adds 3 years

Rating U adds no credit for retention

Grade and Pay Retention

Except where waived or modified in

the waivers section of this plan, grade

and pay retention will follow current

law and regulations.

IV. Training

Introduction

The key to the success or failure of the

proposed demonstration project will be

the training provided for all involved.

This training will not only provide the

necessary knowledge and skills to carry

out the proposed changes, but will also

lead to program commitment on the part

of participants.

Training at the beginning of

implementation and throughout the

demonstration will be provided to

supervisors, employees, and the

administrative staff responsible for

assisting managers in effecting the

changeover and operation of the new

system.

The elements to be covered in the

orientation portion of this training will

include: (1) a description of the

personnel system, (2) how employees

are converted into and out of the

system, (3) the pay adjustment and/or

bonus process, (4) familiarization with

the new position descriptions and

performance objectives, (5) the

performance evaluation management

system, (6) the reconsideration process,

and (7) the demonstration project

administrative and formal evaluation

process. AFGE Local 1858 will be given

an opportunity to describe their role and

function in the demonstration program.

Supervisors

The focus of this project on

management-centered personnel

administration, with increased

supervisory and managerial personnel

management authority and

accountability, demands thorough

training of supervisors and managers in

the knowledge and skills that will

prepare them for their new

responsibilities. Training will include

detailed information on the policies and

procedures of the demonstration project,

skills training in using the classification

system, position description

preparation, performance evaluation,

and interaction with AFGE Local 1858

as a partner. Additional training may

focus on nonproject procedural

techniques such as interpersonal and

communication skills.

Administrative Staff

The administrative staff, generally

personnel specialists, technicians, and

administrative officers, will play a key

role in advising, training, and coaching

supervisors and employees in

implementing the demonstration

project. This staff will need training in

the procedural and technical aspects of

the project.

Employees

The MRDEC, in conjunction with the

AFGE Local 1858 and education and

development assets of the CPAC/CPOC

will train employees covered under the

demonstration project. In the months

leading up to the implementation date,

meetings will be held for employees to

fully inform them of all project

decisions, procedures, and processes.

V. Conversion

Conversion to the Demonstration Project

a. Initial entry into the demonstration

project will be accomplished through a

full employee protection approach that

ensures each employee an initial place

in the appropriate payband without loss

of pay. Employees serving under regular

term appointments at the time of the

implementation of the demonstration

project will be converted to the

contingent employee appointment.

Position announcement, etc. will not be

required for these contingent employee

appointments. An automatic conversion

from current GS/GM grade and pay into

the new broadband system will be

accomplished.

Each employee’s initial total salary

under the demonstration project will

equal the total salary received

immediately before conversion.

Employees who enter the demonstration

project later by lateral reassignment or

transfer will be subject to parallel pay

conversion rules. If conversion into the

demonstration project is accompanied

by a geographic move, the employee’s

GS pay entitlements in the new

geographic area must be determined

before performing the pay conversion.

b. Employees who are on temporary

promotions at the time of conversion

will be converted to a payband

commensurate with the grade of the

position to which promoted. At the

conclusion of the temporary promotion,

the employee will revert to the payband

which corresponds to the grade of

record. When a temporary promotion is

terminated, the employee’s pay

entitlements will be determined based

on the employee’s position of record,

with appropriate adjustments to reflect

pay events during the temporary

promotion, subject to the specific

policies and rules established by the

MRDEC. In no case may those

adjustments increase the pay for the

position or record beyond the applicable

pay range maximum rate. The only

exception will be if the original

competitive promotion announcement

stipulated that the promotion could be

made permanent; in these cases actions

to make the temporary promotion

permanent will be considered, and if
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11995

implemented, will be subject to all

existing priority placement programs.

c. Employees who are covered by

special salary rates, prior to the

demonstration project, will no longer be

considered a special rate employee

under the Demonstration Project. These

employees will, therefore, be eligible for

full locality pay.

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 (higher of special rate

or locality rate) 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.

d. During the first 12 months

following conversion, employees will

receive pay increases for noncompetitive promotion equivalents

when the grade level of the promotion

is encompassed within the same

broadband, 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 as defined

below.

e. At the time of conversion each

converted employee will be given a

lump sum cash payment for the time

credited to the employee toward what

would have been the employee’s next

within-grade (step) increase. The

payment for employees will be

computed by: calculating the ratio of the

number of weeks the employee will

have spent in the current step through

the week prior to the day of conversion,

to the total number of weeks in the

employee’s current waiting period for a

regular within-grade increase; and

multiplying that ratio by the dollar

value of the employee’s next withingrade increase at the time of conversion.

Conversion or Movement from a Project

Position to a General Schedule Position

If a demonstration project employee is

moving to a General Schedule (GS)

position not under the demonstration

project, or if the project ends and each

project employee must be converted

back to the GS system, the following

procedures will be used to convert the

employee’s project payband to a GSequivalent grade and the employee’s

project rate of pay to GS equivalent rate

of pay. The converted GS grade and GS

rate of pay must be determined before

movement or conversion out of the

demonstration project and any

accompanying geographic movement,

promotion, or other simultaneous

action. For conversions upon

termination of the project and for lateral

reassignments, the converted GS grade

and rate will become the employee’s

actual GS grade and rate after leaving

the demonstration project (before any

other action). For transfers, promotions,

and other actions, the converted GS

grade and rate will be used in applying

any GS pay administration rules

applicable in connection with the

employee’s movement out of the project

(e.g., promotion rules, highest previous

rate rules, pay retention rules), as if the

GS converted grade and rate were

actually in effect immediately before the

employee left the demonstration project.

a. Grade-Setting Provisions: An

employee in a payband corresponding

to a single GS grade is converted to that

grade. An employee in a payband

corresponding to two or more grades is

converted to one of those grades

according to the following rules:

(1) The employee’s adjusted rate of

basic pay under the demonstration

project (including any locality payment)

is compared with step 4 rates in the

highest applicable GS rate range. (For

this purpose, a ‘‘GS rate range’’ includes

a rate in (1) the GS base schedule, (2)

the locality rate schedule for the locality

pay area in which the position is

located, or (3) the appropriate special

rate schedule for the employee’s

occupational series, as applicable.) If the

series is a two-grade interval series, only

odd-numbered grades are considered

below GS–11.

(2) If the employee’s adjusted project

rate equals or exceeds the applicable

step 4 rate of the highest GS grade in the

band, the employee is converted to that

grade.

(3) If the employee’s adjusted project

rate is lower than the applicable step 4

rate of the highest grade, the adjusted

rate is compared with the step 4 rate of

the second highest grade in the

employee’s payband. If the employee’s

adjusted rate equals or exceeds step 4

rate of the second highest grade, the

employee is converted to that grade.

(4) This process is repeated for each

successively lower grade in the band

until a grade is found in which the

employee’s adjusted project rate equals

or exceeds the applicable step 4 rate of

the grade. The employee is then

converted at that grade. If the

employee’s adjusted rate is below the

step 4 rate of the lowest grade in the

band, the employee is converted to the

lowest grade.

(5) Exception: If the employee’s

adjusted project rate exceeds the

maximum rate of the grade assigned

under the above-described ‘‘step 4’’ rule

but fits in the rate range for the next

higher applicable grade (i.e., between

step 1 and step 4), then the employee

shall be converted to that next higher

applicable grade.

(6) Exception: An employee will not

be converted to a lower grade than the

grade held by the employee

immediately preceding a conversion,

lateral reassignment, or lateral transfer

into the project, unless since that time

the employee has undergone a reduction

in band.

b. Pay-Setting Provisions: An

employee’s pay within the converted GS

grade is set by converting the

employee’s demonstration project rate

of pay to GS rate of pay in accordance

with the following rules:

(1) The pay conversion is done before

any geographic movement or other payrelated action that coincides with the

employee’s movement or conversion out

of the demonstration project.

(2) An employee’s adjusted rate of

basic pay under the project (including

any locality payment) is converted to a

GS adjusted rate on the highest

applicable rate range for the converted

GS grade. (For this purpose, a ‘‘GS rate

range’’ includes a rate range in (1) the

GS base schedule, (2) an applicable

locality rate schedule, or (3) an

applicable special rate schedule.)

(3) If the highest applicable GS rate

range is a locality pay rate range, the

employee’s adjusted project rate is

converted to a GS locality rate of pay.

If this rate falls between two steps in the

locality-adjusted schedule, the rate must

be set at the higher step. The converted

GS unadjusted rate of basic pay would

be the GS base rate corresponding to the

converted GS locality rate (i.e., same

step position). (If this employee is also

covered by a special rate schedule as a

GS employee, the converted special rate

will be determined based on the GS step

position. This underlying special rate

will be basic pay for certain purposes

for which the employee’s higher locality

rate is not basic pay.)

(4) If the highest applicable GS rate

range is a special rate range, the

employee’s adjusted project rate is

converted to a special rate. If this rate

falls between two steps in the special

rate schedule, the rates must be set at

the higher step. The converted GS

unadjusted rates of basic pay will be the

GS rates corresponding to the converted

special rate (i.e., same step position).

c. Within-Grade Increase—Equivalent

Increase Determinations: Service under

the demonstration project is creditable

for within-grade increase purposes upon

conversion back to the GS pay system.

Performance pay increases (including a
11996 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

zero increase) under the demonstration

project are equivalent increases for the

purpose of determining the

commencement of a within-grade

increase waiting period under 5 CFR

531.405(b).

Personnel Administration

All personnel laws, regulations, and

guidelines not waived by this plan will

remain in effect. Basic employee rights

will be safeguarded and merit principles

will be maintained. Supporting

personnel specialists will continue to

process personnel-related actions and

provide consultative and other

appropriate services.

Automation

The MRDEC will continue to use the

Defense Civilian Personnel Data System

(DCPDS) for the processing of

personnel-related data. Payroll servicing

will continue from the respective

payroll offices.

Local automated systems will be

developed to support computation of

performance related pay increases and

awards and other personnel processes

and systems associated with this

project.

Experimentation and Revision

Many aspects of a demonstration

project are experimental. Modifications

may be made from time to time as

experience is gained, results are

analyzed, and conclusions are reached

on how the system is working. The

MRDEC will make minor modifications,

such as changes in the occupational

series in a occupational family without

further notice. Major changes, such as a

change in the number of occupational

families, will be published in the

Federal Register.

VI. Project Duration

Public Law 103–337 removed any

mandatory expiration date for this

demonstration. The project evaluation

plan adequately addresses how each

intervention will be comprehensively

evaluated for at least the first 5 years of

the demonstration. Major changes and

modifications to the interventions can

be made through announcement in the

Federal Register and would be made if

formative evaluation data warranted. At

the 5 year point, the entire

demonstration will be reexamined for

either: (a) permanent implementation,

(b) change and another 3–5 year test

period, or (c) expiration.

VII. 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 context

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; and, (5) core

measures of laboratory effectiveness.

VIII. Demonstration Project Costs

Costs associated with the

development of the personnel

demonstration system include software

automation, training, and project

evaluation. All funding will be provided

through the MICOM/MRDEC budget.

The projected annual expenses for each

area is summarized in Table 1.

TABLE 1.—Projected Developmental Costs (Then Year Dollars)

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

Training .................................................................................................... $6K $99K $12K

Project Evaluation .................................................................................... $25K $60K $60K $60K $60K $60K

Automation ............................................................................................... $80K $10K
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 11997

TABLE 1.—Projected Developmental Costs (Then Year Dollars)

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

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

IX. Required Waivers to Law and

Regulation

Public Law 103–337 gave the DoD the

authority to experiment with several

personnel management innovations. In

addition to the authorities granted by

the law, the following are the waivers of

law and regulation that will be

necessary for implementation of the

Demonstration Project. In due course,

additional laws and regulations may be

identified for waiver request.

1. Title 5, U.S. Code

Chapter 31, Section 3111: Acceptance

of Volunteer Service—To the extent that

the acceptance of retired or separated

engineers and scientists are not

included as volunteers under current

statute.

Chapter 33, Section 3324:

Appointment to positions classified

above GS–15.

Chapter 41, Section 4107: Pay for

Degrees.

Chapter 41, Section 4108: Employee

Agreements; Service after Training—To

the extent that employees who accept an

expanded developmental opportunity

(sabbatical) do not have to sign a

continued service agreement.

Chapter 43, Sections 4301(3):

Definitions.

Chapter 43, Section 4302:

Establishment of Performance Appraisal

Systems.

Chapter 43, Section 4303(a), (b), and

(c): Actions Based on Unacceptable

Performance.

Chapter 51, Sections 5101–5111:

Related to classification standards and

grading; to the extent that white collar

employees will be covered by

broadbanding. Pay category

determination criteria for federal wage

system positions remain unchanged.

Chapter 53, Sections 5301, 5302 (8)

and (9), 5303 and 5304: Sections 5301,

5302, and 5304 are waived only to the

extent necessary to allow demonstration

project employees 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 pay. This waiver does

not apply to ST employees who

continue to be covered by these

provisions, as appropriate.

Chapter 53, Section 5305: Special

Rates.

Chapter 53, Sections 5331–5336:

General Schedule pay rates.

Chapter 53, Sections 5361–5366:

Grade and pay retention—This waiver

applies only to the extent necessary to

(1) replace ‘‘grade’’ with ‘‘payband’’; (2)

allow demonstration project employees

to be treated as General Schedule

employees; (3) provide that pay

retention provisions do not apply to

conversions from General Schedule

special rates to demonstration project

pay, as long as total pay is not reduced,

and to reductions in pay due solely to

the removal of a supervisory pay

adjustment upon voluntarily leaving a

supervisory position; and (4) provide

that an employee on pay retention

whose performance rating is ‘‘U’’ is not

entitled to 50 percent of the amount of

the increase in the maximum rate of

basic pay payable for the payband of the

employee’s position. This waiver does

not apply to ST employees unless they

move to a GS-equivalent position under

the demonstration project under

conditions that trigger entitlement to

pay retention.

Chapter 55, Section 5545(d):

Hazardous duty differential—This

waiver applies only to the extent

necessary to allow demonstration

project employees to be treated as

General Schedule employees. This

waiver does not apply to ST employees.

Chapter 57, Section 5753, 5754, and

5755: Recruitment and Relocation

Bonuses, Retention Allowances and

Supervisory Differentials—This waiver

applies only to the extent necessary to

allow employees and positions under

the demonstration project to be treated

as employees and positions under the

General Schedule. This waiver does not

apply to ST employees who continue to

be covered by these provisions, as

appropriate.

Chapter 75, Section 7512(3): Adverse

actions—This waiver applies only to the

extent necessary to replace ‘‘grade’’ with

‘‘payband’’.

Chapter 75, Section 7512(4): Adverse

actions—This waiver applies 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, as long as total pay is not reduced

and (2) reductions in pay due to the

removal of a supervisory pay adjustment

upon voluntary movement to a

nonsupervisory position.

2. Title 5, Code of Federal Regulations

Part 300.601–605: Time-in-Grade

requirements—Restrictions eliminated

under the demonstration.

Part 308.101 through 308.103:

Volunteer Service—To the extent that

retired engineers/scientists can perform

voluntary services.

Part 315.801 and 315.802:

Probationary Period—Demonstration

project employees in some occupational

families will have extended

probationary period.

Part 316.301: Term Appointments—

Adding years to exceed 4.

Part 316.303: Tenure of Term

Employees—Demonstration allows for

conversion.

Part 316.305: Eligibility for WithinGrade Increases.

Part 351.402(b): Competitive Areas—

Demonstration establishes Competitive

Areas by Occupational Family.

Part 351.403: Competitive level—To

the extent that payband is substituted

for grade.

Part 351.504: Credit for

Performance—As it relates to years of

credit.

Part 351.701: Assignment Involving

Displacement—To the extent that

employees bump and retreat rights will

be limited to one payband except in the

case of 30% preference eligibles which

is a position equivalent to five GS

grades below the minimum grade level

of his/her payband.

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 reference 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.

Part 432, Sections 104 and 105:

Proposing and Taking Action Based on

Unacceptable Performance.
11998 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

Part 511: Classification Under the

General Schedule—To the extent that

grades are changed to broadbands, and

that white collar positions are covered

by broadbanding.

Part 530, subpart C: Special salary

rates.

Part 531, subparts B, D, and E:

Determining rate of basic pay, withingrade increases, and quality step

increases.

Part 531, subpart F: Locality pay—

This waiver applies only to the extent

necessary to allow demonstration

project employees to be treated as

General Schedule employees, and basic

rates of pay under the demonstration

project to be treated as scheduled

annual rates of pay. This waiver does

not apply to ST employees who

continue to be covered by these

provisions, as appropriate.

Part 536: Grade and pay retention—

This waiver applies only to the extent

necessary to (1) replace ‘‘grade’’ with

‘‘payband’; (2) provide that pay

retention provisions do not apply to

conversions from General Schedule

special rates to demonstration project

pay, as long as total pay is not reduced,

and to reductions in pay due solely to

the removal of a supervisory pay

adjustment upon voluntarily leaving a

supervisory position; and (3) provide

that an employee on pay retention

whose performance rating is ‘‘U’’ is not

entitled to 50 percent of the amount of

the increase in the maximum rate of

basic pay payable for the payband of the

employee’s position. This waiver does

not apply to ST employees unless they

move to a GS-equivalent position under

the demonstration project under

conditions that trigger entitlement to

pay retention.

Part 550.703: Severance Pay—This

waiver applies only to the extent

necessary to 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’.

Part 550.902: Hazardous Duty

Differential—This waiver applies only

to the extent necessary to allow

demonstration project employees to be

treated as General Schedule employees.

This waiver does not apply to ST

employees.

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

Recruitment Bonuses, Relocation

Bonuses, Retention Allowances and

Supervisory Differentials—This waiver

applies only to the extent necessary to

allow employees and positions under

the demonstration project covered by

broadbanding to be treated as employees

and positions under the General

Schedule. This waiver does not apply to

ST employees who continue to be

covered by these provisions, as

appropriate.

Part 752.401 (a)(3): Adverse Actions—

This waiver applies only to the extent

necessary to replace ‘‘grade’’ with

‘‘payband.’

Part 752.401(a)(4): Adverse Actions—

This waiver applies 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, as long as total pay is not reduced

and (2) reductions in pay due to the

removal of a supervisory pay adjustment

upon voluntary movement to a

nonsupervisory position.

Appendix A: Occupational Series by

Occupational Family

I. Engineers & Scientists

0801 General Engineer

0806 Materials Engineer

0808 Architecture

0810 Civil Engineer

0819 Environmental Engineer

0830 Mechanical Engineer

0850 Electrical Engineer

0854 Computer Engineer

0855 Electronics Engineer

0861 Aerospace Engineer

0892 Ceramics Engineer

0893 Chemical Engineer

0896 Industrial Engineer

0899 Student Trainee (Engr)

1301 Physical Scientist

1310 Physicist

1320 Chemist

1321 Metallurgist

1515 Operations Research Analyst

1520 Mathematician

1529 Mathematician Stat

1550 Computer Scientist

II. E&S Support

0028 Environ Protec Specialist

0301 Data & Configuration Management,

Standardization

0334 Computer Specialist

0391 Telecommunications

0802 Engineering Technician

0809 Construction Rep

0856 Electronics Technician

1001 General Arts & Information

1040 Language Specialist

1082 Technical Information Writer

1083 Technical Writer/Editor

1150 Industrial Specialist

1311 Physical Sciences Tech

1410 Librarian (Phy Sci & Engr)

1412 Technical Information Spec

1499 Student Trainee

1521 Mathematics Technician

1670 Equipment Specialist

1910 Quality Assurance Specialist

III. Business Management

0301 Misc Admin & Program

0340 Program Manager

0341 Administrative Officer

0342 Support Services Spec

0343 Mgmt/Prog Analyst

0560 Budget Analyst

1102 Contract Specialist

2001 General Supply Spec

IV. General Support

0085 Guard

0302 Messenger

0303 Misc Clerk and Asst

0305 Mail Clerk

0312 Clerk-Stenographer

0318 Secretary

0326 Ofc Automation Clerk

0344 Management Assistant

0561 Budget Assistant

1106 Procurement Clerk

1411 Library Technician

2005 Supply Technician

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Appendix C. Performance Elements

All employees will be rated against at

least the five generic performance

elements listed through ‘‘e’’ below.

Technical competence is a mandatory

critical element. Other elements may be

identified as critical by agreement

between the rater and the employee. In

case of disagreements, the decision of

the supervisor will prevail. Generally,

any performance element weighted 25

or higher should be critical. However,

only those employees whose duties

require manager/leader responsibilities

will be rated on element ‘‘f.’’

Supervisors will be rated against an

additional critical performance element,

listed at ‘‘g’’ below:

a. Technical Competence. Exhibits

and maintains current technical

knowledge, skills, and abilities to

produce timely and quality work with

the appropriate level of supervision.

Makes prompt, technically sound

decisions and recommendations that

add value to mission priorities and

needs. For appropriate career paths,

seeks and accepts developmental and/or

special assignments. Adaptive to

technological change. (Weight range: 15

to 50)

b. Working Relationships. Accepts

personal responsibility for assigned

tasks. Considerate of others’ views and

open to compromise on areas of

difference, if allowed by technology,

scope, budget, or direction. Exercises

tact and diplomacy and maintains

effective relationships, particularly in

immediate work environment and

teaming situations. Always willing to

give assistance. Shows appropriate

respect and courtesy. (Weight Range: 5

to 15)

c. Communications. Provides or

exchanges oral/written ideas and

information in a manner that is timely,

accurate and cogent. Listens effectively

so that resultant actions show

understanding of what was said.

Coordinates so that all relevant

individuals and functions are included

in, and informed of, decisions and

actions. (Weight Range: 5 to 15)

d. Resource Management. Meets

schedules and deadlines, and

accomplishes work in order of priority;

generates and accepts new ideas and

methods for increasing work efficiency;

effectively utilizes and properly controls

available resources; supports

organization’s resource development

and conservation goals. (Weight Range:

15 to 50)

e. Customer Relations. Demonstrates

care for customers through respectful,

courteous, reliable and conscientious

actions. Seeks out and develops solid

working relationships with customers to

identify their needs, quantifies those

needs, and develops practical solutions.

Keeps customer informed and prevents

surprises. Within the scope of job

responsibility, seeks out and develops

new programs and/or reimbursable

customer work. (Weight Range: 10 to 50)

f. Management/Leadership. Actively

furthers the mission of the organization.

As appropriate, participates in the

development and implementation of

strategic and operational plans of the

organization. Develops and implements

tactical plans. Exercises leadership

skills within the environment. Mentors

junior personnel in career development,

technical competence, and interpersonal

skills. Exercises due responsibility of

technical/acquisition/organizational

positions assigned to them. (Weight

Range: 0 to 50)

g. Supervision/EEO. Works toward

recruiting, developing, motivating, and

retaining quality team members; takes

timely/appropriate personnel actions,

applies EEO/merit principles;

communicates mission and

organizational goals; by example,

creates a positive, safe, and challenging

work environment; distributes work and

empowers team members. (Weight

Range: 15 to 50)
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[FR Doc. 97–6168 Filed 3–10–97; 8:45 am]

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