12006 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

OFFICE OF PERSONNEL

MANAGEMENT

Proposed Laboratory Personnel

Management Demonstration Project;

Department of the Army, U.S. Army

Engineer Waterways Experiment

Station, Vicksburg, Mississippi

AGENCY: Office of Personnel

Management.

ACTION: Notice of Intent to Implement

Demonstration Project.

SUMMARY: Title V 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

changes 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 to the China

Lake demonstration project at DoD

Science and Technology (S&T)

reinvention laboratories. The Army is

proposing demonstration projects

initially to cover five of its S&T

reinvention laboratories: the Army

Research Laboratory; the Army Missile

Research, Development, and

Engineering Center; the Army Aviation

Research and Development Center; the

Army Medical Research and Materiel

Command; and the Army Engineer

Waterways Experiment Station. This

proposal is for the Army Engineer

Waterways Experiment Station (WES).

DATES: To be considered, written

comments must be submitted on or

before May 20, 1997; the public hearing

will be scheduled as follows: Friday,

May 2, 1997, at 10:00 a.m., in Vicksburg,

Mississippi. At the time of the hearing,

interested persons or organizations may

present their written or oral comments

on the proposed demonstration project.

The hearing will be informal. However,

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

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 following location: U.S. Army

Engineer Waterways Experiment

Station, Building 1006, 3909 Halls Ferry

Road, Vicksburg, Mississippi.

FOR FURTHER INFORMATION CONTACT: (1)

On proposed demonstration project: Dr.

C. H. Pennington, U.S. Army Engineer

Waterways Experiment Station, ATTN:

CEWES–ZT–E, 3909 Halls Ferry Road,

Vicksburg, Mississippi 39180–6199,

phone 601–634–3549; on proposed

demonstration project and public

hearings: Fidelma A. Donahue, U.S.

Office of Personnel Management, 1900 E

Street, NW, Room 7460, Washington,

DC 20415, phone 202–606–1138.

SUPPLEMENTARY INFORMATION: Since

1966, at least 19 studies of 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 classifications,

pay banding, a contribution-based

compensation system, streamlined

hiring processes, 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 and Expected Benefits

D. Participating Organizations

E. Participating Employees

F. Project Design

III. Personnel System Changes

A. Broadbanding

B. Classification

C. Pay for Performance

D. Pay Setting Provisions

E. Hiring and Placement Authorities

F. Employee Development

G. Reduction in Pay or Removal Actions

H. Revised Reduction-In-Force (RIF)

Procedures

IV. Training

A. Supervisors

B. Administrative Staff

C. Employees

V. Conversion

A. Conversion to the Demonstration Project

B. Conversion from the Demonstration

Project

VI. Project Duration

VII. Evaluation Plan

VIII. Demonstration Project Costs

A. Step Buy-Ins

B. Development Costs

IX. Required Waivers to Law and Regulations

A. Waivers to Title 5, U.S. Code

B. Waivers to Title 5, Code of Federal

Regulations

I. Executive Summary

The Department of the Army (DA)

proposes to establish, as a

demonstration project, a Personnel

Demonstration Project generally similar

to the system currently in use at the

Navy Personnel Demonstration Project

known as ‘‘China Lake.’’ The Personnel

Demonstration Project will be

implemented initially at five Army

Science and Technology (S&T)

Reinvention Laboratory sites, and will

be developed to be in-house budget

neutral, based on a baseline of

September 1995 in-house costs and

consistent with the DA plan to

downsize the DA laboratories and

research and development (R&D)

centers. An in-house budget is a

compilation of costs of the many diverse

components required to fund the day-today 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 was designed by the

Assistant Secretary of the Army for

Research, Development and Acquisition

with the support of the Assistant

Secretary of the Army for Civil Works,

and the participation of five Army S&T

Reinvention Laboratories. Review was

provided by the US Army Corps of

Engineers, DA, DoD, and OPM. Phases

of the project that address non-Title 5

issues began as early as 1 October 1995,

with implementation of Title 5

initiatives beginning no earlier than

Spring 1997.

The project is built upon the concepts

of linking performance to pay for all

covered positions, simplifying

paperwork in the processing of

classification and other personnel

actions, emphasizing partnerships

among management, employees, and

unions, and delegating classification

and other authorities to line managers.

II. Introduction

A. Purpose

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. The

purposes of the demonstration project

are to: improve the hiring process and
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allow WES to compete more effectively

for high-quality personnel; motivate and

retain staff, through pay for

performance, sabbaticals, and a more

responsive personnel system; strengthen

the manager’s role in personnel

management through increased

delegation of personnel authorities;

increase the efficiency of the personnel

system by simplifying the classification

system through broad banding and

reduction of guidelines, steps, and

paperwork; and create a model that

could be adopted by other government

agencies.

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 MACOM

Commander of the participating Army

S&T Reinvention Laboratory will

execute and manage the project.

Project oversight 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 DoD and OPM.

B. Problems With the Present System

The civilian personnel system

currently in use at DoD laboratories has

several major inefficiencies, which

hinder management’s ability to recruit

and retain the best qualified personnel.

Line managers have only limited

flexibility to administer personnel

resources, and existing personnel

regulations are often in conflict with

line management’s ability to perform

world-class research. Laboratory

managers are frustrated in their attempts

to hire the best and brightest engineers

and scientists (E&S).

The classification system requires

lengthy, narrative, individual position

descriptions, which have to be classified

by the use of complex and often

outdated position classification

standards. The system causes delays in

recruiting, reassigning, promoting, and

removing employees. Rewarding or

taking a performance based action

requires inordinate paperwork and time,

often discouraging managers from

pursuing critical actions. Few

incentives, with limited flexibility, exist

in dealing with all levels of the

workforce, and pay is not always

commensurate with performance. The

current reduction-in-force (RIF) system

does not adequately recognize

performance as a major criterion in RIF

situations. The RIF rules are complex,

and difficult to understand and

administer. The RIF process disrupts

operations, due to displacement of

employees within their competitive

levels and in the exercise of bumping

and retreat rights.

C. Changes Required and Expected

Benefits

This project is expected to

demonstrate that a human resource

management system tailored to the

mission and need of WES will result in:

increased quality in the engineering and

science workforce and the laboratory

products they produce; increased

timeliness of key personnel processes;

trended workforce data that reveals

increased retention of excellent

contributors and separation rates of poor

contributors; and increased customer

satisfaction with the laboratory and its

products by customers serviced.

This demonstration program builds

on the successful features of

demonstration projects at China Lake

and the National Institute of Standards

and Technology. These demonstration

projects have produced impressive

statistics on job satisfaction of their

employees versus that for the federal

workforce in general. This

demonstration expects similar

successes. A full range of data will be

collected to evaluate the project (and is

described in Section VII, Evaluation

Plan).

D. Participating Organization

U.S. Army Engineer Waterways

Experiment Station, 3909 Halls Ferry

Road, Vicksburg, Mississippi 39180–

6199. Employees assigned to WES work

at the locations shown in Table 1.

TABLE 1.—DUTY LOCATIONS

Location

Total

No. of

employees

London, England ............................... 1

Berkeley, CA ..................................... 1

Fort Collins, CA ................................ 1

Washington, DC ................................ 3

Gainesville, FL .................................. 1

Jacksonville, FL ................................ 1

Jackson, MS ..................................... 1

Natchez, MS ..................................... 1

Vicksburg, MS ................................... 1412

New Madrid, MO ............................... 1

Duck, NC .......................................... 12

Corvallis, OR ..................................... 1

Calhoun Falls, SC ............................. 3

Lewisville, TX .................................... 3

North Bonneville, WA ....................... 2

Eau Galle, WI ................................... 2

Onalaska, WI .................................... 1

E. Participating Employees

The project will cover all General

Schedule (GS) employees assigned to

WES. Federal Wage System (FWS)

employees, Civilian Intelligence

Personnel Management (CIPMS)

employees covered by Title X, and 5

U.S.C. 3105 Scientific and Technical

(ST) employees will be included for

employee development provisions only.

The occupational series of employees

included in the project are identified by

occupational family in Table 2. All GS

employees with appointments

exceeding one year will be covered by

the provisions of this project. GS

employees with appointments limited to

one year or less will be covered for pay

banding, the performance appraisal

process, and salary adjustments. Senior

Executive Service (SES) employees will

not be included in the project. It is the

intent of WES to expand coverage of the

project to all FWS employees 1 to 2

years following date of implementation.

In the event of expansion to FWS

employees beyond the performance

appraisal provisions, full approval will

be obtained from DA, DoD, and OPM.

The American Federation of

Government Employees (AFGE)

represents approximately 550 GS and

FWS employees at WES. The AFGE

represents all E&S Technicians except

student trainees; all General Support

employees except fire protection

inspectors, security guards, student

trainees, and those designated as

confidential employees; and all

nonsupervisory FWS employees. AFGE

Local 3310 has been involved with and

participated in the development of the

project since its inception. WES will

continue to fulfill its obligation to

consult or negotiate with the AFGE, as

appropriate, 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.

F. Project Design

In August 1994, a Project Manager

was appointed to lead the WES

reinvention effort. The Project Manager

was assisted by a representative of the

servicing Human Resources

Management (HRM) Office. During

October-November 1994, a WES concept

plan was developed to map out desired

areas in which to propose changes in

the personnel system. The concept plan

was then merged into a single Army

plan for the participating Army S&T

Laboratories and was submitted to the

DA in December 1994.

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WES formed four teams in January

1995 to develop specific initiatives to be

undertaken in the WES demonstration

project. The teams were composed of

from 7 to 14 employees each and

included representatives from

management, engineers, scientists,

technicians, clerical, administrative,

wage grade, human resources, and

representatives from the local union.

The teams developed human resources

management initiatives which were

designed to: assist in hiring the best

people to accomplish the mission;

improve training and development of

the workforce; improve and simplify the

position classification process; develop

a broadband system to facilitate

classification and career progression;

and develop a pay for performance

system to recognize employee

contributions to mission

accomplishment.

The Army’s plan was reviewed

concurrently by DoD and OPM in April

1996. Among their many

recommendations was one for each

Army lab to submit individual project

plans. The second joint review by DoD

and OPM of the lab plans was

conducted in September 1996. The

philosophy and intent of WES

throughout the process of project

development was the inclusion of its

total workforce. As such, a pay-forperformance broadbanding system was

developed for FWS employees, in

partnership with representation from

the bargaining unit, and was included as

part of the WES plan. At the joint

reviews, the DoD Civilian Personnel

Management Service and OPM’s Office

of Classification and Office of

Compensation Policy considered the

broadbanding of FWS employees as

outlined in the WES plan to be

inappropriate. FWS employees were

removed from the plan for pay-forperformance purposes only. Options for

including them in a pay-forperformance system at a later date are

currently being developed by WES, DA,

DoD, and OPM.

This plan and these initiatives are the

result of many months of effort by

dedicated participants at WES, U.S.

Army Corps of Engineers, DA, and DoD

levels.

III. Personnel System Changes

A. Broadbanding

1. Pay Bands

Each occupational family will be

composed of discrete pay bands

corresponding to recognized

advancement within the occupations.

The pay bands will replace grades. The

pay bands will not be the same for all

occupational families. Each

occupational family will be divided into

four to six pay bands, each pay band

covering the same pay range now

covered by one or more grades. The

minimum rate of basic pay for a band

will be the minimum rate for the lower

grade in the band as shown on the

regular GS schedule. The maximum rate

of basic pay for a pay band will be the

highest regular schedule GS rate

possible for positions within that

occupational family and pay band. 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 pay band.

Exceptional qualifications, specific

organizational requirements, or other

compelling reasons may lead to a higher

entrance salary within a pay band.

The proposed pay bands for the

occupational families and how they

relate to the current GS grades are

shown in Table 3. This pay band

concept has the following advantages

because it: reduces the number of

classification decisions required during

an employee’s career; simplifies the

classification decision-making process

and paperwork; supports delegation of

classification authority to line managers;

provides a broader range of

performance-related pay for each pay

band; and prevents the progression of

low performers through a pay band by

mere longevity, since job performance

serves as the basis for determining pay.

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A feature is pay band VI of the

Engineers and Scientists occupational

family, which is an expansion of the

broad banding concept used at China

Lake and NIST. This pay band is

designed for Senior Technical Managers

and Senior Engineers/Scientists.

Current OPM guidelines covering the

Senior Executive Service and Scientific

and Technical positions do not fully

meet the needs of WES. 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 involve

supervisory and managerial authorities.

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.

WES currently has a few senior

manager positions which have

characteristics of both SES and ST

classifications. Most of these positions

are responsible for supervising other

GS–15 positions, including branch

chief, non-supervisory researcher

engineers and scientists, and potential

ST positions. The positions are

classified at the GS–15 level, and one

has been recognized at the SES level.

WES management considers the primary

requirement for the positions to be

knowledge of and expertise in the

specific scientific and technology areas

related to the mission of the

organization. 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 the

positions as SES have been difficult.

Classification of the positions at ST is

also not an option because of the

supervisory responsibilities.

As preeminent engineers and

scientists, STs are responsible for

specific research and development

efforts that are continuing and long

range, generally requiring the efforts of

a team. STs 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 WES 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,

WES has positions that do not conform

to the strict OPM definitions of either

the SES or ST.

The purpose of pay band VI is to

overcome the difficulties identified

above by creating a category for two

types of positions—the Senior Technical

Manager (with full supervisory

authorities) and the Senior Engineer/

Scientist (less than or no supervisory

authority). Current GS–15 Senior

Technical Managers and Senior

Engineers/Scientists will convert into

the demonstration project at pay band

V. After conversion the Senior

Technical Manager and Senior

Engineers/Scientist positions will be

reviewed against established criteria to

determine if they should be reclassified

to pay band VI. The proposed salary

range is the same as currently exists for

ST positions (minimum of 120 percent
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of the minimum rate of basic pay of GS–

15 with a maximum of the basic rate of

pay established for level IV of the

Executive Schedule). Vacant positions

in pay band VI will be competitively

filled to ensure that selections are made

from among the world’s preeminent

researchers and technical leaders in the

specialty fields.

The final component of pay band VI

is the management of all pay band VI

assets. Specifically, this includes

authority to classify, create, abolish

positions as circumstances warrant;

recruit and reassign employees in this

pay band; 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 pay band VI positions and

recruitment/promotion criteria. The

specific details regarding the control

and management of pay band VI 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.

2. Occupational Families

Positions will be grouped into

occupational families according to

similarities in type of work and

customary requirements for formal

training or credentials. The historical

patterns of advancement within the

occupational families will be

considered. The current positions and

grades at WES have been examined, and

their characteristics and distribution

have served as guidelines in the

development of occupational families.

Four occupational families will be

established:

(a) Engineers and Scientists. This

occupational family includes all

technical professional positions such as

engineers (civil, hydraulic, structural,

mechanical, electronic, electrical,

chemical, and environmental),

mathematicians, statisticians, computer

scientists, outdoor recreational

planners, geographers, architects,

archaeologists, operations research

analysts, and a variety of physical and

biological scientists. Specific course

work or educational degrees are

required for positions in this

occupational family.

(b) E&S Technicians. This

occupational family consists of the

positions that support the various

engineering and scientific activities.

Employees in this occupational family

are required to have training and skills

in the various technical areas (civil,

hydraulic, structural, geotechnical,

physical, coastal, biological, chemical).

(c) Administrative. This occupational

family contains specialized functions in

such fields as counsel, audit, finance,

procurement, public information,

accounting, administrative, computing,

safety, and management analysis.

Special training and skills in

administrative fields or special degrees

are required.

(d) General Support. This

occupational family is composed of

positions requiring special skills and

knowledge, such as typing or shorthand,

and job-related experience. 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, legal clerks, guards, mail

clerks, etc.

3. 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.

All employees are covered by the FLSA

unless they meet the executive,

administrative, or professional criteria

for exemption. As a general rule, the

FLSA status can generally be matched to

the occupational families and pay bands

found in Table 3. Exceptions to these

guidelines include supervisors/

managers who meet the definitions

outlined in the OPM General Schedule

Supervisory Guide. The generic position

descriptions will not be the sole basis

for the FLSA determination. Each

position will be evaluated on a case by

case basis by comparing the duties and

responsibilities assigned, the

classification standards for each pay

band, under 5 CFR part 551 criteria.

B. Classification

1. Coverage

The present GS classification system

has over 400 occupations (also called

series), which are divided into 22

groups. The present occupational series

will be maintained. New series may be

added as needed to reflect new

occupations in the work force when

established by OPM.

2. Classification Standards

The classification system will be

modified to facilitate pay banding. The

present classification standards will be

used to create local benchmark position

description/standards for each pay

band, reflecting duties and

responsibilities comparable to those

described in present classification

standards for the span of grades

represented by each pay band. 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.

3. Position Descriptions and

Classification Process

New standardized position

descriptors will be developed to assist

managers in exercising delegated

position classification authority.

Managers will identify the appropriate

pay band and descriptor definition and

proceed to finalize the position

description. A cover sheet similar to the

present DA Form 374 will be used to

reflect their classification decision. The

cover sheet used will include a

provision for designating specialty

codes. These specialty codes will be

developed to identify the special nature

of work performed and will be included

on the final position descriptor.

Employees will be entitled to appeal

the title, series, and pay band level of

their position to the DoD Field Advisory

Service (FAS) and to OPM. The appeal

will be adjudicated using the position

classification provisions/criteria of this

demonstration project. Employees may

appeal either to FAS or OPM; however,

if they first appeal to OPM, they may

not then appeal to FAS.

C. Pay for Performance

The objective is to establish a pay

system that will improve the ability of

WES 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.

1. Determining Pay Increases

Compensation will be allocated to

employees through organizational

compensation pools. The WES Director,

Commander and Deputy Director, and

Laboratory Directors at WES will

manage their respective pools.

The compensation pools will have

two components: funds for performance

pay increases (money previously

available for within-grade increases,

quality step increases, and promotions

between grades that are banded under

the project); and funds for General
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Schedule pay increases. Performance

awards (cash awards and bonuses

presently allowed) and locality pay

increases will continue under the

project and will be excluded from the

compensation pools. The compensation

pools will be managed to ensure relative

cost neutrality. As a result, funds will

not be shifted between pools.

Annual base pay increases paid from

the performance pay increase

component of the compensation pools

will be based on eligibility as well as

scores on the established standards as

follows:

PR V = S P

100

Where:

PR=employee’s annual performancebased pay raise, $

V=value of a share, percent

S=number of shares earned by employee

based on performance

P=employee’s salary prior to pay raise

The number of shares earned by an

employee will vary from 0 to 4 and will

depend upon their performance score. A

performance pay increase may not cause

the employee’s rate of basic pay to

exceed the maximum rate of the bay

band.

The value of a share will be computed

in a manner to ensure that the amount

of money available for performance pay

increases will not exceed the amount of

money in a compensation pool that is

available for raises. Therefore, the

amount of money available annually

within a pay pool for performance-based

pay raises is:

M A Pi

i

n

=

=

∑ 100 1

Where:

A=average annual historical pay raise,

percent

M=pay pool size, $

Pi=salary of employee i

n=number of employees in

compensation pool

The share value (percent) is computed

in a manner to ensure exact expenditure

of the amount of money in the

compensation pool as follows:

V M

S Pi i

i

ne = ×

=

∑

1

100

Where:

Si=number of shares earned by

employee i based upon performance

ne=number of employees within

compensation pool that are eligible

for a performance-based pay raise

A payout function that correlates

number of shares earned by an

employee for a performance based pay

raise to average performance score will

be similar to the plot shown in Figure

1.

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The annual General Schedule pay

increase will be allocated as follows:

(a) The first step is setting the

percentage General Schedule increase

that will be given to all eligible

employees. This amount will be equal to

the General Schedule increase

authorized for GS employees. All

employees whose average performance

score is 2.0 or greater will be eligible for

the increase. Employees with an average

performance score of less than 2.0 will

be ineligible for the full General

Schedule increase and may receive

either none or one-half of the increase.

Pay increases for employees receiving

retained rates will be determined in

accordance with 5 U.S.C. 5363 except

that those with an average performance

score of less than 2.0 may receive either

none or one-quarter of the increase in

the maximum rate of basic pay for the

applicable pay band.

(b) The minimum and maximum pay

rates of basic pay for each pay band in

an occupational family will be adjusted

by any general pay increase to reflect

the new rates in accordance with the
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criteria reflected in Section III,

Broadbanding, of this plan.

2. Performance Evaluation

The performance appraisal system

will link compensation to performance

through annual performance evaluations

and performance ratings. Performance

will be evaluated against generic

performance standards. Rating elements

will be provided for all employees. All

rating elements will be critical and

scored on a scale of 0 to 5. The score

will be based on employees

performance as evaluated against

generic performance standards for each

element. The supervisor will discuss

performance rating standards with the

employee to clarify performance criteria

at the beginning of the rating period.

The generic performance standards,

with the provision to add specific work

plans, will be used to evaluate employee

performance. The standards will

describe the level of performance

required for the employee to be rated

fully successful. Reviews will be

conducted at least at mid-year to

evaluate employee progress in meeting

performance standards. However, WES

interns in recognized career programs

will be appraised semi-annually until

they complete their internship. The last

performance rating in each annual cycle

will be considered to be the rating of

record for interns.

Since all employees will not have the

same number of rating elements, the

element scores will be summed and

averaged by the number of elements

rated to determine the overall

performance score. The score will be

used for setting performance pay

increases and determining eligibility for

performance awards.

Employees must have an average

performance score of 2.5 and above to

be eligible for performance pay

increases. Employees with an average

performance score of 2.0 or greater will

be eligible for performance awards and

full General Schedule increases.

Employees with an average score of less

than 2.0 will be ineligible for

performance awards and full General

Schedule increases. A within-the-year

review may be used to reevaluate

employees with performance scores of

less than 2.0. If the employee’s

performance has improved sufficiently

since the last rating period, the

employee may be eligible for a

nonretroactive General Schedule pay

raise at that time.

3. Awards

WES currently has an extensive

awards program consisting of both

internal and external awards. On-thespot, special act, and other internal

awards (both monetary and

nonmonetary) will continue under the

project. MACOM, DA, and DoD awards

and other honorary noncash awards will

be retained.

Cash awards may be given for

performance and to recognize and

encourage special contributions.

Awards can be made to individuals,

teams, or organizations. Awards must be

approved at a managerial level at least

one level higher than the recommending

official except in the case where the

WES Director is the recommender. Cash

awards will not be considered to be a

part of base pay.

D. Pay Setting Provisions

1. Pay and Compensation

(a) Pay Ceilings. An employee’s total

monetary compensation paid in a

calendar year may not exceed the rate of

basic pay for level I of the Executive

Schedule consistent with 5 U.S.C. 5307

and 5 CFR part 530, subpart B. Each pay

band will have its own pay ceiling, just

as grades do in the GS system. Basic pay

rates for the various pay bands will be

directly keyed to the GS basic rates of

pay except for pay band VI in the

Engineers and Scientists occupational

family. Pay band VI will have pay rates

keyed to a minimum of 120% of the

minimum rate of basic pay for GS–15

basic pay with a maximum of the basic

rate of pay established for level IV of the

Executive Schedule.

(b) Staffing Supplements. Employees

assigned to occupational series covered

by special rates will be eligible for a

staffing supplement if the maximum

adjusted rate for the banded GS grades

to which assigned exceeds the

maximum GS locality rate for the

banded grades (e.g., engineers in pay

bands II and III). The staffing

supplement is added to the base pay,

much like locality rates are added on to

base pay. The employee’s total pay

immediately after implementation of the

demonstration project will be the same

as immediately before the

demonstration project, but a portion of

the total will be in the form of a staffing

supplement. Adverse action and pay

retention provisions will not apply to

the conversion process as there will be

no change in total salary. The staffing

supplement is calculated as described

below.

Upon conversion, the demonstration

base rate will be established by dividing

the old maximum GS adjusted rate

(special rate or locality rate) by the

staffing factor. The staffing factor will be

determined by dividing the maximum

special rate for the banded grades by the

GS unadjusted rate corresponding to

that special rate (step 10 of the GS rate

for the same grade as the special rate).

The employee’s demonstration staffing

supplement is derived by multiplying

the demonstration base rate by the

staffing factor minus one. So the

employee’s final demonstration special

staffing rate equals the demonstration

base rate plus the special staffing

supplement; this amount will equal the

employee’s former maximum GS

adjusted rate. Simplified, the formula is:

Staffing factor = Maximum special rate for the banded grades

GS rate corresponding to that special rate

Demonstration base rate = Old maximum GS adjusted rate (special or locality rate)

Staffing factor

Staffing supplement = Demonstration base rate staffing factor -1

Salary upon conversion = Demo base rate + staffing supplement sum will = existing rate

× ( )

( )
12014 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

Example: In the case of a GS–801–11/

03 employee who is receiving a special

salary rate, the salary before the

demonstration project is $42,944. The

maximum special rate for a GS–801–11

Step 10 is $51,295 and the

corresponding regular rate is $46,523.

The staffing factor is computed as

follows:

Staffing factor

Demonstration base rate

= =

= =

$51,295

$46, .

$42,944

. $38,948

523

11026

11026

Then to determine the staffing

supplement, multiply the demonstration

base by the staffing factor minus 1.

Staffing plement sup

$38,

.

$ ,

= ×

948

1026

3 996

The staffing supplement of $3,996 is

added to the demonstration base rate of

$38,948 and the total salary is $42,944,

which is the salary of the employee

before conversion to the demonstration

project.

If an employee is in a band where the

maximum GS adjusted rate for the

banded grades is a locality rate, when

the employee is converted into the

demonstration, the demonstration base

rate is derived by dividing the

employee’s former GS maximum

adjusted rate (locality or special rate) by

the applicable locality pay factor. The

employee’s demonstration localityadjusted rate will equal the employee’s

former maximum GS adjusted rate.

Annual pay adjustment for employees

in special rate occupations will require

recomputation of the staffing

supplement. If OPM discontinues or

decreases special rates, employees will

be entitled to pay retention. Upon

geographic movement, an employee

who receives the special staffing

supplement will have the supplement

recomputed. Any resulting reduction in

pay will not be considered an adverse

action or a basis for pay retention.

Established salary including the

staffing supplement will be considered

basic pay for the same purposes as a

locality rate under 5 CFR 531.606(b),

i.e., for purposes of retirement, life

insurance, premium pay, and severance

pay purposes and for advances in pay.

It will also be used to compute worker’s

compensation payments and lump sum

payments for accrued and accumulated

annual leave.

2. Promotions

A promotion is the movement of an

employee to a higher pay band within

the same occupational family or to a pay

band in a different occupational family

which results in an increase in the

employee’s salary. Progression within a

pay band, whether by performance pay

increases or supervisory adjustments,

are not subject to the provisions of this

section.

Promotions will be processed under

competitive procedures in accordance

with merit principles and requirements.

The following actions are excepted from

competitive procedures:

(a) Re-promotion to a position which

is in the same pay band and

occupational family as the employee

previously held on a permanent basis

within the competitive service.

(b) Promotion, reassignment,

demotion, transfer, or reinstatement to a

position having promotion potential no

greater than the potential of a position

an employee currently holds or

previously held on a permanent basis in

the competitive service.

(c) A position change permitted by

RIF procedures.

(d) Promotion without current

competition when the employee was

appointed through competitive

procedures to a position with a

documented career ladder.

(e) A temporary promotion, or detail

to a position in a higher pay band, of

180 days or less.

(f) Impact of person-in-the-job

promotions.

(g) Promotion resulting from the

accretion of duties and responsibilities.

(h) A promotion resulting from the

correction of an initial classification

error.

Upon promotion to a higher pay band,

an employee will be entitled to a 6

percent basic pay increase or the lowest

level in the pay band to which

promoted, whichever is greater.

3. Link Between Promotion and

Performance

Noncompetitive promotions (e.g.,

accretion of duties, recognition of

impact of person-in-job, career ladder)

will require an acceptable level of

performance in their current position.

To be promoted noncompetitively from

one band to the next within an

occupational family, an employee must

meet the minimum qualifications for the

job and have a current average

performance score of 2.5 or above

(Section III, Performance Evaluation) or

equivalent under a different

performance management system (an

equivalence chart will be developed by

HRM specialists and included in the

implementation instructions). Selection

of employees through competitive

procedures will require a current

average performance score of 2.5 or

above.

4. Supervisory Pay Adjustments

Supervisory pay adjustments may be

used, at the discretion of the WES

Director, to compensate employees in

the Engineers and Scientists

occupational family in supervisory

positions. 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 pay band maximum rate. Only

employees in supervisory positions with

formal supervisory authority meeting

that required for coverage under the

OPM GS Supervisory Guide will 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: needs

of the organization to attract, retain, and

motivate high quality supervisors;

budgetary constraints; years of

supervisory experience; amount of

supervisory training received;

performance; and managerial impact on

the organization.

Conditions, after the date of

conversion into the demonstration

project, under which the application of

a supervisory pay adjustment will be

considered are as follows:

(a) 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 pay band. This rate of pay

may include a supervisory pay
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 12015

adjustment determined using the ranges

and criteria outlined above.

(b) An employee selected for a

supervisory position that is within the

employee’s current pay band may also

be considered for a supervisory pay

adjustment.

(c) If a supervisor is already

authorized a supervisory pay

adjustment and is subsequently selected

for another supervisory position, within

the same pay band, then the supervisory

pay adjustment will be redetermined.

(d) An employee promoted to a

supervisory position in a higher pay

band may be considered for a

supervisory adjustment in addition to

the pay increase that resulted from the

promotion.

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.

Before supervisory employees may

receive the pay adjustment, they must

sign a statement acknowledging that the

entire adjustment will be immediately

withdrawn if they are removed from the

supervisory position because of

unacceptable performance or conduct.

Supervisory employees who are

reassigned to a nonsupervisory position

for any other reasons (i.e., employee

choice, management directed

reassignment, or RIF) will receive onehalf of the pay adjustment for one year

following the reassignment.

Eliminations or reductions in

supervisory pay adjustments are not

adverse actions, are not subject to

appeal, and are not covered under pay

retention provisions.

5. Supervisory Pay Differentials

Supervisory pay differentials may be

used, at the discretion of the WES

Director, to incentivize and reward E&S

supervisors who are in pay bands IV

and V whose pay is at the maximum

rate of the pay band. Formal supervisory

authority meeting that required for

coverage under the OPM GS

Supervisory Guide is required. A

supervisory pay differential is a cash

incentive, paid out on a pay period

basis, which is not included as part of

the supervisor’s basic rate of pay. The

differential may be up to 10 percent 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. The differential

will be terminated if the employee is

removed from a supervisory position,

regardless of cause.

As specified in the Supervisory Pay

Adjustment Section, 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 discretion of the WES

Director. The termination or reduction

of the differential is not an adverse

action, is not subject to appeal, and is

not covered under pay retention

provisions.

E. Hiring and Placement Authorities

1. Modified Term Appointments

WES conducts many research and

development projects that range from 3

to 6 years. The current 4-year limitation

on term appointments imposes a burden

on laboratory managers by forcing the

termination of some term employees

prior to completion of projects they

were hired to support. This disrupts the

research and development process and

reduces the ability of WES to serve its

customers.

Under the demonstration project,

WES will have the authority to hire

individuals under modified term

appointments. These appointments will

be used to fill positions for a period of

more than 1 year but not more than 5

years when the need for employee’s

services is not permanent. The modified

term appointments differ from term

employment as described in 5 CFR part

316 in that they may be made for a

period not to exceed 5, rather than 4

years. The WES Director is authorized to

extend a term appointment 1 additional

year.

Employees hired under the modified

term appointment authority may be

eligible for conversion to careerconditional appointments. To be

converted, the employee must: have

been selected for the term position

under competitive procedures, with the

announcement specifically stating that

the individual(s) selected may be

eligible for conversion to a careerconditional appointment at a later date;

have served 2 years of continuous

service in the term position; be selected

under WES merit promotion procedures

for the permanent position; and have a

current performance score of 2.5 or

better.

Employees serving under term

appointments at the time of conversion

to the demonstration project will be

converted to the new modified term

appointments provided they were hired

for their current positions under

competitive procedures. These

employees will be eligible for

conversion to career-conditional

appointment if they have a current

performance score of 2.5 or better and

are selected under merit promotion

procedures for the permanent position

after having completed 2 years of

continuous service. Time served in

temporary or term positions prior to

conversion to the modified term

appointment is creditable, provided the

service was continuous. Employees

serving under modified term

appointments under this plan will be

covered by the plan’s pay-forperformance system.

2. Extended Probationary Period

A new employee needs to

demonstrate adequate contribution

during all cycles of a research effort for

a laboratory manager to render a

thorough evaluation. The current 1-year

probationary period will be extended to

2 years for all newly hired career

employees in the Engineers and

Scientists occupational family. The

purpose of extending the probationary

period is to allow supervisors an

adequate period of time to fully evaluate

an employee’s contribution and

conduct.

Aside from extending the time period,

all other features of the current

probationary period, including the

criteria for crediting prior service and

the limited notice and appeal rights, are

retained. The requirements for

conversion to career tenure are

unchanged. Employees appointed prior

to the implementation date will not be

affected.

Probationary employees will be

terminated when the employee fails to

demonstrate proper conduct, technical

competency, and/or adequate work

contribution for continued employment.

When WES decides to terminate an

employee serving a probationary period

because their work contribution or

conduct during this period fails to

demonstrate their fitness or

qualifications for continued

employment, it shall terminate their

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,

consist of WES’s conclusions as to the

inadequacies of their work contribution

or conduct.

3. Voluntary Emeritus Program

Under the demonstration project, the

WES Director will have the authority to

offer retired or separated individuals

(engineers and scientists) voluntary

assignments in the laboratory. This
12016 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

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 buy-outs 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 E&Ss could accept

retirement and return to provide

valuable on-the-job training or

mentoring to less experienced

employees.

To be accepted into the emeritus

program, a volunteer must be

recommended by a Laboratory Director

to the WES Director. Everyone who

applies is not entitled to a voluntary

assignment. The WES Director must

clearly document the decision process

for each applicant (whether accepted or

rejected) and retain the documentation.

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

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 and the WES.

The agreement will be reviewed by the

local Office of Counsel for ethics

determinations under the Joint Ethics

Regulation. The agreement must be

finalized before the assumption of

duties and shall include:

(a) A statement that the voluntary

assignment does not constitute an

appointment in the civil service 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 laboratory

(travel, administrative, office space,

supplies).

(f) A one page Statement of Duties.

(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.

(i) The level of security access

required (any security clearance

required by the assignment will be

managed by the laboratory while the

volunteer is a member of the Voluntary

Emeritus Program).

F. Employee Development

The objective of the employee

development program will be to develop

the competence of employees for

maximum achievement of Laboratory,

MACOM, DA, and DoD goals. WES will

continue its employee development

programs, such as local training, off-site

training, long-term training, and

developmental assignments. Under this

Project, the opportunity to apply for

expanded developmental opportunities

to include sabbaticals and training for

degrees, which was previously

restricted, will be made available to

permanent employees.

1. Sabbatical

WES will have the authority to grant

sabbaticals to career employees to

permit them to engage in study or

uncompensated work experience that

will contribute to their development

and effectiveness. Each sabbatical

should benefit WES as well as increase

the employee’s individual effectiveness.

Examples are as follows: advanced

academic teaching, study, or research;

self-directed (independent) or guided

study; and on-the-job work experience

with a public, private, or nonprofit

organization. Each recipient of a

sabbatical must sign a continued service

agreement and agree to serve a period

equal to at least three times the length

of the sabbatical.

2. Degree Training

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 DoD 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 currently not

permitted for non-shortage occupations

involving critical skills.

Under the Personnel Demonstration

Project, WES will expand the authority

to provide degree training 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. It is expected that the

degree payment authority will be used

primarily for attainment of advanced

degrees.

G. Reduction in Pay or Removal Actions

Employees covered by the project will

be evaluated under a performance

evaluation system that affords grievance

and/or appeal rights the same as those

provided currently.

1. Unacceptable Performance

Employees whose performance is

unsatisfactory (equivalent to a

performance score of 0 on any critical

element) at anytime during the year

shall be placed in a Performance

Improvement Plan (PIP). If in a PIP at

the end of a rating period, the employee

will not be given a performance rating

while in that program. If performance

remains unsatisfactory upon completion

of the PIP, the employee will be

separated from his or her position or

reduced to a lower pay band. If

performance becomes satisfactory, the

employee will receive a performance

rating of record and appropriate

adjustments to pay may be made at that

time (i.e. granting General Schedule

increase). These performance-based

actions will follow the same procedures

as current performance-related removals

and reductions in grade under Chapter

43 or Chapter 75 when appropriate.

2. Placement in a Lower Pay Band

An employee who is determined

ineligible for a performance award may

receive either none or one-half the

General Schedule pay increase and will

not receive a performance pay increase

or performance award. Because the

minimum pay rate for each pay band

will be increased each year by the

amount of the General Schedule

increase, it is possible that the new

minimum rate of a pay band will exceed

the basic pay of an employee in that

band who did not receive the full
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 12017

General Schedule increase. In these

cases, the employee will be moved to

the next lower band level and the action

will be considered a demotion. This will

not be considered an adverse action,

will not be appealable through a

statutory appeals process, and will not

be covered under grade retention

provisions.

G. Revised Reduction in Force (RIF)

Procedures

Modifications include limiting

competitive areas to occupational

families and increasing the emphasis on

performance in the RIF process. These

modifications will increase the

probability of retaining the highest

performing individuals in their

positions and will increase the

probability of displacing the lowest

performing individuals.

1. Competitive Areas

For RIF purposes, the competitive

area will be the occupational family in

which the employee is assigned and

will cover all geographic locations.

2. Retention

Retention registers will be established

based on the following criteria listed in

order of priority: tenure status (Tenure

I-career, Tenure II-career conditional,

Tenure III-modified term); veteran’s

preference; most recent employee

performance score; and service

computation date. Modified term

employees within the affected

occupational family will be separated

before permanent Tenure I and II

employees. The present RIF system

essentially remains in effect, except that

performance scores are part of the

retention order. Performance scores will

not be used to adjust the service

computation date. A preference eligible

with a compensable service-connected

disability of 30 percent or more may

displace employees in positions

equivalent to 5 GS grades below the

minimum grade level of his/her current

pay band. Increasing the emphasis on

job performance will help ensure the

retention of outstanding individuals in

RIF situations.

3. Grade and Pay Retention

Except where waived or modified in

the waiver section of this plan, grade

and pay retention will follow current

law and regulations.

IV. Training

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 commitment to the program on

the part of all participants. Training will

be tailored to fit the requirements of

every employee included and will fully

address employee concerns to ensure

that everyone has a comprehensive

understanding of the program.

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 the following: a description of

the system; how employees are

converted into the system; pay

adjustment process; familiarization with

the new position descriptions and

performance objectives; the individual

performance rating process; the

reconsideration process; and the

demonstration project administrative

and formal evaluation process.

A. 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, and performance

evaluation. Additional training may

focus on nonproject procedural

techniques such as interpersonal and

communication skills.

B. 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.

C. Employees

WES 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

A. Conversion to the Demonstration

Project

Initial entry into the demonstration

project for covered employees will be

accomplished through a full employee

protection approach that ensures each

employee an initial place in the

appropriate occupational family and

pay band without loss of pay. An

automatic conversion from current GS/

GM grade and pay into the new broad

banding system will be accomplished.

Except for special rate employees, each

employee will be converted at their

current GS salary at the time of

conversion.

Special conversion rules will apply to

special rate employees (see Section III,

Pay Setting Provisions). Employees who

enter the demonstration project later by

lateral reassignment or transfer will be

subject to the same pay conversion

rules. Employees serving under regular

term appointments at the time of project

implementation will be converted to the

modified term appointment. Position

announcements, etc. will not be

required for these term appointments. 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.

Employees who are on temporary

promotions at the time of conversion

will be converted to a pay band

commensurate with the grade of the

position to which temporarily

promoted. At the conclusion of the

temporary promotion, the employee will

revert to the pay band which

corresponds to the grade of record.

When a temporary promotion is

terminated, pay will be determined as

described in Section III, Pay Setting

Provisions. 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 implemented, will be

subject to all existing priority placement

programs.

At the time of conversion, each

employee will be given a lump sum

cash payment for the time credited (in

weeks) to the employee toward what

would have been the employee’s next

within-grade increase. This step buy-in

is applicable only to employees

converted into the project at the time of

its initial establishment.

Any OCONUS employee covered by

the project will continue to be ineligible

for locality pay. The maximum basic
12018 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

salary payable in the pay band will be

limited to the maximum rate of pay on

the GS salary table which does not

include any locality pay.

B. Conversion From the Demonstration

Project

If a demonstration project employee is

moving to a 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 pay band

to an equivalent grade and the

employee’s project rates of pay to

equivalent rates of pay. The converted

grade and rates 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 grade and rates will become

the employee’s actual grade and rates

after leaving the demonstration project

(before any other action). For transfers,

promotions, and other actions, the

converted grade and rates will be used

in applying any pay movement out of

the project (i.e., promotion rules,

highest previous rate rules, pay

retention rules) as if the converted grade

and rates were actually in effect

immediately before the employee left

the demonstration project.

1. Grade-Setting Provisions. An

employee in a pay band corresponding

to a single grade is converted to that

grade. An employee in a pay band

corresponding to two or more grades is

converted to one of those grades

according to the following rules:

(a) The employee’s adjusted rate of

basic pay under the demonstration

project (including any locality payment

or staffing supplement but excluding

any supervisory pay adjustment) is

compared with step 4 rates in the

highest applicable GS rate range. For

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

a rate range in the GS base schedule, the

locality rate schedule for the locality

pay area in which the position is

located, or 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.

(b) 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.

(c) 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 pay band. If the employee’s

adjusted rate equals or exceeds step 4

rate of the second highest grade, the

employee is converted to that grade.

(d) 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.

(e) 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 that next higher

applicable grade.

(f) 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.

2. Pay-Setting Provisions. An

employee’s pay within the converted GS

grade is set by converting the

employee’s demonstration project rates

of pay to GS rates of pay in accordance

with the following rules:

(a) 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.

(b) An employee’s adjusted rate of

basic pay under the project (including

any locality payment or staffing

supplement but excluding any

supervisory pay adjustment) is

converted to a GS adjusted rate on the

highest applicable GS rate range for the

converted GS grade. For this purpose, a

‘‘GS rate range’’ includes a rate range in

the GS base schedule, an applicable

locality rate schedule, or an applicable

special rate schedule.

(c) 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 the 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.

(d) 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 rate must be set at the

higher step. The converted GS

unadjusted rate of basic pay will be the

GS rate corresponding to the converted

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

3. Within-Grade Increase—Equivalent

Increase Determinations. Service under

the demonstration project since the last

pay-for-performance determination is

creditable for within-grade purposes

upon conversion back to the GS pay

system. Performance pay increases

(including a 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).

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 (Proposed Plan for

the Evaluation of the DoD Laboratory

Demonstration Program, OPM, 1995).

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: permanent

implementation; change and another 3–

5 year test period; or expiration.

VII. Evaluation Plan

Authorizing legislation mandated

evaluation of the demonstration project

to assess the merits of project outcomes

and to evaluate the feasibility of

applications to other federal

organizations. A comprehensive and

methodologically rigorous evaluation of

the personnel system changes will be

carried out. The overall evaluation

consists of two components—external

and internal evaluation. The external

evaluation will be conducted by OPM’s

Personnel Resources and Development

Center (PRDC) to benefit from their

extensive experience evaluating

demonstration projects. PRDC will serve

in the role of external evaluator to
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 12019

ensure the integrity of the evaluation

process, outcomes, and interpretation of

results. Their external evaluation will be

supplemented by an internal evaluation

to be accomplished by the staff of WES.

Selected parts of the evaluation will be

completed using contractor support.

The contractor(s) will be well qualified

and experienced with demonstrated

expertise in performing relevant support

functions.

Essential elements of the evaluation

plan are set forth below. The

demonstration project is a complex

experiment to be conducted in a

dynamic environment over several

years. Modifications and refinements to

the evaluation plan will be made as

required by mid-course project changes.

All additions, deletions, and

refinements to the current plan will be

fully documented and explained as part

of the evaluation reporting process. The

main purpose of the evaluation is to

determine the effectiveness of the

personnel system changes described by

the individual interventions. Every

effort will be made to establish direct

cause-and-effect relationships between

the interventions and effectiveness

criteria. An ancillary objective is to

assess the effects of the interventions on

improved organizational performance.

An indirect causal link is hypothesized

between the personnel system changes

and improved organizational

effectiveness, i.e., improved laboratory

performance, mission accomplishment,

and customer satisfaction. The current

personnel management system with its

many rigid rules and regulations often is

perceived as a barrier to mission

accomplishment. Together, the

demonstration project initiatives are

intended to remove some of those

barriers, and therefore, are expected to

contribute to improved laboratory

performance.

The evaluation effort will be

accomplished in four distinct phases:

(a) Design phase—includes

development of the evaluation model,

selection of experimental and

comparison sites, and collection of

baseline data prior to implementation.

(b) Implementation phase—includes

actual project implementation and

monitoring of the degree and support of

implementation to assure that each of

the project interventions has been

operationalized as originally conceived.

(c) Formative evaluation phase—

includes data collection and analysis for

five years for purposes of evaluating the

effects of the interventions. Periodic

reports and annual summaries will be

prepared to document the findings.

(d) Summative evaluation phase—

focuses on summary evaluation and

overall assessment of the project’s

impact, including presentation of

conclusions and final recommendations

upon completion of the project.

An intervention impact model

(Appendix A) 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 with 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 on 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: workforce data; personnel

office data; employee attitudes and

feedback using surveys, structured

interviews and focus groups; local

activity histories, and core measures of

laboratory effectiveness.

VIII. Demonstration Project Costs

A. Step Buy-Ins

Under the current pay structure,

employees progress through their

assigned grade in step increments. Since

this system is being replaced under the

demonstration project, employees will

be awarded that portion of the next

higher step they have completed up

until the effective date of

implementation. As under the current

system, supervisors will be able to

withhold these partial step increases if

the employee’s performance is not at an

acceptable level of competence.

At the time of conversion, each

employee will be given a lump sum

cash payment for the time credited (in

weeks) to the employee toward what

would have been the employee’s next

within-grade increase. Employees at the

top step of their grade on the date of

implementation will not be eligible for

within-grade increase equity

adjustments since they are already at the

top of the step scale.

B. Development 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 WES budget. The projected

annual expenses for each area is

summarized in Table 4. Project

evaluation costs are not expected to

continue beyond the first 6 years.

TABLE 4.—PROJECTED DEVELOPMENTAL COSTS

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

Training .................................................................... $97K $19K

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

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

Totals ................................................................ 202K 89K 60K 60K 60k 60K
12020 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices

IX. Required Waivers to Law and

Regulations

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.

A. Waivers to Title 5, U.S. Code

Section 3111, Acceptance of volunteer

service

Section 3324, Appointments to

positions classified above GS–15

Section 3341, Details

Section 4107, Non-Government

facilities; restrictions (to the extent

that training may be paid for the

purpose of an employee to obtain a

degree)

Section 4108, Employee agreements;

service after training (to the extent

that continued service is required

only for long-term training and

sabbaticals)

Sections 5101–5111, Purpose,

definitions, basis, classification of

positions, review, authority (to the

extent that white collar employees

will be covered by broadbanding. Pay

category determination criteria for

Federal Wage System positions

remain unchanged).

Sections 5301; 5302 (8), and (9); 5303;

and 5304, Pay comparability system

(Sections 5301, 5302, and 5304 are

waived only to the extent necessary to

allow: (1) Demonstration project

employees, except employees in band

VI of the Engineers and Scientists

occupational family, to be treated as

General Schedule employees; (2) basic

rates of pay under the demonstration

project to be treated as scheduled

rates of basic pay; and (3) employees

in band VI of the Engineers and

Scientists occupational family to be

treated as ST employees for the

purposes of these provisions)

Section 5305, Special pay authority

Sections 5331–5336, General Schedule

pay rates

Sections 5361–5366, Grade and pay

retention (to the extent necessary to

(1) Replace ‘‘grade’’ with ‘‘pay band’;

(2) allow demonstration project

employees to be treated as General

Schedule employees; (3) provide that

pay band retention provisions do not

apply to movements to a lower pay

band as a result of receiving no or

only part of a general pay increase

because of poor performance; (4)

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 all or part of a supervisory

pay adjustment upon leaving a

supervisory position; and (5) provide

that an employee on pay retention

whose performance rating is less than

2.0 is not entitled to 50 percent of the

amount of the increase in the

maximum rate of basic pay payable

for the pay band of the employee’s

position. This waiver does not apply

to employees in band VI of the

Engineers and Scientists occupational

family who are to be treated as ST

employees for the purposes of

applying the grade and pay retention

provisions.)

Section 5545, Night, standby, irregular,

and hazardous duty differential (to

the extent necessary to allow

demonstration project employees to

be treated as General Schedule

employees. This waiver does not

apply to employees in band VI of the

Engineers and Scientists occupational

family.)

Sections 5753, 5754, and 5755,

Recruitment and relocation bonuses,

retention allowances, and supervisory

differentials (to the extent necessary

to allow: (1) Employees and positions

under the demonstration project to be

treated as employees and positions

under the General Schedule; and (2)

employees in band VI of the Engineers

and Scientists occupational family to

be treated as ST employees)

Section 7512(3), Adverse actions (to the

extent necessary to (1) substitute ‘‘pay

band’’ for ‘‘grade.’’

Section 7512(4), Adverse actions (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 removal of

all or part of a supervisory

adjustment)

B. Waivers to Title 5, Code of Federal

Regulations

Part 300.601–605, Time-in-grade

restrictions (to the extent that time-ingrade restrictions are eliminated)

Part 308.101–103, Volunteer service (to

the extent that volunteer service is

unrestricted)

Parts 315.801(a) and 315.802(a), Length

of probationary period (to the extent

that the probationary period for

engineers and scientists is increased

to 2 years)

Part 316.301, Term appointment (to the

extent that modified term

appointments may cover a maximum

period of 6 years)

Part 316.303, Tenure of term employees

(to the extent that term employees

may compete for permanent status

through local merit promotion plans)

Part 335.103, Covering the length of

details and temporary promotions

Part 351.402(b), Competitive area (to the

extent that occupational family is the

competitive area)

Part 351.403, Competitive level (to the

extent that pay band is substituted for

grade)

Part 351.504, Retention standing, credit

for performance (to the extent that

service credit will not be modified

based on performance rating)

Part 351.701, Assignment involving

displacement (to the extent that a

performance score of 1 is substituted

for level 2 and bumping and retreating

will be limited to no more than 2 pay

bands except for 30 percent

compensable veterans who can retreat

to the equivalent of 5 GS grades)

Part 430.101–210, subparts A and B,

Performance Management System

Part 432.103–105, Performance based

reduction-in-grade and removal

actions (to the extent that pay band is

substituted for grade, reduction in

band level as a result of non-receipt

of General Schedule increases because

of poor performance is not an adverse

action, and unacceptable performance

is redefined)

Part 511.101, 201–203, General

provisions and coverage of the

General Schedule (to the extent that

positions are covered by

broadbanding)

Part 511.601–612, Classification appeals

(to the extent that positions are

covered by broadbanding)

Part 530, subpart C, Special salary rates

Part 531, subparts B, D, and E,

Determining the rate of basic pay,

within-grade increases, and quality

step increases

Part 531, subpart F, Locality-based

comparability payments (to the extent

necessary to allow: (1) demonstration

project employees, except employees

in band VI of the Engineers and

Scientists occupational family, to be

treated as General Schedule

employees; (2) basic rates of pay

under the demonstration project to be

treated as scheduled annual rates of

pay; and (3) employees in band VI of

the Engineer and Scientist

occupational family to be treated as

ST employees)

Part 536, Grade and pay retention (to the

extent necessary to: (1) replace

‘‘grade’’ with ‘‘pay band’; (2) provide
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 12021

that pay band retention provisions do

not apply to movements to a lower

pay band as a result of receiving no

or only part of a general pay increase

because of poor performance; (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 all or part of a supervisory

pay adjustment upon leaving a

supervisory position; and (4) provide

than an employee on pay retention

whose performance rating is less than

2.0 is not entitled to 50 percent of the

amount of the increase in the

maximum rate of basic pay payable

for the pay band of the employee’s

position. This waiver does not apply

to employees in band VI of the

Engineers and Scientists occupational

family who are to be treated as ST

employees for the purposes of

applying the grade and pay retention

provisions)

Part 550.703, Severance pay (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, definition of ‘‘employee’’

(to the extent necessary to allow

demonstration project employees to

be treated as General Schedule

employees. This waiver does not

apply to employees in band VI of the

Engineers and Scientists occupational

family)

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

Recruitment bonuses, relocation

bonuses, retention allowances and

supervisory differentials (to the extent

necessary to allow (1) employees and

positions under the demonstration

project to be treated as employees and

positions under the General Schedule

and (2)employees in band VI of the

Engineers and Scientists occupational

family to be treated as ST employees)

Part 752.401 (a)(3), Adverse actions (this

provision is waived only to the extent

necessary to (1) substitute ‘‘pay band’’

for ‘‘grade’’ and (2) provide that

moving a lower pay band as a result

of not receiving the full amount of a

general pay increase because of poor

performance is not an adverse action)

Part 752.401 (a)(4), Adverse actions (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 all or part of a supervisory

adjustment)

BILLING CODE 6325–01–P
12022 Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices
Federal Register / Vol. 62, No. 49 / Thursday, March 13, 1997 / Notices 12023
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[FR Doc. 97–6169 Filed 3–10–97; 8:45 am]

BILLING CODE 6325–01–C