72776 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

161a); the Federal Advisory Committee 

Act (5 U.S.C. App.); and the 

Commission’s regulations in Title 10, 

U.S. Code of Federal Regulations, Part 7. 

Dated: December 17, 2007. 

Andrew L. Bates, 

Advisory Committee Management Officer. 

[FR Doc. E7–24869 Filed 12–20–07; 8:45 am] 

BILLING CODE 7590–01–P 

OFFICE OF PERSONNEL 

MANAGEMENT 

Personnel Demonstration Project; Pay 

Banding and Performance-Based Pay 

Adjustments in the National Nuclear 

Security Administration 

AGENCY: U.S. Office of Personnel 

Management. 

ACTION: Notice of approval of a 

demonstration project final plan. 

SUMMARY: Chapter 47 of title 5, United 

States Code, authorizes the U.S. Office 

of Personnel Management (OPM), 

directly or in agreement with one or 

more agencies, to conduct 

demonstration projects that experiment 

with new and different human resources 

management concepts to determine 

whether changes in human resources 

policy or procedures would result in 

improved Federal human resources 

management. The National Nuclear 

Security Administration (NNSA) and 

OPM will test a pay banding system in 

which within-band pay progression is 

based on performance. The final project 

plan has been approved by NNSA, the 

Department of Energy, and OPM. 

DATES: This demonstration project will 

be implemented on March 16, 2008. 

FOR FURTHER INFORMATION CONTACT: 

National Nuclear Security 

Administration: Rosa Benavidez, 

Demonstration Project Leader, (202–

586–1622), Office of Human Capital 

Management Programs, 1000 

Independence Ave., SW., Washington, 

DC 20585. U.S. 

Office of Personnel Management: 

Patsy Stevens, Systems Innovation 

Group Manager, U.S. Office of Personnel 

Management, (202) 606–1574, 1900 E 

Street, NW., Room 7456, Washington, 

DC 20415. 

SUPPLEMENTARY INFORMATION: 

1. Background 

In May 2006, NNSA responded to 

OPM’s solicitation of interest in 

undertaking a demonstration project to 

experiment with and test the concept of 

performance-based pay increases. NNSA 

already had substantial experience with 

such a mechanism. NNSA’s enabling 

statute (National Defense Authorization 

Act for Fiscal Year 2000, Pub. L. 106–

65, as amended) provided the NNSA 

Administrator with the authority to 

establish not more than 300 scientific, 

engineering, and technical positions as 

necessary to carry out the 

Administrator’s responsibilities, and to 

appoint individuals to these positions 

and fix their compensation without 

regard to title 5, United States Code 

(U.S.C.) [hereafter in this notice referred 

to as the ‘‘NNSA excepted service 

system’’]. In developing an employment 

system to support this authority, NNSA 

opted for pay banding and designed a 

performance-based pay system. NNSA 

has made full use of its excepted service 

system authority and considers pay-forperformance a highly effective tool to 

attract, reward, and retain high 

performers. OPM’s solicitation was 

opportune. NNSA now desires to test 

the feasibility of expanding pay-forperformance among the ranks of its 

larger General Schedule (GS) workforce. 

At the same time, NNSA sees the 

demonstration project as an opportunity 

to streamline the traditional position 

classification system that governs GS 

positions by banding together one or 

more GS grades. NNSA had done 

similar banding when it established its 

excepted service system some years 

before. When NNSA submitted its 

official proposal to OPM in August 

2006, pay banding was a vital part of the 

plan. 

2. Overview 

The NNSA Demonstration Project 

proposal was approved by OPM and 

publicized in the Federal Register on 

February 28, 2007. With OPM’s 

preliminary approval given, and 

knowing that NNSA would receive 

critical comments from the public and 

have about 6 months to refine its plan, 

NNSA’s Administrator asked the 

agency’s top program managers to reexamine projected career paths and 

proposed pay bands to ensure they 

effectively met the varying mission 

requirements and management needs 

found in NNSA’s primary nuclear 

weapons, nuclear nonproliferation, and 

naval reactors propulsion programs. 

NNSA’s Office of Human Capital 

Management Programs facilitated this 

re-examination. The agency’s top 

managers were briefed on the various 

management and mission implications 

of the project, and discussions with 

managerial stakeholder groups were 

held to elicit insights and perspectives 

on how to ensure the project makes 

credible and meaningful contributions 

to enhancing the overall excellence of 

NNSA’s twenty-first century workforce. 

Meanwhile, there was a 30-day public 

comment period immediately following 

publication of the proposed 

demonstration project plan in the 

Federal Register, culminating in a 

public hearing on April 4, 2007, held at 

the Department of Energy (DOE) 

headquarters in Washington, DC. A total 

of 55 individuals, mostly NNSA 

employees, one NNSA sub-organization, 

and one labor organization, submitted 

written comments and questions. Two 

additional individuals provided 

comments and asked questions at the 

public hearing. Many of these 

commenters offered multiple comments 

and questions. A total of 170 different 

comments and questions were received, 

with some of them duplicative. 

Comments covered a number of 

different management and human 

resources topical areas, and in some 

cases, pertained to more than one topic. 

Two broad topics relating to pay bands 

and pay-related issues received the 

largest number of comments and 

questions by a considerable margin. 

There were 45 comments on pay-related 

issues and 39 on issues relating to pay 

bands. Other topical issues earning 

numerous comments/questions 

included staffing (17), position 

classification (14), management 

accountability (14), excepted service 

(10), employee relations (7), employee 

equity (6), performance management (5), 

and reduction in force (4). An additional 

25 comments and questions did not fall 

into one of the above topical areas. 

Every comment and question received 

was extremely important, as each 

helped to focus NNSA’s top leadership 

during the Administrator’s reexamination of the project plan and 

helped the leadership to better 

understand the long-term management 

and employee implications of the 

project. Public comments and questions 

often served as a catalyst to raising 

additional questions on the part of top 

management. As a result of public 

comments received, NNSA has made a 

number of substantive refinements to its 

plan and a few clarifying editorial and 

textual changes as well. 

3. Summary of Comments and 

Responses 

Comments are arranged into 11 broad 

topical areas that correspond to the 

topics identified in the previous section 

and are presented not in an order 

dictated by the number of comments 

received, but in an order that reflects the 

logic of the project’s design scheme and 

contents; i.e., in a topical order 

beginning with pay banding and 

devolving through pay, position 

classification, staffing, performance 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72777 

management, employee matters, and 

management matters. NNSA’s responses 

are generic summaries relative to the 

major issues raised by comments/ 

questions, rather than point-by-point 

responses. 

(a) Career Paths and Pay Bands 

There were several comments about 

proposed career paths, several 

comments about the constituent job 

series in each career path, several 

comments about proposed pay band pay 

rates, many comments about the lack of 

pay band symmetry across career paths, 

and many comments about the structure 

of proposed pay bands relative to the 

pay band structure in NNSA’s excepted 

service system. 

(1) Career Paths 

Comments: Several commenters 

wondered why NNSA didn’t establish a 

supervisory career path to recognize and 

reward supervision or have more 

targeted and occupationally narrower 

career paths, as the Defense 

Department’s National Security 

Personnel System does. 

Response: In designing proposed 

career paths, NNSA wanted to take the 

broadest approach that made sense, 

given the nature of the work performed 

and the nature of the occupations 

requiring this work. The broader the 

design approach, the more employees 

are treated alike and the simpler it is to 

administer pay banding. Employee 

equity and systemic simplification are 

central goals of this project. In deciding 

on the original career path proposal, 

NNSA opted to essentially build its 

career paths around OPM’s white-collar 

‘‘PATCO’’ categories with one 

exception. The PATCO scheme 

encompasses extremely broad groupings 

of white-collar occupational categories, 

largely based on differences in the 

nature of work and the essential job 

knowledge required to successfully 

perform the work (for instance, whether 

work accomplishment requires certain 

educational attainments, or analytical 

ability, or subject-matter competencies, 

and so on). OPM defines each distinct 

occupational job series according to 

whether work is professional (‘‘P’’), 

administrative (‘‘A’’), technical (‘‘T’’), 

clerical (‘‘C’’), or falls into a 

miscellaneous others (‘‘O’’) category. 

NNSA’s original proposal simply 

lumped into two broad primary career 

paths all ‘‘professional’’ occupations 

and all ‘‘administrative’’ occupations, 

respectively, while combining all 

‘‘clerical’’ and ‘‘technician’’ occupations 

into a third composite career path, 

irrespective of whether positions in 

these career paths possessed classifiable 

supervisory duties. There is no distinct 

PATCO category for supervision. The 

notable exception to this extremely 

broad general approach was an 

extremely narrow fourth career path, 

which covered only the GS–084 Nuclear 

Material Courier occupation. 

Notwithstanding the inclusion of only 

one job series, this career path covers a 

sizable block of employees. There are 

about 300 couriers scattered throughout 

the United States. 

In light of the comments received 

regarding career paths, NNSA’s top 

managers have reconsidered and refined 

certain elements of the original 

proposal, including career paths. NNSA 

has reconstituted its two primary career 

paths into an Engineering and Scientific 

Career Path and a Professional, 

Technical, and Administrative Career 

Path and is establishing a fifth career 

path for interns enrolled in NNSA’s 

Future Leaders Program. 

The most populous jobs in NNSA are 

engineering, followed by scientific. As 

of August 2007, there were 205 GS–801 

employees, 64 GS–840 employees, and 

another 24 employees in positions 

classified in other GS–0800 

occupations. There were also 64 GS–

1301 employees and 7 in other GS–1300 

occupations. All together, there were 

364 General Schedule employees in 

engineering and scientific occupations, 

in complement to the additional 425 

engineering and scientific employees 

appointed under NNSA’s excepted 

service system authority and through 

two other DOE excepted service 

authorities. Because engineering and 

scientific employees perform work vital 

to NNSA’s primary nuclear weapons, 

nuclear nonproliferation, and naval 

reactors missions, and because this 

cadre—engineers and scientists serving 

under either the General Schedule or 

the excepted service system—

predominates in NNSA in comparison 

to other professional occupations (e.g., 

foreign affairs specialists, industrial 

hygienists, attorneys, and the like), the 

agency’s top managers have decided to 

reconstitute the Engineering and 

Scientific Career Path to exclude other 

‘‘professional’’ occupations. These other 

professional occupations are now 

incorporated into the reconstituted 

Professional, Technical, and 

Administrative Career Path. 

Future Leaders are recruited with 

academic achievement and diversity in 

mind and traditionally have been 

appointed under several competitive 

and excepted service authorities, with 

varying conditions of employment and 

advancement opportunities unique to 

each respective appointing authority. 

Establishing a Future Leaders Career 

Path, into which all interns will be 

appointed and advanced, and making 

all participants subject to pay banding 

will be of great benefit to NNSA and the 

interns. Not only will the human capital 

management practices attendant to these 

employees be standardized, but so will 

development and advancement 

opportunities—one set of rules and 

expectations for all Future Leader 

interns. 

In lieu of a supervisory career path, or 

a supervisory pay differential, NNSA 

will seek to recognize and reward 

supervisory performance by providing 

supervisory bonuses as described in the 

project plan. 

(2) Occupational Series in Career Paths 

Comments: Several commenters 

wanted to know how NNSA decided 

which job series to assign to which 

career paths. In particular, there were 

questions relating to why certain 

‘‘administrative’’ occupations were 

treated separately from ‘‘professional’’

occupations, since in the opinion of 

some commenters, the work 

accomplished in NNSA, regardless of 

whether performed, for example, by an 

engineer or program analyst, or an 

accountant or budget analyst, was pretty 

much the same. 

Response: As explained in the 

response immediately above, NNSA’s 

original career path proposal conformed 

generally to OPM’s PATCO categories. 

OPM assigns each authorized job series 

to one of these categories for 

definitional and pay purposes. In 

constructing its three broad career paths 

in the original proposal, NNSA simply 

used the same PATCO series 

assignments as does OPM. In light of 

comments received regarding the 

proposed demonstration project plan, 

NNSA has reconsidered and refined 

certain elements of the original 

proposal, including the constituent job 

series that make up respective career 

paths. For instance, only professional 

positions whose occupational job series 

are found in OPM’s ‘‘GS–0800 

Engineering and Architecture Group’’

and ‘‘GS–1300 Physical Sciences 

Group’’ are to be included in NNSA’s 

redesigned Engineering and Scientific 

Career Path. After further reflection, 

NNSA could not agree that such 

professional occupations as GS–510 

accountants, GS–690 industrial 

hygienists, and GS–905 attorneys, 

employees who primarily ‘‘support’’ the 

main missions of NNSA, belonged in 

the same career path as engineers and 

scientists, those who do the pre-eminent 

mission work of NNSA. Further, it was 

not felt that GS–130 foreign affairs 

specialists, with their significantly 

mstockstill on PROD1PC66 with NOTICES

72778 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

‘‘non-technical’’ knowledge base, albeit 

professional employees who perform 

primary mission work, should be 

grouped in the same career path as 

engineers and scientists. Similarly, such 

professional occupations as GS–1102 

contract specialist and GS–1515 

operations research analyst are to be 

included in NNSA’s redesigned and 

expanded Professional, Technical, and 

Administrative Career Path. 

(3) Pay Rates 

Comments: Some commenters 

pointed out that the pay rates associated 

with NNSA’s proposed pay bands were 

lesser in value than corresponding pay 

rates found in the demonstration 

projects and alternative personnel 

systems of other Federal agencies, or 

even in comparison with the pay rates 

in NNSA’s own excepted service 

system. Several commenters felt this 

rendered NNSA uncompetitive in the 

labor market versus these other systems, 

and several considered lower pay rates 

unfair and not consistent with the 

principle of ‘‘equal pay for equal work.’’

Response: NNSA looked at two basic 

occupational questions in considering 

these comments: 

1. Historically, has NNSA been able to 

attract and retain critical skills to carry 

out important work within the 

traditional GS grade and pay structure? 

2. Is NNSA losing employees to paybanded agencies with enhanced pay 

rates? 

In looking at the first question, what 

NNSA found was that there is no 

directly correlative data relating to 

ability ‘‘to attract and retain critical 

skills,’’ but there is plenty of anecdotal 

information. NNSA experiences 

instances of recruitment difficulty in 

two basic circumstances, (1) when a 

local private employer successfully 

competes for a top prospect by offering 

a higher starting salary than NNSA can, 

and (2) at locations that are considered 

geographically isolated and remote, and 

where top candidates are scarce. But 

despite these instances, NNSA has not 

experienced a general pattern of 

recruitment difficulty because NNSA’s 

important national security work has an 

intrinsic attraction to prospective 

candidates, and because NNSA makes 

selective good use of Government-wide 

recruitment incentives. The second 

question was answered through a 

straightforward analysis of the data: 

NNSA is not losing current employees 

to any significant degree to agencies 

with enhanced pay rates, such as to the 

National Security Personnel System 

(NSPS) in the Department of Defense. In 

fact, during the past two years, NNSA 

has gained 13 employees (not including 

senior executives) from NSPS, while 

losing only 9 to NSPS. 

Based on these findings, NNSA’s 

initial approach to establishing pay 

band pay rates is affirmed. NNSA 

remains committed to its demonstration 

project principle to construct pay band 

thresholds and boundaries, and 

associated pay rates, consistent with 

OPM’s official classification criteria and 

the Government’s prevailing pay 

structure. 

While the notion of pay rates in 

excess of the current rates permissible 

under the traditional GS pay system is 

attractive to many managers and 

employees, implementing enhanced pay 

rates on a broad scale is not compelling 

now on the evidence in hand. Nor is 

NNSA prepared at this time to 

undertake systematic occupational 

market studies to validate the need for 

enhanced pay rates or to develop 

NNSA-only position classification 

criteria and standards, which are 

prerequisites to obtaining OPM’s 

approval to institute enhanced pay 

rates. However, we note that the 

demonstration project includes an 

authority to establish special staffing 

supplements, in lieu of locality 

payments, in order to increase pay when 

necessary to address serious recruitment 

and retention difficulties associated 

with a particular category of jobs. 

(4) Pay Band Structures 

Comments: Perhaps no other topic 

generated so many comments and often 

conflicting opinions. Many commenters 

felt that NNSA’s proposal failed to live 

up to the project’s goal to achieve 

greater parity with NNSA’s own 

excepted service pay-banded system, 

not only due to differences in pay band 

pay rates but also due to differences in 

how GS grades were to be bundled. 

Others took strong exception to the 

differences in proposed pay-band 

structures for ‘‘professional’’ and 

‘‘administrative’’ positions, feeling that 

because, in their opinions, such work 

was of equivalent value to NNSA, it was 

unfair not to have identical pay bands, 

while others took a contrary view, 

feeling that engineers and scientists 

should not be in the same career path 

as other professional and administrative 

occupations. Still others offered that 

when NNSA proposed only single-grade 

pay bands (such as a GS–13 pay band, 

a GS–14 pay band, and a GS–15 pay 

band in the proposed ‘‘administrative’’

career path), this defeated the purpose 

of pay banding, that in fact it was not 

‘‘pay banding’’ at all but just more of the 

same bureaucratic classification 

practice. Some commenters proposed 

their own pay band structures. Several 

commenters suggested that NNSA 

establish supervisory pay bands with 

higher pay rates to recognize the value 

of supervision and to incentivize the 

voluntary movements of technical 

employees into leadership positions. 

Response: NNSA found much to agree 

with in the many comments received on 

this topic. These comments led NNSA 

to reconsider the proposed pay-band 

structures, while recognizing that no 

matter what NNSA did in response to 

comments, there was no practical way 

to reconcile all viewpoints or satisfy 

everyone’s concerns. Consequently, 

NNSA revised some, though not all, of 

its earlier pay-band structures, where 

the work and employee promotional 

patterns supported doing so. NNSA 

agreed that the exercise of supervision 

compounds the complexities and value 

of a position’s work and should be 

recognized in some way. NNSA is 

therefore adopting a supervisory bonus 

mechanism as part of its performance 

policies. 

In reconsidering NNSA’s fundamental 

approach to pay bands, NNSA weighed 

the various and often competing 

arguments, only to affirm in the end the 

original approach. Upon closer study, 

NNSA found that lying just beneath the 

surface of a seemingly attractive 

‘‘equity’’ argument on behalf of identical 

pay bands was the more powerful 

reality that all work is not equivalent in 

grade value across occupations and 

organizations, that in fact there can be 

meaningful differences in the inherent 

level of work performed by professional 

and administrative employees, and that 

fulfilling the principle of ‘‘equal pay for 

substantially equal work’’ actually 

results in pay band structures that 

reflect these meaningful differences. 

Positions attributable to a given career 

path will have traditional grading 

patterns, and employee recruitment and 

promotion patterns, in common with 

other positions in the career path, but 

not in common with positions in other 

career paths. 

Consequently, NNSA not only revised 

its career paths but is revising the 

attendant pay band structures, as 

follows: 

I. Engineering and Scientific Career 

Path: Encompasses all professional 

positions classified in the GS–0800 and 

GS–1300 job series, subdivided into the 

following pay bands: 

• Pay Band I (GS–5 through GS–8) 

• Pay Band II (GS–9 through GS–11) 

• Pay Band III (GS–12/GS–13) 

• Pay Band IV (GS–14/GS–15) 

II. Professional, Technical, and 

Administrative Career Path: 

Encompasses all OPM-recognized 

professional occupations, except GS–

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72779 

1Although all Future Leaders will have career 

ladders to pay band III in either the Engineering and 

Scientific Career Path, or the Professional, 

Technical, and Administrative Career Path, a 

control point equating to the salary of GS–12 step 

10 will be established for those Future Leaders with 

a Masters Degree in business-related and 

administrative fields to enable these individuals to 

be converted from band III of the Future Leaders 

Career Path to band II of the Professional, 

Technical, and Administrative Career Path upon 

successful completion of the 2-year program. 

0800 engineers and GS–1300 scientists, 

requiring positive education 

requirements, and all other subjectmatter, business, and administrative 

occupations characterized by a 

traditional two-grade interval pattern of 

grade progression. All positions 

encompassed within this career path are 

subdivided into the following pay 

bands: 

• Pay Band I (GS–5 through GS–8) 

• Pay Band II (GS–9 through GS–12) 

• Pay Band III (GS–13/GS–14) 

• Pay Band IV (GS–15) 

III. Technician and Administrative 

Support Career Path: Encompassing 

technician, secretarial, assistant, and 

clerical occupations, and similar 

positions characterized by a traditional 

one-grade interval pattern of grade 

progression. All positions encompassed 

within this career path are subdivided 

into the following pay bands: 

• Pay Band I (GS–1 through GS–4) 

• Pay Band II (GS–5 through GS–8) 

• Pay Band III (GS–9) 

IV. Nuclear Materials Couriers Career 

Path: Encompassing all positions 

classified into the GS–084 job series, 

subdivided into the following pay 

bands: 

• Pay Band I (GS–8 through GS–10) 

• Pay Band II (GS–11) 

• Pay Band III (GS–12) 

• Pay Band IV (GS–13) 

V. Future Leaders Career Path: 

Encompassing the positions of all 

interns enrolled in NNSA’s 2-year 

Future Leaders Program, in various 

engineering, scientific, professional, 

technical, and administrative 

occupations. All positions encompassed 

within this career path are subdivided 

into the following pay bands: 

• Pay Band I (GS–5 through GS–8) 

• Pay Band II (GS–9 through GS–11) 

• Pay Band III (GS–12/GS–13) 1

The arguments in favor of readjusting 

NNSA’s original pay-band proposals 

were several. (The only pay bands not 

altered from the original are those 

associated with career path III.) The 

readjustment in the Engineering and 

Scientific Career Path not only better 

reflects the pre-eminent work done in 

NNSA by engineers and scientists, but 

is more consistent with the actual 

promotional patterns found in the 

demographics of the workforce. Most 

General Schedule engineers and 

scientists in NNSA are either at GS–14, 

or GS–15, with development patterns 

that often see GS–14 positions advance 

to GS–15 levels of work. Such 

advancement occurs traditionally under 

both competitive and noncompetitive 

promotional procedures, when such 

traditional job factors as Guidelines, 

Complexity, Scope and Effect, and 

others, have evolved under the weight 

of natural employee growth and 

maturation to the highest levels 

creditable (e.g., levels 2–5, 3–5, 4–6, and 

so on) under respective engineering and 

scientific standards and guides. In an 

agency with highly technical national 

security missions and one-of-a-kind 

nuclear weapons, nonproliferation, and 

naval reactor propulsion programs, it is 

not surprising to find engineering and 

scientific positions expanding in scope 

and responsibility due to recognizable 

increases in technical job expertise and 

project authority, which so often accrue 

to such positions over time. Out of 364 

GS engineers and scientists, there are 

147 GS–14 and 148 GS–15 positions 

that are graded in almost every case, 

including many classified supervisors, 

on their paramount non-supervisory 

work assignments. 

Similarly, agency program managers, 

agreeing with many of the comments 

received on this subject, questioned the 

validity and effectiveness of the separate 

single-grade ‘‘bands’’ at the GS–13, –14, 

and –15 levels previously proposed for 

the now reconstituted Professional, 

Technical, and Administrative Career 

Path. As NNSA looked at the actual 

distributions of professional, subjectmatter, and administrative positions 

that would be covered within this broad 

career path, as well as relevant 

employee promotional patterns, NNSA 

realized that this path’s pay-band 

structure also required adjusting. The 

new pay-band patterns in this career 

path are more consistent with the 

demographics of the actual workforce 

today; the majority of positions found in 

this career path are graded at GS–13 and 

GS–14, about 640 encumbered positions 

at this writing. Combining GS–13 and 

–14 into band III therefore makes better 

sense to NNSA than the original 

proposal did, given the relationship 

between these two grades among the 

many occupations covered by the career 

path. Generally, the main difference in 

NNSA between GS–13 and GS–14 in 

actual classification practice is that the 

Supervisory Controls and Guidelines 

factors are credited one level higher at 

GS–14, the two factors most readily 

influenced by the greater freedom from 

supervision and guidelines that 

invariably comes to a position through 

seasoning, through greater maturity of 

judgment, and through a derivatively 

more confident and authoritative 

incumbent performance. Combining 

these two grades into a single pay band, 

covering the majority of employees 

serving in positions in this important 

career path, shifts the focus of employee 

pay advancement from position 

classification and merit promotion 

criteria to performance-based criteria, 

one of the chief goals of this 

demonstration project. This shift in preeminence from classification and 

promotion criteria to performance also 

occurs, of course, in the examples of 

other pay bands in other occupational 

career paths, and serves in the aggregate 

to underscore how pay-banding 

intrinsically enhances the potential 

effectiveness of a performance-based 

pay system. 

A review of actual promotional 

patterns supports combining GS–13 and 

–14 into one pay band. Of the 328 GS–

14 employees serving in occupations 

that will be covered by the Professional, 

Technical, and Administrative Career 

Path, 80 were promoted from NNSA 

GS–13 positions in the same 

occupational series and line of work. 

With respect to the Nuclear Materials 

Couriers Career Path, NNSA’s Office of 

Human Capital Management Programs 

worked diligently with the top managers 

from the Office Secure Transportation, 

the NNSA organization in which the 

couriers are assigned, to arrive at a payband pattern that better met both 

management’s mission needs and 

employee advancement expectations. In 

developing pay bands for the new 

Future Leaders Career Path, the Future 

Leaders Program Manager was heavily 

consulted. 

(5) Comparisons With NNSA Excepted 

Service System Pay Bands 

Comments: Many commenters 

questioned why NNSA proposed pay 

bands for General Schedule engineering 

and scientific positions that did not 

correspond to the pay band structure in 

NNSA’s own excepted service system, 

pointing out, in their opinions, that the 

work was identical. 

Response: To understand the different 

pay band structures between General 

Schedule and NNSA’s excepted service 

system engineering and scientific 

positions, the fundamental distinction 

between these two systems must be 

understood. While it is true that many 

current excepted service system 

engineers and scientists are former 

General Schedule engineers and 

scientists, and that both General 

mstockstill on PROD1PC66 with NOTICES

72780 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

Schedule and excepted service system 

employees can currently be found 

working in the same facilities and 

offices, what needs to be kept in mind 

when comparing the two systems is the 

very nature of the authorities through 

which respective employees are 

appointed and paid. The NNSA Act 

(P.L. 106–65, as amended) gives the 

Administrator the authority to appoint 

employees to scientific and engineering 

positions and to pay them without 

regard to title 5, United States Code, 

when the Administrator deems it 

necessary to accomplish his statutory 

responsibilities. By design, these 

positions are established in unusual 

occupational circumstances (either 

extreme difficulty of work, or extreme 

difficulty in recruitment), and do not 

represent the engineering and scientific 

work common to many occupational 

settings in NNSA. Furthermore, 

excepted service system employees in 

concept have been held to a higher 

performance threshold (as befitting a 

performance-based pay system) than 

their General Schedule counterparts, 

which NNSA believes has resulted in an 

overall improvement in excellence and 

mission accomplishment—the reason 

NNSA now seeks to expand the 

applicability of pay-for-performance. At 

the same time, these excepted service 

system employees do not possess 

traditional civil service entitlements, 

such as ‘‘career status,’’ or certain 

protections having to do with reduction 

in force and other employment 

matters—a key design difference 

between the two systems. Although it is 

true that NNSA could request that OPM 

approve pay rates exceeding those 

traditionally associated with GS grades 

under the authority of the 

demonstration project, as discussed in 

subsection C above, NNSA is not now 

prepared to undertake systematic 

occupational market studies to validate 

the need for enhanced pay rates or to 

develop NNSA-only position 

classification criteria and standards. 

(b) Excepted Service 

Comments: There were other 

comments comparing the demonstration 

project to NNSA’s existing excepted 

service system, aside from concerns 

relating to proposed pay bands and pay 

rates. A number of commenters 

expressed the view that NNSA’s current 

General Schedule employees be 

permitted the opportunity to volunteer 

for the demonstration project, just as 

General Schedule engineers and 

scientists had the opportunity to 

volunteer to enter the NNSA excepted 

service system at the time of its 

inception a few years ago. Similarly, 

others suggested that NNSA provide an 

opportunity for current excepted service 

employees to volunteer for the 

demonstration project, and in essence, 

volunteer out of the excepted service 

system. There were various reasons 

given for this latter suggestion. The 

absence of ‘‘career status’’ (and the 

resulting inability to apply for many of 

NNSA’s promotional opportunities), 

and the absence of ‘‘second-round’’ RIF 

protections, were mentioned. Also, 

some excepted service employees feel 

topped out in terms of pay potential. 

Response: Providing an opportunity 

to volunteer in or out of the 

demonstration project, or the excepted 

service system for that matter, is not 

tenable today. Because NNSA is 

experimenting with a pay-banding and 

pay-for-performance system that, were it 

to be successful, would replace entire 

segments of the General Schedule 

workforce, allowing employees to 

volunteer to participate in the 

demonstration project would be 

unwieldy to manage, impractical to 

administer, and, more compelling, not 

in the best interest of efficient 

Government. Furthermore, NNSA 

intends to continue to make full use of 

its unique excepted service employment 

authority in those circumstances and for 

those purposes that the NNSA Act 

envisions. From a practical standpoint, 

excepted service employees who have 

not previously competed for 

competitive appointment and who do 

not already have career status will have 

to apply for demonstration project 

positions through an appropriate 

appointing authority. 

(c) Pay and Pay Pools 

Comments: This was the other topical 

issue receiving many comments. The 

most frequent pay comment, by far, had 

to do with the issue of annual 

comparability pay increases, locality 

pay, and the effects of performance on 

these annual pay events. NNSA had 

proposed one pay pool from which 

general pay adjustments and 

performance-based pay increases were 

to have been funded and paid out all at 

one time, and many commenters felt the 

plan was unclear in describing the 

interrelationships among these pay 

events. Other comments concerned (1) 

the effects of budgetary constraints on 

the amounts and timing of payouts; (2) 

the apparent lack of pay-setting 

guidelines with respect to hiring new 

employees and promoting existing 

employees; (3) the apparent lack of a 

financial incentive for an NNSA 

employee to be reassigned to another 

NNSA job or location to fill a critical 

need; (4) the pay implications of 

supervisory incompetence, caprice, or 

favoritism in appraising employee 

performance; and (5) the effect of pay 

banding on premium pay for overtime 

work for the courier workforce, the 

payment of night differential for work 

performed beyond the first-40-hour tour 

of duty, and other pay matters relating 

to the unique irregular work schedules 

of the couriers. 

Response: NNSA agrees that the 

original proposal was not as clearly 

presented as it should have been, and 

furthermore, has reconsidered certain 

mechanical features of its pay 

provisions, making several changes to 

the plan accordingly. NNSA will 

establish two pay pools, one from which 

to fund annual general pay adjustments 

and the second from which to fund 

performance-based payouts. Each pay 

pool will have its own payout schedule, 

though in close proximity to the end of 

the calendar year and to each other. In 

conjunction with establishment of two 

pay pools, NNSA is increasing the 

maximum number of shares for 

performance payouts, from 3 shares to 4. 

NNSA is also changing the share 

distribution pattern (number of shares 

linked to performance level) from 3–2–

1–0 to 4–3–2–1–0. An employee with a 

Significantly Exceeds Expectation (level 

‘‘5’’ performance under NNSA’s 

performance management program) may 

receive 3 or 4 shares, an employee with 

a Fully Meets Expectations (level ‘‘3’’

performance under NNSA’s 

performance management program) 

rating and no critical element rate at the 

Needs Improvement level may receive 1 

or 2 shares, and all other employees 

receive 0 shares. As under the original 

proposal, any increased locality pay or 

staffing supplement percentages will be 

applied on top of eligible employees’

adjusted base rates outside of the pay 

pool process. 

Furthermore, NNSA will provide a 

limited flexibility to increase an 

employee’s pay upon accepting an intrapay band reassignment. These changes, 

along with NNSA’s pay-setting 

guidelines, will be described in detail in 

NNSA’s Demonstration Project Policies 

and Procedures Manual, which shall be 

published in accompaniment to this 

project plan. The pay-setting guidelines 

will ensure that the use of 

demonstration project pay flexibilities 

will be judicious and appropriate. 

NNSA’s administration of the 

demonstration project will be under 

OPM’s continuous oversight, with 

rigorous evaluations of pay-setting and 

other project provisions and 

applications. Supervisors will be 

afforded extensive training to ensure 

they have the competence to make fair 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72781 

and valid employee appraisals, and they 

will be held accountable for doing so 

during their own performance 

appraisals. As for the courier workforce, 

pay banding will have no effect 

whatsoever on their tours of duty, their 

administrative work schedules, or on 

their eligibility under current law and 

regulation to receive premium pay, 

night differentials, and other pay 

benefits and incentives. 

(d) Position Classification 

Comments: Several commenters 

wondered how upholding the use of 

OPM’s traditional position classification 

criteria and standards will lend itself to 

streamlining the ‘‘cumbersome, laborintensive, and difficult to comprehend’’

system, as the project plan calls it. They 

imply that part of the problem with the 

present system is just these criteria and 

standards, and they don’t see how 

NNSA will be able to reduce 

documentation requirements, eliminate 

use of the Factor Evaluation System 

format (which typically increases the 

length of position descriptions 

threefold), or reduce traditional 

procedural steps. Others wondered how 

NNSA’s pay-banding system would 

safeguard equal pay for equal work 

when a selecting official will be free to 

set pay for a new appointee anywhere 

in a band. Some noted that current 

employees might be penalized in 

comparison to a new hire’s potential for 

a pay increase, as pay increases for 

internal promotees are limited to 8 

percent, and this limitation may 

actually offer an employee less money 

than customarily received when moving 

from one GS grade to the next during a 

conventional promotion. Others were 

concerned about the effect on an 

employee’s existing promotion potential 

in a traditional career-ladder position 

when converting to a pay-banded 

position, when that potential falls 

outside the band of the position to 

which the employee converts. One 

person asked what impact there would 

be on the conversion to pay banding of 

a position currently graded outside the 

proposed maximum band range of a 

given career path. Others were 

concerned about the right of employees 

to appeal their placement into a career 

path and pay band. 

Response: The comments in this 

topical area, while more process 

oriented than comments in other topical 

areas, underscore the need to clarify just 

how position classification works in a 

pay-banding environment. The 

comments, especially those about career 

ladders and equal pay for equal work, 

warrant more discussion. 

In general, OPM’s position 

classification standards and guides 

remain the single most concise and 

valuable analytical tools with respect to 

defining occupations and evaluating 

assignments of white-collar work, not 

only in the Federal sector, but in 

general. They remain models for other 

levels of Government, and even private 

industry, to emulate in developing their 

own local job-evaluation schemes. 

OPM’s standards and guides do not in 

themselves contribute to the 

classification system’s breakdown and 

inefficiency. Rather, it is the towering 

emphasis today on compensation as a 

tool for attracting and retaining the best 

talent in a hypercompetitive labor 

market that has hammered the rigid 

grade-bound classification system into a 

contorted and broken program. All the 

hammering has brought resistance, 

inertia, and resignation among managers 

and classifiers alike. Pay banding, in 

bundling several grades and pay rates 

together into one band when 

appropriate, will go a long way to lift 

the deadly onus off the classification 

program. But this is only the start of the 

classification program’s streamlining. 

There will be a number of genuine and 

potentially significant opportunities 

under the demonstration project to 

simplify the administration of the 

classification program. Not delegating 

classification authority to managers, as 

most other demonstration projects and 

alternative personnel systems have 

done, is a significant simplification. Job 

analysis is no less sophisticated than are 

most other technical disciplines in the 

modern workplace. Efficient 

classification practice requires 

substantial training and years of 

seasoning. NNSA believes that it makes 

far better sense not to expend countless 

resources and endless hours trying to 

train and encourage supervisors to 

become seasoned classifiers, but rather, 

to hone their skills as leaders of the men 

and women they supervise and to retain 

classification authority and skills in the 

personnel office. Furthermore, there is 

nothing in OPM’s existing doctrines and 

requirements that will not permit the 

simplification of position description 

formats or the synopsizing of traditional 

evaluation documents. Add pay banding 

to the flexibility that already exists, and 

there is a significant opportunity to 

streamline. Pay banding can group two 

or more levels of traditional work and 

associated pay rates into one pay band 

when appropriate, thereby compressing 

expanses of work and pay rates into 

fewer classification units and easing 

attendant classification practices and 

protocols, with less documentation, 

particularly when future automation 

comes on line. 

It is true that successful streamlining 

doesn’t happen by itself and won’t 

happen overnight. NNSA has 

considerable design and development 

work to do in building an effective paybanding classification system, but not 

having to develop its own classification 

standards and guides will contract 

NNSA’s design and development 

challenges immeasurably. This system 

will be built around demonstration 

project career paths and will feature two 

unique concepts, the ‘‘core pay band 

descriptor’’ and the ‘‘core position 

description.’’ A descriptor is a generic 

benchmark description used to illustrate 

the ranges of complementary work 

levels within a pay band. The 

assignment of a specific position to a 

particular pay band will be made on the 

basis of a core pay band descriptor. Core 

pay band descriptors will be based on 

the OPM job family standard and 

functional classification guide that most 

directly corresponds to the work 

encompassed within an occupational 

series. A core position description is 

simply an abbreviated benchmark 

description of a common set of core 

duties and responsibilities typical of 

large numbers of positions within each 

career path and pay band across NNSA’s 

various organizational and functional 

settings. NNSA will publish its paybanding classification policies in its 

companion document to this project 

plan, NNSA’s Demonstration Project 

Policies and Procedures Manual, and 

will supplement these policies with 

handbook guidance as needed. This 

guidance will more fully describe 

NNSA’s streamlined pay-banding 

classification system and will better 

describe the simplified position 

description concept with samples. 

Briefings tailored to managers, 

employees, and the personnel staff, 

respectively, will also be developed to 

accompany the development of the 

system and application of NNSA’s 

classification policies. 

The compressed occupational 

construct of a pay band renders 

concerns about undermining the civil 

service system’s classification principles 

unfounded, as several gradations of 

work are possible within a given pay 

band. In essence, pay banding assumes 

that different employees in the same 

career path, job series, and pay band of 

a properly classified position can 

operate at differing levels—within 

reason—due to variations in incumbent 

maturity (seasoning), and performance. 

In this circumstance, equal pay for 

substantially equal work is not 

compromised, even though one 

mstockstill on PROD1PC66 with NOTICES

72782 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

employee may be earning higher pay 

than another employee in the same pay 

band. In a fundamental respect, this is 

really no different than the disparities in 

pay that occur between employees in 

the same properly classified GS–13 

position where one employee is earning 

a GS–13, step 2, rate and another is 

earning a GS–13, step 9, rate. 

The 8 percent limitation on a pay 

increase as a result of internal 

promotion is a standardized policy that 

will apply in most situations. Most 

other pay-banding systems set similar 

controls on pay increases. NNSA 

considered a higher percentage, and 

even considered a range of percentages, 

from lower to higher, but decided on the 

fixed 8 percent minimum increase to 

mitigate the opportunity for disparate 

employee treatment at such an 

important career event. While NNSA 

expects most internal promotion actions 

to adhere to this standard, like most 

rules, there will be the flexibility to 

allow an exception, with proper 

justification, and higher-management 

approval. This flexibility will be 

described in detail in the staffing and 

pay policies that will be published in 

accompaniment to this project plan. 

There will continue to be ‘‘career 

ladders’’ under NNSA’s pay-banding 

system, though instead of grade 

intervals, there will be band intervals. A 

‘‘laddered’’ position is simply a position 

advertised during recruitment at a 

certain level of full performance that is 

filled through selection and 

appointment at a lower pay band. NNSA 

is developing staffing policies that will 

‘‘grandfather’’ employees who at the 

time of conversion to the appropriate 

pay band have not reached their 

promotion potential. These employees 

will be eligible for an in-band pay 

increase similar to a promotion increase 

under the General Schedule system 

until they reach their full promotion 

potential. ‘‘Full promotion potential’’ is 

a traditional position classification and 

personnel staffing concept that will 

continue to have validity under NNSA’s 

demonstration project, and it means the 

highest grade, or pay band, of a careerladder position for which an incumbent 

previously competed under the 

Government’s merit system principles 

and an agency’s merit promotion plan. 

Once an NNSA employee who 

converted to pay banding under this 

demonstration project receives an inband pay increase or a promotion that 

takes him or her to a pay level 

equivalent to the highest GS grade in the 

formerly applicable career ladder, the 

employee will be considered to have 

reached the full performance level, and 

the grandfather provision will cease to 

apply. Future in-band pay increases for 

such an employee would then be based 

solely on performance, consistent with 

all other demonstration project 

employees. Of course, just as a GS 

employee is not guaranteed a careerladder promotion without the 

supervisor’s certification, the 

promotions and special grandfathered 

in-band increases for demonstration 

project employees will not be 

guaranteed, and they will be issued new 

performance plans with each pay 

increase. Only current NNSA employees 

who convert at the inception of pay 

banding will be afforded the benefit of 

having their career ladders 

grandfathered. The specific terms and 

conditions of this benefit will be 

published in the policies and 

procedures manual that will implement 

this project plan. 

As NNSA prepares to implement the 

demonstration project, NNSA is 

reviewing current position classification 

outcomes, and potential discrepancies 

and inconsistencies, with the intent to 

correct any that are found prior to 

implementation to assure a smooth 

conversion process. 

Under the demonstration project, 

employees retain their traditional 

position classification appeal rights. A 

classification appeal is a formal request 

by an employee in writing for a review 

of the official job series, pay band, or 

pay system, of the employee’s current 

position to correct what the employee 

believes is an erroneous classification. 

Any employee in a position covered by 

chapter 51 of 5 U.S.C., and by NNSA’s 

Demonstration Project, can file a 

classification appeal. 

(e) Staffing 

Comments: Most of the 17 staffing 

comments crossed over into other 

topical areas already treated, such as the 

structure of relative pay bands across 

career paths, and the impact of 

employee conversion to pay banding on 

pre-existing promotion potential as a 

result of having successfully competed 

for a career-ladder position. Other 

comments concerned such issues as 

pay-setting and band and grade 

assignment upon converting to a paybanding position from a GS position, 

and vice versa, upon converting back to 

GS from pay banding. Many 

commenters pointed out that the 

language in the February 28 Federal 

Register notice pertaining to such 

practical staffing and pay matters was 

vague. One person expressed concern at 

the quality of applicants under pay 

banding, should candidates only need to 

meet the minimum qualification 

requirements associated with the lowest 

grade level in a multi-graded band, and 

believed that the candidate screening 

process would suffer as a result. 

Response: It is understandable that 

many commenters found NNSA’s 

proposed project plan vague and 

unclear in parts. NNSA’s demonstration 

project plan, in both its proposed and 

final incarnations, is designed to mainly 

answer the ‘‘what’’ of a matter, not the 

‘‘how.’’ This is why there have been 

many references in these responses, as 

well as throughout the text of the project 

plan, to a policies and procedures 

manual. But this response is not to 

dodge the issues. Most of the comments 

received during the public comment 

period have been invaluable in guiding 

NNSA’s development of its companion 

policies and procedures. By design, a 

demonstration project is an experiment. 

Frankly, there is more than one way to 

execute and effect almost any feature of 

this experiment, and though modeling 

previous successful experiments and 

viable alternative personnel systems can 

be extremely useful, there are still 

mechanical subtleties and finer points 

of interpretation in matters of pay 

banding, staffing, and pay that NNSA 

must come to terms with. Having said 

this, it can be said after the past 6 

months of rigorous development and 

refinement, that NNSA has gained 

competence and sureness about how to 

effectively execute the innumerable 

features and applications of this project. 

With respect to questions about 

conversion, NNSA GS employees will 

be converted to the career path and pay 

band that is equivalent to their current 

job series and grade, irrespective of preexisting promotion potential, as 

discussed in the preceding subsection. 

In no case will an employee lose pay 

upon conversion; in fact, at conversion, 

most employees will receive an increase 

in pay reflecting the prorated value of 

their next scheduled within-grade 

increase (WIGI) based on the amount of 

time they have served in their respective 

waiting period. 

The project plan gives NNSA 

authority to establish the rules 

governing pay-setting for employees 

who convert out of the demonstration 

project and move to a GS position. 

Those technical conversion-out rules 

will be provided in NNSA’s manual of 

implementing policies and procedures 

and will be forwarded to other Federal 

agencies should an NNSA pay-banded 

employee move to a GS position in 

another agency. In general, 

demonstration project employees 

moving to a GS position will be 

converted to a GS-equivalent grade and 

rate before they leave the demonstration 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72783 

project and thus will be treated as GS 

employees under GS pay-setting rules. 

NNSA is also developing staffing 

guidelines to aid managers, selecting 

officials, and personnel office staff on 

processes to use in evaluating candidate 

qualifications, and to identify the more 

qualified candidates from among 

applicants. We expect that this will take 

time as we train staff, develop operating 

procedures, and evaluate their 

effectiveness. This will be true of most 

other operational features and 

applications of the project. It will be 

some time following project 

implementation and employee 

conversion before NNSA is proficient in 

most demonstration project matters, 

though NNSA is taking great pains and 

care to ensure that start-up and 

transition are implemented as smoothly 

as possible. 

(f) Performance Management 

Comments: Most of the several 

comments received on performance 

management concerned the adaptability 

of NNSA’s existing performance 

management program to the 

demonstration project. There were 

concerns expressed about the timing of 

implementation—too soon—about the 

readiness of NNSA’s supervisors to 

fulfill their responsibilities to appraise 

their subordinates fairly—not ready—

about the subjectivity of NNSA’s fourlevel rating scheme—can’t make 

distinctions—and so on. A labor union 

suggested ways to improve NNSA’s 

appraisal program. 

Response: The project is scheduled to 

be implemented on March 16, 2008. 

Once implementation occurs, there will 

be complete instructions on what to 

expect, and how to proceed, midway 

through the rating year as it will be. As 

NNSA prepares to implement the 

demonstration project, agency 

management holds many of the same 

reservations as did commenters. When 

NNSA was established seven years ago 

as a separately organized agency within 

DOE, NNSA inherited a variety of then 

existing performance management 

programs, between headquarters and a 

multitude of field offices. Four appraisal 

cycles ago, NNSA consolidated and 

standardized all GS and equivalent 

appraisal programs into one. At the 

onset of each new rating year since then, 

NNSA has made changes in its program 

based on the lessons learned from the 

previous rating cycle. As NNSA’s 

program has evolved from year to year, 

it has been necessary to conduct focus 

groups and supervisory training. This 

upcoming year, during the transition to 

the demonstration project, will be no 

exception. And NNSA thinks this is a 

good thing. It is doubtful there would 

ever be an ideal time to embark on such 

a project. NNSA believes waiting for 

such a time will be a precious 

opportunity lost. By design, the 

demonstration project is an experiment. 

Many things are supposed and 

anticipated, but few things are known 

for sure in advance. They need to be 

tried and tested. This NNSA intends to 

do, realizing that it is likely that there 

will continue to be a need for 

improvements in design and execution 

for the next several years to come, not 

only concerning the existing 

performance management program, but 

to the demonstration project as a whole. 

(g) Reduction in Force 

Comments: There were several 

questions concerning the mechanics of 

reduction in force (RIF) under the 

demonstration project, and the impact 

on employee RIF entitlements. One 

person asked whether demonstration 

project employees and excepted service 

employees would compete together in a 

RIF. Another asked whether employee 

protections would be lessened under the 

demonstration project. A third person 

asked specifically whether there would 

be ‘‘bumping’’ rights. 

Responses: Not only will there be 

bumping rights for demonstration 

project employees, but all other 

traditional employee protections are 

retained under the demonstration 

project. There is only one substantive 

change from traditional rules, having to 

do with a further subdivision of an 

NNSA competitive area by career path. 

Currently in NNSA, the decision to 

undertake RIF is made by the 

Administrator, respective Site Office 

Managers, the Service Center Director, 

and the heads of the Naval Reactors 

Offices in Pittsburgh, PA, and 

Schenectady, NY. Consequently, each of 

these management officials is 

considered to be the head of a 

competitive area for RIF purposes. (The 

Administrator has actually delegated the 

authority to take and direct personnel 

actions to these officials, while retaining 

this authority for all headquarters 

components, except Naval Reactors, 

which has a unique dual reporting 

arrangement with the Secretaries of 

Energy and Navy.) What this means 

from a practical management standpoint 

is that Site Offices, the Service Center, 

and the Pittsburgh and Schenectady 

Naval Reactors Offices are considered to 

be under separate administration for RIF 

purposes, while the Administrator 

remains the head of the headquarters 

competitive area. The existing 

competitive area standard in NNSA 

under current Federal regulation, and 

DOE policy, is ‘‘a subdivision of the 

agency under separate administration 

within the local commuting area 

[5CFR351.402].’’ The concept of ‘‘local 

commuting area’’ further defines the 

competitive area standard. Regulations 

permit agencies to subdivide 

competitive areas according to 

commuting area, the geographic 

proximity within which normal patterns 

of applicant recruitment and worker 

commutation can be expected to occur, 

even when the management official 

with the authority to take and direct 

personnel actions is located elsewhere. 

This is what NNSA does currently, and 

this part won’t change under the 

demonstration project. Therefore, 

employees in one NNSA competitive 

area would not now compete with 

employees in another competitive area, 

nor would employees in different 

commuting areas within the same 

competitive area compete with each 

other. Under the demonstration project, 

NNSA will institute one additional 

competitive area subdivision, by career 

path, so that the employees in one 

career path would not compete with 

employees in another career path in a 

given RIF. NNSA’s non-demonstration 

project employees, such as bargaining 

unit employees at headquarters, or all 

excepted service employees, are not 

affected by this competitive area change. 

They continue to be subject to 

traditional RIF rules, and applicable 

collective bargaining agreements, and 

would not compete with demonstration 

project employees in a given RIF. 

(h) Employee Relations 

Comments: The several comments in 

this topical area concerned whether 

employees have the right of appeal, or 

to grieve, their performance ratings, and 

whether employees whose ratings are 

less than Fully Meets Expectations will 

have an opportunity to improve. 

Response: The demonstration project 

has no direct bearing on NNSA’s 

performance management program, 

though the program continues to be 

refined based on lessons learned from 

previous rating cycles. Under NNSA’s 

performance management policies, 

employees whose ratings are less than 

Fully Meets Expectations are provided 

structured opportunities to improve 

their performance. An employee who is 

dissatisfied with an official rating can 

request a reconsideration, under 

NNSA’s policies and procedures. 

(i) Employee Equity 

Comments: Commenters generally felt 

that the demonstration project will 

actually produce contrary results. 

Instead of encouraging workers to 

mstockstill on PROD1PC66 with NOTICES

72784 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

higher levels of excellence, it will 

actually discourage workers who benefit 

now from the employment stability that 

the traditional civil service system 

provides. They suggested that the net 

effect of basing pay increases on 

performance will allow for faster pay 

progression in the short-term, with the 

ultimate effect of increasing salary costs 

to such a degree that there won’t be 

sufficient funds to properly reward 

employees in the future. Two persons 

agreed with basing pay increases on 

performance, but had concerns about 

the equity of the process, and disagreed 

that performance pay increases should 

be combined with the annual 

comparability pay adjustment. 

Response: NNSA shares some of these 

same concerns, and views these 

concerns as challenges. Perhaps the 

biggest challenge the agency faces is 

earning and keeping the trust of its 

employees during this time of profound 

change, while ensuring that the 

demonstration project is not perceived 

as a disincentive. Perhaps the next 

biggest challenge is ensuring that 

supervisors are properly trained in their 

key responsibilities under the 

demonstration project, and that they are 

held accountable when they don’t 

uphold these responsibilities. And two 

other significant challenges are ensuring 

that there are adequate cost controls in 

place, and that ample funds are 

appropriated to support meaningful 

levels of performance-based pay 

increases. NNSA does not minimize the 

significance of these challenges, but 

does not shrink from them either. 

As already discussed, NNSA is 

establishing two pay pools, and will 

administer annual pay adjustments and 

performance-based pay increases 

separately. 

(j) Management Accountability 

Comments: A uniform thread runs 

through the many comments submitted 

on management accountability. 

Commenters expressed disbelief that 

managers will be held accountable for 

not rendering objective and fair 

performance ratings, and some said they 

have yet to see measures put in place, 

or actions taken, to assure 

accountability. One person wanted to 

know how OPM will oversee 

accountability and conduct ongoing 

evaluations. 

Response: Chapter 47 of title 5 

requires an evaluation of the results of 

each demonstration project and its 

impact on improving public 

management. This project plan has been 

revised to include additional details 

about the project evaluation. In 

addition, NNSA will be held to scrutiny 

under DOE’s human capital 

management accountability regimen. 

Aside from these layers of oversight, 

NNSA is dedicated to changing the 

management culture. One of the 

Administrator’s highest goals is to make 

NNSA an Employer of Choice. NNSA 

will encourage openness between 

managers and employees, will provide 

extensive training to supervisors, will 

institute a regimen of employee 

communications, and will hold 

supervisors accountable through the 

performance management process. 

Supervisors, like everyone else in 

NNSA, will be held to higher standards. 

(k) Other 

Comments: The comments in this 

category did not fall neatly under any 

other topic, and mainly reflected 

employee anxiety, or asked extremely 

process-oriented questions that will be 

responded to via other media. A general 

concern in various comments was the 

desire for more specificity. In some 

cases, NNSA has made changes that 

provide more specific information. (See 

section 4, ‘‘Changes to Demonstration 

Project Plan.’’) 

Two specific comments warrant 

NNSA’s response: a letter from a labor 

organization, and a thoughtful comment 

about the merit system principles. 

Response: The labor organization 

offered an extensive critique of recent 

pay-for-performance initiatives in 

Government, and then offered 

suggestions concerning NNSA’s 

proposal. NNSA shares the union’s deep 

concern for the welfare of affected 

employees, and for advancing the 

public’s interest in protecting nuclear 

security. NNSA will consider all 

suggestions for improving the 

demonstration project, and for making it 

a success. Should NNSA decide to 

apply the demonstration project to its 

bargaining unit employees in the future, 

it will honor its collective bargaining 

obligations. 

One person expressed concern that 

NNSA and OPM were not giving due 

adherence to the statutory merit system 

principles [5 U.S.C. 2301]. We disagree. 

As explained earlier, NNSA is relying 

on OPM’s position classification criteria 

and standards and is adhering to the 

classification principle in 5 U.S.C. 

5101(1) of ‘‘equal pay for substantially 

equal work,’’ which is akin to the merit 

principle in 5 U.S.C. 2301(b)(3) of 

‘‘equal pay should be provided for work 

of equal value.’’ NNSA has a profound 

regard for the merit system principles 

and has taken great pains in the design 

of this project to safeguard these 

principles. We note that the merit 

principle in 5 U.S.C. 2301(b)(3) also 

states that ‘‘appropriate incentives and 

recognition should be provided for 

excellence in performance.’’ Thus, the 

performance-based pay features of this 

demonstration project support this merit 

principle. 

4. Changes to Demonstration Project 

Plan 

What follows is a list enumerating the 

substantive changes to NNSA’s 

demonstration project, and major 

textual changes to the plan. The page 

numbers referenced are those found in 

the February 28, 2007, Federal Register 

Notice. Some of the changes have been 

described in the preceding responses to 

specific comments. Other changes 

provide additional detail, provide 

clarification, or correct technical 

problems. 

(1) Page 9038: The Table of Content 

is revised to reflect the addition of three 

new sections, III.A. 3., ‘‘Position 

Classification Appeals,’’ III.D., 

‘‘Supervisory Bonuses’’, and VII., 

‘‘Project Modification.’’

(2) Page 9039: The ‘‘executive 

summary’’ is rewritten to reflect NNSA’s 

final project goals. 

(3) Page 9040: NNSA has decided to 

create separate pay pools for 

comparability adjustments and 

performance payouts. 

(4) Page 9041: August 2006 data is 

superseded with August 2007 data in 

the table, ‘‘Covered Employees by 

Occupational Series and Grade.’’

(5) Page 9042: The design principles 

are rewritten to eliminate ill-defined 

and inadequately developed principles. 

(6) Page 9043: Career path and pay 

band structures are revised, consistent 

with the NNSA’s response herein under 

the ‘‘pay band structures’’ subsection. 

(7) Page 9043: A new section III.A.3., 

‘‘Position Classification Appeals,’’ is 

added. 

(8) Page 9044: The pay increase 

preclusion for maximum rate employees 

who receive less than an SEE 

performance rating is modified to 

permit a 50 percent increase. 

(9) Page 9044: A locality rate cap 5 

percent higher than the statutory pay 

cap is provided for top-rated performers 

in the upper range extension. 

(10) Page 9044: The section ‘‘rate of 

basic pay upon promotion’’ is clarified. 

(11) Page 9044: The date of 

performance-based pay adjustment is 

changed to ‘‘the first day of the last full 

pay period in each calendar year.’’

(12) Page 9044: The pay retention 

provisions in the section ‘‘other pay 

administration provisions’’ are modified 

to provide 100 percent of the annual 

comparability pay adjustment for up to 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72785 

2 years for employees who are reduced 

in band through no fault of their own. 

(13) Page 9045: NNSA clarifies that it 

may request that OPM establish a new 

staffing supplement for a category of 

NNSA employees. 

(14) Page 9045: The performancerating reconsideration process is to be 

referenced, rather than stipulated, in the 

plan. 

(15) Page 9046: There are to be two 

pay pools. 

(16) Page 9046: The share distribution 

pattern (linked to levels of performance) 

is revised to take into account the effect 

of the establishment of separate pay 

pools for comparability adjustments and 

performance payouts and to provide 

additional flexibility. 

(17) Page 9046: The section ‘‘pay 

adjustments’’ is modified to reflect the 

impact of establishing two pay pools, 

with staggered payouts. 

(18) Page 9047: The section 

‘‘employees who do not receive a pay 

adjustment’’ is modified to eliminate 

general references to employee 

notification and redress procedures, 

which will be handled through NNSA’s 

own performance-rating reconsideration 

process. 

(19) Page 9047: The mechanism for 

withholding a pay increase from an 

employee who receives a less than fully 

Meets Expectations rating is modified; 

in the unlikely event that an employee 

whose basic pay is frozen as a result of 

a less than Fully Meets Expectations 

rating moves to another demonstration 

project position with a different locality 

pay schedule or staffing supplement, the 

employee’s frozen base and locality pay 

or staffing supplement would be 

adjusted in accordance with NNSA’s 

Demonstration Project Policies and 

Procedures Manual. 

(20) Page 9047: A new section III.D., 

‘‘Supervisory Bonuses,’’ is added. 

(21) Page 9048: A new section VII, 

‘‘Project Modification,’’ is added. 

(22) Page 9049: Several changes are 

made and citations are added in the 

‘‘waiver of laws and regulations 

required’’ segments. 

Linda M. Springer, 

Director. 

Table of Contents 

I. Executive Summary 

II. Introduction 

A. Purposes and Approach 

B. Problems with the Present System 

C. Changes Required/Expected Benefits 

D. Participating Organizations 

E. Participating Employees 

F. Project Design 

III. Personnel System Changes 

A. Pay Banding Classification and Pay 

System 

1. Establishment of Career Paths and Pay 

Bands 

2. Position Classification 

3. Position Classification Appeals 

4. Minimum Qualifications Requirements 

5. Elimination of Fixed Steps 

6. Rate Range 

7. Rate of Basic Pay Upon Initial 

Appointment 

8. Rate of Basic Pay upon Promotion 

9. Rate of Basic Pay in Noncompetitive 

Lateral Actions 

10. Other Pay Administration Provisions 

11. Staffing Supplements 

B. Performance Appraisal 

1. Program Requirements 

2. Supervisory Accountability 

3. Reconsideration of Ratings 

C. Performance-based Pay Increases 

1. Pay Pools 

2. Performance Shares 

3. Performance Pay Increases 

4. Employees Who Cannot Receive a 

Performance Pay Increase 

D. Supervisory Bonuses 

E. Reduction-in-Force 

IV. Training 

V. Conversion 

A. Conversion to the Demonstration Project 

B. Conversion to the General Schedule 

System 

VI. Project Duration 

VII. Project Modification 

VIII. Project Evaluation 

IX. Costs 

X. Waiver of Laws and Regulations Required 

A. Title 5, United States Code 

B. Title 5, Code of Federal Regulations 

I. Executive Summary 

This project was designed by NNSA 

in consultation with OPM. The goals of 

this demonstration project are to—

(1) Improve hiring by allowing NNSA 

to compete more effectively for high 

quality employees through the judicious 

use of higher entry salaries; 

(2) Motivate and retain staff by 

providing faster pay progression for 

high-performing employees; 

(3) Improve the usefulness and 

responsiveness of the position 

classification system to managers; 

(4) Increase the efficiency of 

administering the position classification 

system through a simplified pay-banded 

application of the current General 

Schedule grade structure, and reduce 

the procedural steps and documentation 

requirements traditionally associated 

with classifying positions; 

(5) Eliminate automatic pay increases 

(i.e., annual adjustments that normally 

take effect the first day of the first pay 

period beginning on or after January 1) 

by making pay increases performancesensitive, so that only Fully Successful 

(known as ‘‘Fully Meets Expectations’’

in NNSA) and higher performers will 

receive pay adjustments, and the best 

performers will receive the largest pay 

adjustments; 

(6) Integrate with, build upon, and 

advance the work of several key human 

capital management improvement 

initiatives and projects currently 

underway in NNSA, including—

a. Advancing the ongoing refinement 

of NNSA’s four-year old enterprise-wide 

performance management program, 

which currently features a pilot for 

automating yearly performance ratings, 

to the next logical level, encompassing 

performance-based pay adjustments, 

b. Achieving greater parity, though 

not complete harmony, with NNSA’s 

mature excepted service pay-banded 

and pay-for-performance system (e.g., 

will have lower pay band maximum 

rates; no automatic pay increases, etc.), 

c. Building on the simplified position 

description (PD) format and automated 

PD library that are already in place, 

d. Continuing to develop improved 

performance management skills among 

first-line supervisors through increased 

program rigor, additional training, and 

better guidance materials, to better 

develop standards that reflect 

differences in performance, 

e. Establishing a system of careerenhancing career paths for the purpose 

of developing, advancing, and retaining 

employees, 

f. Building on the new workforce 

analysis and planning system, already 

in place to identify FTE needs and 

competency needs and skills gaps, to 

conduct a valid occupational analysis to 

construct meaningful pay bands. 

The demonstration project will 

modify the General Schedule (GS) 

classification and pay system by 

identifying several broad career paths, 

establishing pay bands which may cover 

more than one grade in each career path, 

eliminating longevity-based step 

progression, and providing for annual 

pay adjustments based on performance. 

The proposed project will test (1) the 

effectiveness of multi-grade pay bands 

in recruiting, advancing, and retaining 

employees, and in reducing the 

processing time and paperwork 

traditionally associated with classifying 

positions at multiple grade levels, and 

(2) the application of meaningful 

distinctions in levels of performance to 

the allocation of annual pay increases. 

II. Introduction 

A. Purposes and Approach 

The purposes of the proposed project 

are to—

(1) Modify the GS classification 

system by establishing pay bands which 

may cover more than one grade; and 

(2) Modify the GS pay system to 

provide larger annual pay increases to 

employees who are better performers 

mstockstill on PROD1PC66 with NOTICES

72786 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

based on performance distinctions made 

under a credible, strategically-aligned 

performance appraisal system/program 

and thereby improve the resultsoriented performance culture within the 

organization. 

NNSA’s approach to achieving these 

purposes is to integrate with and build 

upon the several ongoing human capital 

management initiatives and projects that 

are already underway, and to design a 

GS pay banding and performance-based 

pay adjustment system that—

(1) Complements and increases parity 

with the statutory NNSA excepted 

service employment system already in 

place, and 

(2) Profits from the successes, 

mistakes, and lessons of other agency 

demonstration projects, past and 

current. 

B. Problems With the Present System 

Position Classification Rigidity, 

Incomprehensibility, and Procedural 

Excesses 

Although the GS classification system 

is not a compensation system per se, the 

classification and pay systems are 

inextricably intertwined. In practice, the 

GS classification system is the primary 

determinant of an employee’s basic pay. 

Furthermore, NNSA believes in the 

principles underlying the GS 

classification system (i.e., equal pay for 

substantially equal work, and variations 

in pay based on the work actually 

performed, rather than on who performs 

the work) and believes that these 

principles are as valid and applicable to 

the Federal civil service system today as 

when originally enacted into law in 

1923, and when the General Schedule 

was established in 1949. As Ismar 

Baruch wrote in a classic 

groundbreaking 1941 report, Position 

Classification in the Public Service: 

* * * the very nature of governmental 

jurisdictions places them in a position of 

peculiar responsibility to the public at large. 

Individual actions without plan or system 

and based merely upon the expediency of the 

moment are undesirable. Public personnel 

policies and transactions affecting positions 

and employees should be supportable by 

facts and logic in the light of broad 

considerations applicable to the service as a 

whole. Further, in the management of public 

personnel affairs, considerations of fairness 

and equity require uniform action under like 

circumstances, particularly in the 

establishment of pay rates. 

This in essence is what the Federal 

position classification system was 

designed to achieve, and has achieved 

in principle, if not practice, ever since 

these words were first written. Thus, 

rather than ‘‘scrapping’’ the current GS 

classification system and starting over, 

NNSA believes that modifying the 

system to accommodate the work and 

workforce of the 21st century is a more 

prudent and workable approach. 

Pay banding does this. The current GS 

classification system is cumbersome, 

labor intensive, and difficult to 

comprehend. As OPM’s April 2002 

white paper, A Fresh Start for Federal 

Pay: The Case for Modernization, points 

out, the GS classification system was 

designed during the World War II years 

when civil servants were predominantly 

‘‘process-obsessed’’ file clerks. Public 

servants in the middle of the 20th 

century performed work that tended to 

be mechanical and repetitive in nature, 

consisting of job tasks readily 

observable and measurable. Today, 

work tends to be knowledge-based and 

highly specialized, and does not lend 

itself to easy categorization based on 

readily observable characteristics. 

Nonetheless, as an employee progresses 

from the entry level to the fullperformance level in a given occupation 

today, under the traditional 

classification system, a separate position 

description is still required for each 

grade. For example, an entry level GS–

5 Engineer with promotion potential to 

GS–12 requires five different position 

descriptions (or statements of 

differences) covering grade intervals 

GS–5, GS–7, GS–9, GS–11, and GS–12. 

Additionally, each position description 

should be accompanied by a position 

evaluation report certifying that the 

duties and responsibilities of the 

position meet the requirements for 

classification into the series and grade. 

Often, the difference between a highergraded and lower-graded position in the 

same career progression may be the 

level of supervision an employee 

receives, or the increasing gradations in 

the scope and effect of an employee’s 

work on agency missions and programs, 

or some other interpretative degree of 

occupational difficulty and 

responsibility. As a result, managers 

who assign work and who are 

responsible for describing such 

assignments of work, and the position 

classifiers who evaluate assignments of 

work against OPM’s and applicable 

agency classification criteria, often view 

the practice attendant to the current GS 

classification system as an exercise in 

semantics, and PD writing, for the 

purpose of ‘‘beating the system’’ to 

award the highest grade possible to a 

position, instead of as a management 

tool by which to make meaningful and 

significant distinctions between levels 

of work. 

The current GS classification system 

also directly impacts the effectiveness of 

agency recruitment activities. Recruiting 

for a vacancy which may be filled at any 

level from the entry level to the fullperformance level requires a separate 

position description for each grade, 

separate qualifications requirements for 

each grade, separate applicant 

assessment and rating tools (often 

referred to as ‘‘crediting plans’’) for each 

grade, and separate lists of bestqualified candidates (often referred to as 

‘‘certificates’’) for each grade. For 

example, recruiting for a single GS–5/12 

Engineer vacancy requires five different 

position descriptions (GS–5, GS–7, GS–

9, GS–11, and GS–12) and five different 

‘‘crediting plans,’’ and will result in the 

agency issuing multiple ‘‘certificates.’’

Thus, Federal managers and applicants 

for Federal employment often view the 

system as cumbersome, time 

consuming, and unresponsive. 

Modifying the current system to 

supplant sequential grade progression 

with valid, rational, and credible pay 

bands will (1) provide much needed 

management relief from the seeming 

arbitrariness, rigidity, and document 

heaviness of the current classification 

system, (2) provide managers with much 

needed flexibility, and (3) offer 

applicants and employees greater 

opportunities for advancement and 

inducements to retention, while 

retaining the public policy principles 

and management values underlying the 

current civil service system. 

A Need for Performance-Based Pay 

Increases 

Additionally, the current GS pay 

system provides annual pay increases to 

all employees, even those whose 

performance is less than Fully 

Successful. Similarly, periodic withingrade pay increases are virtually 

automatic. Although an employee’s 

performance must be determined to be 

at an ‘‘acceptable level of competence’’

in order for the employee to receive a 

within-grade increase (WGI), this is only 

a single-level threshold and no further 

distinctions in levels of performance 

play a role. All performance levels 

above the threshold are treated the same 

for purposes of determining the amount 

of the increase and the rate at which an 

employee advances through the rate 

range of his or her grade. NNSA and 

OPM do not believe it is a wise use of 

the limited resources available for the 

compensation of Federal employees—

nor does it serve taxpayers effectively or 

treat employees fairly—to pass on the 

same pay adjustments, year after year, to 

all employees regardless of differences 

in their performance. 

The current GS pay system does 

provide one limited tool to address 

distinctions in levels of performance—

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72787 

namely, quality step increases (QSIs). 

QSIs are discretionary adjustments that 

are not integrated into the normal pay 

adjustment process; thus, limited funds 

are available to provide QSIs, and the 

decision-making process may not be 

very transparent. In addition, there is no 

flexibility as to the amount of the QSI; 

a full step increase is required. Also, 

QSIs may be used only for those with 

the highest rating of record. In 

summary, QSIs alone cannot be relied 

upon to establish an effective link 

between pay and performance based on 

meaningful distinctions among different 

levels of performance. 

Under these constraints of the GS pay 

system, agencies are severely limited in 

their ability to establish a resultsoriented performance culture as 

contemplated under the Human Capital 

Assessment and Accountability 

Framework (HCAAF). Within the 

HCAAF, a results-oriented performance 

culture effectively plans, monitors, 

develops, rates, and rewards employee 

performance, consistent with the merit 

system principle that ‘‘appropriate 

incentives and recognition should be 

provided for excellence in performance’’

(5 U.S.C. 2301(b)(3)). 

C. Changes Required/Expected Benefits 

The proposed demonstration project 

will respond to the GS classification 

system problems identified above by 

compressing the 15 GS grades into pay 

bands that may cover multiple grades. 

Although this ‘‘compression’’ is neither 

designed nor intended to eliminate the 

fundamental statutory grading 

distinctions embedded in the traditional 

position classification system, it will 

considerably reduce the excessive 

rigidity inherent in the current system, 

making it substantially less 

cumbersome, less labor intensive, less 

time consuming, and easier to 

comprehend and apply. 

Importantly, banding the GS grade 

structure shifts the emphasis for 

employee pay advancement from 

position classification factors and merit 

promotion criteria to performance 

factors, one of the chief goals of this 

demonstration project. Because a pay 

banding system uses broader work 

levels, the system can be viewed as 

having more of a rank-in-person 

emphasis; that is, it permits a more 

direct relationship between an 

incumbent’s actual (or anticipated) 

individual level of job performance and 

a given position’s particular level of 

pay. 

By permitting the advancement of 

employees within given bands without 

the necessity of advertising promotional 

opportunities, and without the need for 

handling employee applications in 

accordance with publicized merit 

promotion procedures, the attainment of 

some of the project’s process 

simplification and streamlining 

objectives is also furthered. 

The proposed demonstration project 

will respond to the pay problem 

identified above by eliminating fixed 

steps within each of the pay bands and 

by making annual GS pay adjustments 

performance-sensitive. Pay adjustments 

will be funded from two pay pools: One 

consisting of the amount that would 

otherwise be used to pay the annual GS 

pay adjustment, and the second 

consisting of the amounts that would 

otherwise be used to pay WGIs and QSIs 

to employees covered by the 

demonstration project. The second pay 

pool also may include funds saved 

through the elimination of promotion 

increases for promotions between grades 

that are consolidated into the same 

band. A share mechanism will be used 

to allocate pay increases among 

employees with different levels of 

performance, and managers will be 

expected to control costs (and will be 

held accountable for doing so in their 

own performance plans). 

Implementation of the proposed pay 

system will result in larger pay 

increases going to employees who 

demonstrate higher performance. By 

regularly rewarding better performance 

with better pay, participating 

organizations will strengthen their 

results-oriented performance cultures. 

Among other things, they will be better 

able to retain their good performers and 

recruit new ones. 

D. Participating Organizations 

It is expected that every major 

headquarters and field organization in 

NNSA will participate. This includes 

HQ, program, and support components, 

including NNSA’s cadre of nuclear 

materials couriers, who are deployed at 

various locations in the United States, 

eight geographically dispersed Site 

Offices and two special purpose Naval 

Reactors Offices (in Pittsburgh, PA, and 

Schenectady, NY), and the Service 

Center in Albuquerque, NM. Each of 

these units is committed to operating a 

credible, robust performance appraisal 

program aligned to the organization’s 

strategic goals and objectives, by 

providing the necessary training and 

resources. These organizations have 

demonstrated this commitment the past 

three years, as NNSA implemented a 

comprehensive performance 

management program enterprise-wide. 

E. Participating Employees 

The demonstration project will cover 

all GS non-bargaining unit employees in 

the participating organizations 

identified in the preceding paragraph. 

(The only bargaining unit in NNSA is at 

headquarters, and currently includes 16 

positions.) Included in the coverage are 

Schedule A and B Excepted Service 

employees. Not included are Schedule C 

Excepted Service employees and 

Excepted Service employees authorized 

under the NNSA Act, National Defense 

Authorization Acts, and the DOE 

Organization Act. Table 1 shows the 

number of employees available through 

September 2007 who are subject to 

coverage under this project by 

occupational series and grade. 

mstockstill on PROD1PC66 with NOTICES

72788 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

TABLE 1.

—

COVERED

EMPLOYEES BY

OCCUPATIONAL

SERIES AND

GRADE

OCC Series 

GS Grade 

GS total 

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 

00018 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 7 3 ............ 11 00028 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 1 3 ............ 2 7 00080 ............................... ............ ............ ............ ............ ............ ............ 1 ............ 6 ............ 3 36 30 40 12 128 00084 ............................... ............ ............ ............ ............ ............ ............ ............ 30 54 80 66 52 22 ............ ............ 304 00086 ............................... ............ ............ ............ ............ ............ 2 2 ............ ............ ............ ............ ............ ............ ............ ............ 4 00099 ............................... ............ ............ ............ 1 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 00130 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 4 14 40 43 104 00132 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 5 2 ............ 10 00201 ............................... ............ ............ ............ ............ ............ ............ 1 ............ 2 ............ 2 7 19 9 7 47 00203 ............................... ............ ............ ............ ............ ............ 1 6 1 ............ ............ ............ ............ ............ ............ ............ 8 00260 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 3 1 ............ 5 00299 ............................... ............ ............ ............ ............ 1 ............ 2 ............ ............ ............ ............ ............ ............ ............ ............ 3 00301 ............................... ............ ............ ............ ............ ............ ............ 3 ............ 24 ............ 39 41 49 29 26 211 00303 ............................... 4 5 4 10 3 14 22 6 ............ ............ ............ ............ ............ ............ ............ 68 00318 ............................... ............ ............ ............ ............ 2 10 10 5 2 ............ ............ ............ ............ ............ ............ 29 00326 ............................... ............ ............ 2 5 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 7 00335 ............................... ............ ............ ............ ............ ............ 1 ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 00340 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 20 21 00341 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 1 2 00342 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 2 ............ ............ ............ 2 00343 ............................... ............ ............ ............ ............ ............ ............ ............ ............ 5 ............ 6 21 36 49 30 147 00344 ............................... ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ ............ ............ ............ ............ ............ 1 00346 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 2 3 3 ............ 8 00361 ............................... ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ ............ ............ ............ ............ ............ 1 00391 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 1 00399 ............................... ............ ............ 1 2 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 00401 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 00501 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 4 3 3 1 12 00505 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 3 00510 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 10 15 22 3 51 00511 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 4 ............ 1 ............ 6 00525 ............................... ............ ............ ............ ............ ............ 1 ............ 1 ............ ............ ............ ............ ............ ............ ............ 2 00560 ............................... ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 9 15 18 7 51 00561 ............................... ............ ............ ............ ............ ............ ............ 1 ............ ............ ............ ............ ............ ............ ............ ............ 1 00599 ............................... ............ ............ ............ ............ 2 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 2 00610 ............................... ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 ............ ............ ............ ............ 2 00671 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 1 00690 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 2 2 ............ 4 00801 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 6 26 91 82 205 00802 ............................... ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 ............ 1 ............ ............ 3 00803 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 2 ............ 2 00804 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 2 ............ 3 00810 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 2 ............ ............ 3 00819 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 1 ............ 4 00830 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ ............ ............ 1 00840 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 2 3 10 14 35 64 00850 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 1 00854 ............................... ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 2 4 1 2 10 00905 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 3 8 14 26 00950 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 ............ ............ ............ ............ 3 00986 ............................... ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ ............ ............ ............ ............ ............ 1 00999 ............................... ............ ............ ............ ............ ............ ............ 2 ............ ............ ............ ............ ............ ............ ............ ............ 2 01035 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 5 1 7 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72789 

01082 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ ............ 1 01099 ............................... ............ ............ 1 ............ 1 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 2 01101 ............................... ............ ............ ............ ............ ............ ............ 1 ............ 2 ............ 1 1 5 5 3 18 01102 ............................... ............ ............ ............ ............ ............ ............ ............ ............ 6 ............ ............ 13 29 36 15 99 01103 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 4 1 2 ............ 10 01106 ............................... ............ ............ ............ ............ ............ ............ 1 ............ ............ ............ ............ ............ ............ ............ ............ 1 01150 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 1 01170 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 1 1 4 01176 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 1 01199 ............................... ............ ............ 1 1 ............ ............ 1 ............ 1 ............ ............ ............ ............ ............ ............ 4 01222 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 2 1 4 01301 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 5 33 26 64 01306 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 3 ............ 4 01310 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 3 01412 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 1 01515 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 01712 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 11 10 4 ............ 25 01750 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ ............ 1 01910 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 6 5 1 1 14 02003 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 02010 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 1 ............ 2 02101 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 4 15 6 25 02130 ............................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 9 1 ............ 10 02210 ............................... ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 2 2 15 13 2 35 

Grand Total ............... 4 5 9 19 9 29 53 46 107 80 141 251 368 468 347 1936 

mstockstill on PROD1PC66 with NOTICES

72790 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

2Although all Future Leaders will have career 

ladders to pay band III in either the Engineering and 

Scientific Career Path, or the Professional, 

Technical, and Administrative Career Path, a 

control point equating to the salary of GS–12 step 

10 will be established for those Future Leaders with 

a Masters Degree in business-related and 

administrative fields to enable these individuals to 

be converted from band III of the Future Leaders 

Career Path to band II of the Professional, 

Technical, and Administrative Career Path upon 

successful completion of the 2-year program. 

Management has provided initial 

notice to affected employees and will 

continue consultation throughout 

project implementation. 

F. Project Design 

The project is designed to (1) 

fundamentally simplify the position 

classification system as the key to 

improving recruitment, retention, and 

classification activities, (2) ensure that 

no participating employee with a rating 

of record of less than Fully Meets 

Expectations will receive a pay increase, 

and (3) ensure that funds available for 

pay adjustments will be allocated on the 

basis of performance, the better 

performers receiving the greater 

performance payouts. 

To ensure expeditious and effective 

project implementation and completion, 

NNSA will model, to the extent feasible 

and appropriate, programmatic features 

and operating systems and procedures 

relating to NNSA’s own pay-banded, 

pay-for-performance excepted service 

system; in addition, NNSA will review 

the successes, mistakes, and lessons 

from the experiences of other agency 

demonstration projects, notably the 

current Department of Defense (DoD) 

laboratory projects, which are based on 

the foundational China Lake project; the 

National Institute of Standards and 

Technology permanent Alternative 

Personnel System; and DoD’s new 

National Security Personnel System 

(one of the participating Air Force labs 

shares Kirtland AFB with NNSA). 

Two basic design principles will 

underpin this project: 

• NNSA will not establish its own 

classification standards, but rather, will 

construct band thresholds and 

boundaries consistent with OPM’s 

official classification criteria. To 

streamline documentation, NNSA will 

establish core pay band descriptors and 

core position descriptions based on the 

OPM job family standard and functional 

classification guide that most directly 

corresponds to the work encompassed 

within an occupational series. The 

descriptor is a generic benchmark 

description used to illustrate the ranges 

of complementary work levels within a 

pay band. The assignment of positions 

to pay bands will be made on the basis 

of the core pay band descriptor. 

• NNSA will not delegate 

classification authority to managers. 

NNSA understands that not delegating 

classification authority runs counter to 

the experiences of other agency 

demonstration projects. Nonetheless, it 

is much more efficient to leave the 

exercise of this authority and all 

attendant administration activities in 

the trained hands of the resident human 

resources (HR) staff. NNSA sees little 

value in turning managers into 

classifiers, but rather, believes the value 

is in preparing managers to become 

better supervisors. NNSA’s pre-eminent 

managerial goal is to develop a seasoned 

cadre of Federal managers who can 

practice the art of supervision at an 

uncommonly high level (i.e., the 

supervisor who is more mentor than 

taskmaster, who can nurture 

subordinates and unleash their potential 

for superior performance through the 

instruments of performance appraisal 

and reward programs). 

III. Personnel System Changes 

The 15-grade GS position 

classification system established under 

5 U.S.C. chapter 51 and the GS pay 

system established under 5 U.S.C. 

chapter 53, subchapter III, will be 

modified as described in the following 

sections. Except as otherwise provided 

in this plan, demonstration project 

employees will be considered to be GS 

employees in applying other laws, 

regulations, and policies. NNSA does 

not currently have employees covered 

by law enforcement officer (LEO) 

special base rates. Should any law 

enforcement officers be covered by this 

demonstration project in the future, they 

will not be considered to be General 

Schedule employees for the purposes of 

applying LEO special base rates 

authorized by section 403 of the Federal 

Employees Pay Comparability Act of 

1990; a separate career path would be 

established for these employees, and 

band ranges for any such LEOs will take 

LEO special base rates into account. 

A. Pay Banding Classification and Pay 

System 

1. Establishment of Career Paths and 

Pay Bands 

NNSA may establish, and adjust over 

time, career paths that group one or 

more occupational categories together 

and provide a common banding 

structure (i.e., set of work levels and rate 

ranges) for occupations within a given 

career path. Initially, NNSA intends to 

establish five career paths. 

Each career path will be subdivided 

into pay bands. Each pay band will 

correspond to one or more GS grades. 

NNSA may establish, and adjust over 

time, a career path’s pay band structure. 

NNSA’s initial career path and pay 

bands are: 

(1) Engineering and Scientific Career 

Path: Encompasses all professional 

positions (with the exception of 

professional positions in the Future 

Leaders Career Path) classified in the 

GS–800 and GS–1300 job series, 

subdivided into the following pay 

bands: 

• Pay Band I (GS–5 through GS–8) 

• Pay Band II (GS–9 through GS–11) 

• Pay Band III (GS–12/GS–13) 

• Pay Band IV (GS–14/GS–15) 

(2) Professional, Technical, and 

Administrative Career Path: 

Encompasses all OPM-recognized twograde interval occupations, except GS–

800 engineers and GS–1300 scientists. 

All positions in this career path are 

subdivided into the following pay 

bands: 

• Pay Band I (GS–5 through GS–8) 

• Pay Band II (GS–9 through GS–12) 

• Pay Band III (GS–13/GS–14) 

• Pay Band IV (GS–15) 

(3) Technician and Administrative 

Support Career Path: Encompasses all 

OPM-recognized one-grade interval 

occupations, excepting positions 

classified in the GS–084 Courier series 

(see below). All positions in this career 

path are subdivided into the following 

pay bands: 

• Pay Band I (GS–1 through GS–4) 

• Pay Band II (GS–5 through GS–8) 

• Pay Band III (GS–9) 

(4) Nuclear Materials Couriers Career 

Path: Encompasses all positions 

classified into the GS–084 job series, 

subdivided into the following pay 

bands: 

• Pay Band I (GS–8 through GS–10) 

• Pay Band II (GS–11) 

• Pay Band III (GS–12) 

• Pay Band IV (GS–13) 

(5) Future Leaders Career Path: 

Encompasses the positions of all interns 

enrolled in NNSA’s 2-year Future 

Leader Program, in various engineering, 

scientific, business, and administrative 

occupations. All positions in this career 

path are subdivided into the following 

pay bands: 

• Pay Band I (GS–5 through GS–8) 

• Pay Band II (GS–9 through GS–11) 

• Pay Band III (GS–12/GS–13) 2

NNSA will coordinate changes in 

career paths or pay banding structures 

with OPM. After coordination with 

OPM, NNSA will give affected 

employees advance notice and an 

opportunity to comment before effecting 

a change with respect to career paths or 

banding structure. 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72791 

2. Position Classification 

Application of the 15-grade GS 

position classification system 

established under 5 U.S.C. chapter 51 

will be simplified by allowing a position 

to be assigned to a specific pay band if 

the duties and responsibilities of the 

position meet (or exceed) the 

requirements for classification into the 

lowest grade included in that specific 

pay band. For example, an 801, 

Engineer, position assigned to Pay Band 

1 (GS–5 through GS–8), need only meet 

the requirements for classification at the 

GS–5 level. Position descriptions will 

include examples of higher-level duties 

and responsibilities to which employees 

are fully intended to progress. NNSA 

will establish pay band boundaries 

consistent with OPM’s existing position 

classification standards, gradeevaluation criteria, and grading 

practices. 

3. Position Classification Appeals 

An individual employee may request 

that NNSA or OPM reconsider the 

classification (i.e., pay system, 

occupational series, official title, or pay 

band) of his or her official position of 

record at any time, consistent with 

procedures currently prescribed under 5 

CFR part 511, subpart F. A full 

description of the classification appeals 

process for the NNSA demonstration 

project will be included in the 

Demonstration Project Policies and 

Procedures Manual that will accompany 

this project plan. 

4. Minimum Qualifications 

Requirements 

Application of the OPM Operating 

Manual: Qualification Standards for 

General Schedule Positions is simplified 

by allowing a candidate to qualify for a 

specific pay band if the candidate meets 

(or exceeds) the requirements for the 

lowest grade included in that specific 

pay band. For example, a candidate for 

an 801 Engineer position assigned to 

Pay Band 1 (GS–5 through GS–8), need 

only meet the qualifications 

requirements for a GS–801 Engineer 

position at the GS–5 level. 

For NNSA demonstration project 

employees and employees of other 

Federal agencies who are in sufficiently 

similar pay banding systems, the 

common OPM requirement of one year 

of experience ‘‘at the next lower grade 

in the normal line of progression for the 

occupation’’ is changed to ‘‘at the next 

lower pay band in the normal line of 

progression for the occupation.’’

Federal employees in the General 

Schedule pay system, Federal 

employees in other pay systems 

comparable to the General Schedule, 

and non-Federal applicants must meet 

the common OPM requirement of one 

year of experience ‘‘at the next lower 

grade in the normal line of progression 

for the occupation.’’

5. Elimination of Fixed Steps 

The 10 fixed steps of each GS grade 

will not apply to employees 

participating in the demonstration 

project. The fixed-step system was 

designed to reward longevity. A pay 

banding system is an important element 

of any effort to make pay more 

performance-sensitive. No employee’s 

pay will be reduced as a result of 

becoming covered by the demonstration 

project. However, demonstration project 

employees will no longer receive 

longevity-based within-grade pay 

increases at prescribed intervals. 

Instead, they will be granted annual 

performance adjustments as described 

in section III.C. below. 

6. Rate Range 

The normal minimum and maximum 

rates of the rate range for each pay band 

will equal the applicable step 1 rate and 

step 10 rate, respectively, for the lowest 

and highest grades, respectively, in the 

General Schedule that are included in 

the pay band. The minimum rate of the 

pay band is extended 5 percent below 

the normal minimum for employees 

with a rating of record below Fully 

Meets Expectations (FME). Such an 

employee’s rate may fall below the 

normal pay band minimum when that 

minimum increases as a result of a pay 

band adjustment, but the employee 

cannot receive a pay adjustment, or 

performance pay increase, because the 

employee’s rating of record is below 

Fully Meets Expectations, as described 

in section III.C.4. 

The maximum rate of each pay band 

is extended 5 percent above the normal 

maximum for all employees with a 

rating of record at the highest level 

(currently called ‘‘Significantly Exceeds 

Expectations’’ (SEE) in NNSA). This 

upper range extension will help ensure 

that the range of available pay rates will 

be adequate to recognize truly 

outstanding performance. The upper 

range extension is reserved for 

employees with a SEE rating. If an 

employee in the upper range extension 

is rated below the SEE level, special 

provisions apply, as described in 

section III.A.10. 

In addition to rates of basic pay, 

employees may receive locality 

payments or staffing supplements as 

described in section III.A.10 or III.A.11, 

respectively. 

7. Rate of Basic Pay Upon Initial 

Appointment 

Upon appointment to a demonstration 

project position under Delegated 

Examining, Direct-Hire Authorization, 

or other authority primarily designed for 

initial entry into the Federal service 

(e.g., Veterans Employment Opportunity 

Act, 30% Disabled Veteran 

Appointment), an appointee’s pay rate 

may be set at any rate within the normal 

pay band range. In exercising this 

flexibility, NNSA will consider the 

appointee’s qualifications, competing 

job offers, NNSA’s need for the 

appointee’s talents, the appointee’s 

potential contributions to NNSA 

mission accomplishment, and the rates 

received by on-board employees. This 

flexibility will allow NNSA to compete 

more effectively with private industry 

for the best talent available, though 

managers will be expected to use this 

flexibility with great judiciousness and 

prudence. 

8. Rate of Basic Pay Upon Promotion 

Upon promotion to a higher pay band, 

an appointee’s pay rate generally will be 

set at a rate within the normal pay band 

range to which the appointee is being 

promoted that provides a pay increase 

of 8 percent, unless a greater increase is 

necessary to set pay at the normal range 

minimum. NNSA may establish 

exceptions to this policy to deal with 

employees receiving a retained rate, 

employees who are re-promoted shortly 

after a demotion, employees with 

exceptional performance warranting a 

larger increase with higher management 

approval, etc. In exercising this 

flexibility, NNSA will consider the 

appointee’s qualifications, competing 

job offers, NNSA’s need for the 

appointee’s talents, and the appointee’s 

potential contributions to NNSA 

mission accomplishment. A 

demonstration project employee who 

moves to a higher pay band (defined as 

a pay band with a maximum base rate 

for the normal range that is higher than 

the maximum rate of the normal range 

of the employee’s pay band before the 

move) in a different career path is 

considered to have been promoted 

under policies prescribed by NNSA. 

NNSA may adopt policies providing a 

promotion-equivalent increase to a 

Federal employee outside the 

demonstration project who is selected, 

through merit promotion plan 

procedures, to fill a higher-level 

position (as defined in NNSA policies) 

covered by the demonstration project. 

NNSA employees, who at the time of 

conversion into the demonstration 

project are in a career ladder to a higher 

mstockstill on PROD1PC66 with NOTICES

72792 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

GS grade (i.e., have not reached the top 

level of that career ladder), will be 

eligible for special in-band pay 

increases under the authority of this 

demonstration project. The in-band pay 

increases will be sufficient to ensure 

that an employee’s base rate under the 

demonstration project is equivalent to 

the base rate which the employee would 

have received had the employee and 

position remained in the General 

Schedule. Only one in-band pay 

increase may be received in a 52-week 

period. This ‘‘grandfathering’’ benefit 

will cease to be applicable when the 

employee reaches equivalence with the 

top GS grade of the formerly applicable 

career ladder. Only current NNSA 

employees who convert at the inception 

of pay banding will be afforded this 

‘‘grandfathering’’ benefit. The specific 

terms and conditions of this benefit will 

be established by NNSA in NNSA’s 

Demonstration Project Policies and 

Procedures Manual that will implement 

this project plan. 

NNSA may establish special rules for 

computing the promotion increase for 

promotions involving positions covered 

by a staffing supplement that take into 

account the staffing supplement and 

locality pay, subject to guidance 

provided by OPM. 

9. Rate of Basic Pay in Competitive and 

Noncompetitive Lateral Actions 

When a non-demonstration project 

employee from NNSA or DOE is 

reassigned into a demonstration project 

position, NNSA may provide an 

immediate increase in the rate of basic 

pay to reflect the prorated value of the 

employee’s next scheduled within-grade 

increase or similar within-range 

adjustment under the former pay 

system, consistent with the 

requirements in section V.A. Similarly, 

when an employee transfers into NNSA 

from another Federal agency, NNSA 

may provide an immediate increase in 

the rate of basic pay to reflect the 

prorated value of the employee’s next 

scheduled within-grade increase or 

similar within-range adjustment, also 

consistent with section V.A. When a 

demonstration project employee is 

selected through competitive 

procedures to fill another demonstration 

project position that is at the same pay 

band as the employee’s current position, 

or has no greater pay potential, NNSA 

may provide an immediate pay increase 

up to 5 percent upon reassignment. The 

increase to pay must be based on a 

review of the employee’s current salary, 

salary history, performance evaluations, 

and qualifications. Justification and 

review requirements for such an 

increase will be reflected in the staffing 

and pay-setting policies found in 

NNSA’s Demonstration Project Policies 

and Procedures Manual. 

10. Other Pay Administration Provisions 

Performance-based pay increases 

described in section III.C will be made 

to the scheduled annual rate of pay. 

These increases will be made on the 

first day of the last full pay period in 

each calendar year. Annual general pay 

adjustments will be effective on the first 

day of the first full pay period in 

January of each year. 

Locality-based comparability 

payments under 5 U.S.C. 5304 will be 

paid on top of the scheduled annual rate 

of pay in the same manner as those 

payments apply to other GS employees 

(except as described in the following 

paragraph). Staffing supplements may 

apply as described in section III.A.11. 

A locality rate cap 5 percent higher 

than the normal EX–IV statutory cap is 

established to accommodate those 

employees in the upper rate range 

extension, whose current rating of 

record is SEE. This higher cap will only 

apply to employees whose pay rate is in 

the upper range extension. If the locality 

rate for an employee at the normal band 

maximum is affected by the EX–IV cap, 

resulting in an ‘‘effective locality pay 

percentage’’ that is less than the regular 

locality pay percentage, the locality rate 

for an employee in the upper rate range 

extension of the same band will be 

computed using that same effective 

locality pay percentage. (For example, if 

the regular locality pay percentage is 30 

percent, but the EX–IV cap causes the 

amount of locality pay actually received 

by an employee at the regular band 

maximum to be 20 percent, that 

effective locality pay percentage of 20 

percent would be used to compute 

locality pay for an employee in the 

upper range extension of the same 

band.) 

If an employee in the upper range 

extension receives a Fully Meets 

Expectations (FME) annual rating of 

record following the previous year’s SEE 

rating, the employee will be converted 

to a retained rate status and will receive 

50 percent of the increase in the 

adjusted rate for the normal range 

maximum (including any applicable 

locality payment or staffing 

supplement). The employee will receive 

the 50 percent adjustment each year he 

or she receives an FME rating of record 

until the employee’s pay falls at or 

below the normal maximum rate of the 

pay band. 

Employees receiving a rating of record 

below Fully Meets Expectations are 

prohibited from receiving any increase 

in basic pay including any annual 

adjustment in the scheduled rate of pay, 

locality pay, or staffing supplement, 

except as necessary to prevent their 

frozen rate from falling below the 5 

percent threshold of the lower band 

extension. A frozen rate of pay does not 

result in a reduction in pay and 

therefore is not subject to adverse action 

procedures in chapter 75 of title 5, 

United States Code. In no case may an 

employee’s rate of basic pay fall below 

the 5 percent lower band extension. If 

an employee’s frozen rate of pay falls 

below the bottom threshold of the lower 

range extension, it will be adjusted by 

the dollar amount of the annual 

adjustment in the scheduled rate of pay 

necessary to bring their adjusted frozen 

rate back within the lower extended 

range. NNSA’s Demonstration Project 

Policies and Procedures Manual will 

address how a frozen locality payment 

or staffing supplement will be adjusted 

if an employee moves to a 

demonstration project position with a 

different locality pay schedule or 

staffing supplement. 

When an employee receives a rating 

of record below Fully Meets 

Expectations, their existing rate of basic 

pay including any applicable locality 

pay or staffing supplement is frozen 

until they receive a new rating of record 

of Fully Meets Expectations. If NNSA 

chooses to give such an employee a new 

rating of record of FME before the end 

of the current appraisal period, the 

employee is entitled to an increase in 

the rate of basic pay effective on the first 

day of the first pay period beginning on 

or after the date the new rating is final, 

as described in section III.C.4. 

Subject to guidance provided by 

OPM, NNSA will establish 

supplemental pay administration rules 

for determining an employee’s rate of 

pay upon initial appointment, 

promotion, demotion, transfer, 

reassignment, or other position change, 

as needed. In addressing geographic 

conversions and simultaneous pay 

actions, such rules must be consistent 

with 5 CFR 531.205 and 5 CFR 531.206, 

respectively. 

The grade retention provisions in 5 

U.S.C. 5362 and 5 CFR part 536 are not 

applicable (i.e., no band retention). The 

pay retention rules in 5 U.S.C. 5363 and 

5 CFR part 536 apply to demonstration 

project employees, subject to the 

following exceptions: 

(1) Enhanced pay retention (as 

described in the next paragraph) applies 

to an employee who is entitled to a 

retained rate as a result of an 

involuntary reduction in band through 

no fault of his or her own; 

(2) An employee with a rating of 

record below Fully Meets Expectations 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72793 

may not receive an increase in his or her 

retained rate under 5 U.S.C. 

5363(b)(2)(B); 

(3) An employee in the upper range 

extension who is rated below 

Significantly Exceeds Expectations will 

be converted to a retained rate before 

processing any other pay action; 

(4) The cap on retained rates is equal 

to the rate for level IV of the Executive 

Schedule plus 5 percent (instead of the 

EX–IV cap established under 5 CFR 

536.306) in order to accommodate 

employees in the upper range extension 

whose rating of record falls below SEE; 

and 

(5) The range maximum rate used in 

computing retained rate adjustments 

will always be the applicable adjusted 

rate for the normal range maximum 

(including any applicability locality 

payment or staffing supplement), not 

the upper range extension maximum, 

regardless of the employee’s rating of 

record. 

Enhanced pay retention applies to 

employees who become entitled to a 

retained rate as a result of an 

involuntary reduction in band under 

conditions that would have met the 

requirements for grade retention if the 

employee were covered by 5 CFR 

536.201–536.202. Under enhanced pay 

retention, an employee’s retained rate 

will be determined as prescribed in 5 

CFR 536.304. However, an employee’s 

retained rate will be increased by 100 

percent (instead of 50 percent) of the 

dollar amount of any increase in the 

normal maximum rate of the employee’s 

band during the 2-year (i.e., 104-week) 

period beginning on the date the 

employee’s retained rate is established. 

After the 2-year period of enhanced pay 

retention, the regular 50-percent 

adjustment rule in 5 U.S.C. 

5363(b)(2)(B) and 5 CFR 536.305 will 

apply, as modified by the provisions in 

this section. The 50-percent adjustment 

rule will be applied by measuring the 

dollar change in the applicable adjusted 

rate for the normal maximum rate of the 

band (linked to applicable GS step 10 

rate). 

If an employee is receiving a retained 

rate that is less than the applicable 

adjusted maximum rate (including any 

applicable locality payment or staffing 

supplement) for the upper range 

extension for the employee’s band, and 

if that employee receives a rating of 

record of Significantly Exceeds 

Expectations, the employee’s retained 

rate will be terminated and converted to 

an equal adjusted rate (base rate in 

upper range extension plus applicable 

locality payment or staffing 

supplement). This conversion must be 

processed before any other pay 

adjustment. 

For a retained rate employee with a 

rating of record of Significantly Exceeds 

Expectations, if a retained rate 

adjustment provided at the time of a 

range adjustment results in the retained 

rate falling below the applicable 

adjusted rate for the upper range 

extension maximum, the employee’s 

retained rate will be terminated, and the 

employee’s pay will be set at the 

maximum rate of the upper range 

extension. 

For a retained rate employee with a 

rating of record of Fully Meets 

Expectations, if a retained rate increase 

provided at the time of a range 

adjustment results in the retained rate 

falling below the applicable adjusted 

rate for the normal band maximum, the 

employee’s retained rate will be 

terminated, and the employee’s pay will 

be set at the normal band maximum 

rate. 

For a retained rate employee with a 

rating of record below Fully Meets 

Expectations, the retained rate is frozen 

and not subject to adjustment. When 

such an employee’s retained rate falls 

below the applicable adjusted rate for 

the normal band maximum, the 

employee’s retained rate will be 

terminated, and the employee’s pay will 

be set at an adjusted rate equal to the 

retained rate (i.e., the rate is not set at 

the range maximum). 

As required by 5 CFR 536.304(a)(2) 

and 536.305(a)(2), any general pay 

adjustment, including a retained rate 

adjustment as described in the 

preceding paragraphs, must be 

processed before any other 

simultaneous pay action (such as a 

geographic pay conversion). 

When applicable, the saved pay rules 

in 5 U.S.C. 3594 and 5 CFR 359.705 for 

former SES members continue to apply 

to demonstration project employees, 

except that (1) an employee with a 

rating of record below Fully Meets 

Expectations may not receive an 

increase in his or her saved rate under 

5 U.S.C. 3594(c)(2); and (2) the 50- 

percent adjustment rule must be applied 

in the same manner as it is applied for 

a retained rate under 5 U.S.C. 5363, 

subject to the modifications described in 

the preceding paragraphs. The rules 

regarding termination of a saved rate 

when it falls below the applicable 

adjusted maximum rate must be parallel 

to those governing termination of a 

retained rate under 5 U.S.C. 5363, 

subject to the modifications described in 

the preceding paragraphs. The enhanced 

pay retention provisions described in 

the preceding paragraphs do not apply 

to saved rates under 5 U.S.C. 3594. 

NNSA may adopt supplemental pay 

administration policies governing 

matters not specifically addressed in 

this plan, subject to any OPM guidance. 

11. Staffing Supplements 

An employee who is assigned to an 

occupational series and geographic area 

covered by an OPM-established special 

rates schedule, and who meets any other 

applicable coverage requirements, will 

be entitled to a staffing supplement if 

the maximum adjusted rate for a 

covered position in the GS grades 

corresponding to the employee’s band is 

a special rate that exceeds the 

applicable maximum GS locality rate. 

The staffing supplement is added on top 

of the rate of basic pay in the same 

manner as locality pay. An employee 

will receive the higher of the applicable 

locality payment or staffing supplement. 

For employees being converted into 

the demonstration project, the 

employee’s total pay immediately after 

conversion will be the same as 

immediately before, 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 the total salary rate. The 

staffing supplement is calculated as 

described below. 

Upon conversion, the demonstration 

base rate will be established by dividing 

the employee’s former GS adjusted rate 

(the higher of 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 base rate 

corresponding to that special rate (step 

10 GS base 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. Therefore, 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 GS adjusted rate. 

Simplified, the formula is this: 

Staffing factor = (Maximum special rate for 

banded grades) / (GS base rate 

corresponding to that special rate) 

Demonstration base rate = (Former GS 

adjusted rate [special or locality rate]) / 

(Staffing factor) 

Staffing supplement = demonstration base 

rate × (staffing factor ¥ 1) 

Salary upon conversion = demonstration base 

rate + staffing supplement [sum will equal 

existing rate] 

If a special rate employee is converted 

to a band where the maximum GS 

adjusted rate for the banded grades is a 

mstockstill on PROD1PC66 with NOTICES

72794 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

locality rate, when the employee is 

converted into the demonstration 

project, the demonstration base rate is 

derived by dividing the employee’s 

former special rate by the applicable 

locality pay factor (for example, in the 

Washington-Baltimore area, the locality 

pay factor is 1.175 in 2006). The 

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

former GS adjusted rate. 

Any General Schedule or special rate 

schedule adjustment will require 

recomputation of the staffing 

supplement. Employees receiving a 

staffing supplement remain entitled to 

an underlying locality rate, which may 

over time supersede the need for a 

staffing supplement. If OPM 

discontinues or decreases a special rate 

schedule, pay retention provisions will 

be applied, as appropriate. Upon 

geographic movement, an employee 

who receives the special staffing 

supplement will have the supplement 

recomputed; any resulting reduction in 

the supplement 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 

special rate under 5 CFR 530.308—e.g., 

for purposes of retirement, life 

insurance, premium pay, severance pay, 

and advances in pay. It will also be used 

to compute workers’ compensation 

payments and lump-sum payments for 

accrued and accumulated annual leave. 

Staffing supplement adjusted rates are 

subject to the Executive Schedule level 

IV cap that applies to GS locality rates 

and special rates (except as provided in 

the following paragraph). 

Adjusted rates that include a staffing 

supplement are subject to an Executive 

Schedule level IV cap, except for 

employees in the upper range extension 

whose rating of record is SEE. For those 

with a base rate in the 5 percent upper 

range extension, an adjusted rate cap 5 

percent higher than the normal EX–IV 

cap is established. This higher cap will 

apply only to employees receiving a rate 

within the upper range extension. If the 

adjusted rate for an employee at the 

normal band maximum is affected by 

the EX–IV cap, resulting in an ‘‘effective 

staffing supplement percentage’’ that is 

less than the regular staffing supplement 

percentage, the adjusted rate for an 

employee in the upper rate range 

extension of the same band will be 

computed using that same effective 

staffing supplement percentage. (For 

example, if the regular staffing 

supplement percentage is 35 percent, 

but the EX–IV cap causes the amount of 

the staffing supplement actually 

received by an employee at the regular 

band maximum to be 20 percent, that 

effective staffing supplement percentage 

of 20 percent would be used to compute 

the staffing supplement for an employee 

in the upper range extension of the same 

band.) 

OPM may approve staffing 

supplements for categories of employees 

within the NNSA demonstration project 

who are not in approved special rate 

categories for GS employees, consistent 

with the provisions in 5 U.S.C. 5305(a) 

and (b). 

B. Performance Appraisal 

NNSA recognizes the importance of 

maintaining highly credible 

performance management systems. 

NNSA will use a performance 

management program under the 

Department of Energy appraisal system 

that has been approved by OPM 

consistent with chapter 43 of title 5, 

United States Code. Throughout the 

duration of the demonstration project, 

the effectiveness of performance 

management within the project will be 

monitored by examining metrics and 

assessments that will be included in the 

demonstration project evaluation plan. 

1. Program Requirements 

The NNSA performance appraisal 

program requires written performance 

plans for each covered employee 

containing the employee’s performance 

elements and standards. The 

performance plan links the performance 

elements and standards for individual 

employees to the organization’s strategic 

goals and objectives. Ongoing feedback 

and dialogue between employees and 

their supervisors regarding performance 

is required. In addition, the program 

provides for, at a minimum, one midyear progress review. 

The NNSA appraisal program, 

including its performance levels and 

standards, provides for making 

meaningful distinctions in performance. 

The program currently uses a four-level 

rating pattern to both summarize 

performance and to appraise 

performance at the element level. Its 

summary level pattern under 5 CFR 

430.208(d) uses Levels 1, 2, 3, and 5, 

which NNSA has labeled Does Not Meet 

Expectations, Needs Improvement, 

Fully Meets Expectations, and 

Significantly Exceeds Expectations, 

respectively. Employees must be 

covered by their performance plan for at 

least 90 days before they can be 

assigned a rating of record. Supervisors 

and managers apply the appraisal 

program in a way that makes 

appropriate differentiations in 

performance. These differentiations 

reflect overall organizational 

performance. Employees receive a 

written performance appraisal (i.e., a 

rating of record) annually. Forced 

distributions of ratings are prohibited. 

Each annual appraisal period will begin 

on October 1 and end on the following 

September 30. Performance appraisals 

will be completed in a timely manner to 

support pay decisions in accordance 

with section III.C. 

Additional guidance on the NNSA 

performance appraisal program is 

provided through internal operations 

manuals. Performance appraisal is an 

evolutionary process, and changes may 

be made during the course of the 

demonstration project based on findings 

from our ongoing evaluations and 

reviews. Any changes will be 

communicated to affected employees, 

and they will be given a chance to 

comment before NNSA implements the 

changes. 

2. Supervisory Accountability 

Supervisors are responsible for 

providing appropriate consequences for 

employee performance by addressing 

poor performance and recognizing 

exceptional performance. The 

performance plans for supervisors and 

managers include the degree to which 

supervisors and managers plan, assess, 

monitor, develop, correct, rate, and 

reward subordinate employees’

performance. It is recognized that 

specific training must be provided to 

prepare supervisors and managers to 

exercise these responsibilities. NNSA 

has provided supervisory training each 

of the past three years on philosophical 

and procedural aspects of its new and 

still evolving performance management 

program (i.e., the lessons learned in the 

administration of each performance 

appraisal cycle have resulted in 

refinements each subsequent year). 

NNSA understands that this 

demonstration project will heighten the 

need for continuing supervisory training 

to support the accurate and realistic 

appraisal of performance. 

3. Reconsideration of Ratings 

To support fairness and transparency 

for the program and its consequences, 

employees have an opportunity to 

request reconsideration of a rating of 

record. Such requests will be 

administered through a reconsideration 

process outlined in NNSA’s 

Demonstration Project Policies and 

Procedures Manual. This procedure will 

be the sole process for addressing 

complaints regarding overall summary 

ratings and ratings of individual 

elements. 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72795 

C. Performance-Based Pay Increases 

1. Pay Pools 

Funds that otherwise would be spent 

on the annual GS pay adjustment, WGIs, 

and QSIs for demonstration project 

employees will instead be placed into 

two pay pools: (1) the general pay 

increase pool will include funds that 

otherwise would be spent on the annual 

scheduled rate pay adjustment and (2) 

the performance pay pool will include 

funds that would otherwise be used to 

pay WGIs and QSIs. The performance 

pay pool also may include funds saved 

through the elimination of promotion 

increases for promotions between grades 

that are consolidated into the same 

band. 

All employees with a rating of Fully 

Meets Expectations or higher are 

entitled to an adjustment in the 

scheduled rate of pay equal to the 

annual pay adjustment, which is also 

used to adjust NNSA pay ranges. This 

general increase is funded by the 

general increase pool. Employees who 

receive a rating below FME will be 

eligible for the annual pay adjustment, 

should a new rating be assigned after a 

period of time under a performance 

improvement plan. 

Additional pay increases will be 

funded from the performance pay pool 

using a share mechanism (1) to ensure 

that employees with higher ratings of 

record receive greater pay increases than 

employees with relatively lower ratings 

of record and (2) to control costs 

without resorting to a forced 

distribution of ratings. Each employee 

will be assigned a certain number of 

shares, based on his or her rating of 

record in accordance with section 

III.C.2. 

Participating organizations will 

establish pay pools for allocating 

performance pay increases. NNSA will 

determine which participating 

employees are covered by any pay pool 

and determine the dollar value of each 

pay pool. In setting the value of pay 

pools, NNSA will initially allocate an 

amount for performance pay increases 

equal to the estimated value of the 

WGIs, QSIs, and applicable promotion 

increases that otherwise would have 

been paid to participating employees. In 

computing the estimated value of WGIs 

and QSIs, NNSA may use estimated 

Governmentwide averages as computed 

by OPM. 

2. Performance Shares 

NNSA will establish rating/share 

patterns for each pay pool—that is, the 

relationship between a rating of record 

and the number of shares. NNSA rating/ 

share patterns will ensure that a higher 

rating of record receives a higher 

performance payout percentage for 

employees in the normal rate range. 

NNSA may adjust rating/share 

patterns over time after coordination 

with OPM and after giving affected 

employees advance notice. A change in 

the rating/share pattern may be applied 

in computing performance-based pay 

adjustments based on an appraisal 

period only if it takes effect at least 120 

days before the end of that appraisal 

period. Initially, the number of shares 

for each rating level will be as follows: 

4 shares are assigned to a Significantly 

Exceeds Expectations summary rating 

when an employee receives SEE ratings 

in all critical elements; 3 shares are 

assigned when an employee receives a 

summary rating of SEE, but one or more 

critical elements are rated at FME; 2 

shares are assigned to an FME summary 

rating when one or more critical 

elements are rated at SEE; and 1 share 

is assigned to an FME summary rating 

when no critical element is rated below 

FME. Employees who receive a final 

summary rating of FME with one critical 

element rated at the NI level are not 

eligible for any shares from the 

performance pay pool. 

No shares may be assigned to any 

rating of record below Fully Meets 

Expectations, since no pay increase is 

payable to employees with such a rating 

of record. After the ratings of record and 

shares are assigned to employees, the 

value of a single share can be calculated. 

In addition to performance-based pay 

increases, demonstration project 

employees remain eligible to receive 

both monetary and non-monetary forms 

of recognition, so long as employees are 

not rewarded twice for the same 

contributions using incentive awards 

authorities under chapter 45 of title 5. 

Additionally, supervisors may receive 

supervisory bonuses, as referenced in 

section III.D. of this plan. NNSA will 

adopt supplemental award 

administration policies not specifically 

covered by this plan. 

3. Performance Payout 

In general: NNSA will determine the 

value of one performance share, 

expressed as a percentage of the 

employee’s rate of basic pay, based on 

the value of the pay pool and the 

distribution of shares among pay pool 

employees. An individual employee’s 

performance payout is determined by 

multiplying the determined percentage 

value of a performance share by the 

number of shares assigned to the 

employee. The performance payout is 

computed as a percentage of the 

employee’s rate of base pay as in effect 

on the date determined in NNSA 

policies. On the first day of the last full 

pay period in each calendar year, this 

amount must be paid as an increase in 

the employee’s rate of basic pay, but 

only to the extent that it does not cause 

the employee’s rate to exceed the 

maximum rate of the employee’s rate 

range. Notwithstanding the preceding 

sentence, employees in the upper band 

extension rated below the highest rating 

level are subject to special rules as 

described in section III.A.6 and III.A.10. 

Any portion of an employee’s 

performance payout amount that cannot 

be delivered as a basic pay increase will 

be paid out as a lump sum (with no 

charge to the pay pool). Such a lumpsum payment is not basic pay for any 

purpose and is not a cash award under 

chapter 45 of title 5, United States Code. 

An employee who does not have a 

rating of record for the appraisal period 

most recently completed will be treated 

the same as employees in the same pay 

pool who received the modal rating for 

that period, subject to NNSA proration 

policies. 

NNSA may establish policies on 

prorating the performance pay increases 

and/or lump-sum payments for an 

employee who, during the period 

between annual pay adjustments, was 

(1) hired or promoted, (2) in leavewithout-pay status, (3) on a part-time 

work schedule, or (4) in other 

circumstances that make proration 

appropriate. Those policies may 

establish a minimum employment 

period as a condition to receive any 

amount of a performance payout. 

If an employee’s rating of record that 

is the basis for a performance payout is 

retroactively revised (after the regular 

effective date of performance payouts) 

through the reconsideration process, the 

employee’s performance payout must be 

retroactively recomputed using the 

share value as originally determined. 

This also applies to the retroactive 

correction of a critical element 

previously rated as Needs Improvement, 

when that element rating resulted in 

zero shares being given to an employee 

with a Fully Meets Expectations rating 

of record. Any such retroactive 

corrections are not funded out of the 

pay pool and do not affect the 

performance payouts provided to other 

employees in the pay pool. In setting the 

size of a future pay pool, management 

will take into account past and 

projected corrections. 

Special provisions for employees 

returning to duty after a period of 

service in the uniformed services or in 

receipt of workers’ compensation 

benefits: Special pay-setting provisions 

apply to employees who do not have a 

rating of record to support a pay 

mstockstill on PROD1PC66 with NOTICES

72796 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

adjustment but who are returning to 

duty status after a period of leave 

without pay or separation during which 

the employee (1) was serving in the 

uniformed services (as defined in 38 

U.S.C. 4303 and 5 CFR 353.102) with 

legal restoration rights (e.g., 38 U.S.C. 

4316), or (2) was receiving workers’

compensation benefits under 5 U.S.C. 

chapter 81, subchapter I. In these cases, 

NNSA will determine the employee’s 

prospective rate of basic pay upon 

return to duty by making performance 

pay adjustments for the intervening 

period based on the modal rating of 

record for employees in the same pay 

pool. The performance pay increases 

during the intervening period may not 

be prorated based on periods covered by 

this provision. In addition, a 

performance pay increase that is 

effective after the employee’s return to 

duty may not be prorated based on 

periods covered by this provision. A 

lump-sum payment for a period 

including actual service performed after 

the employee’s return to duty must be 

prorated (based on service covered by 

this provision) under the same agency 

proration policies that apply generally 

to periods of leave without pay. 

Special provisions for employees 

receiving a retained rate: An employee 

receiving a retained rate under 5 U.S.C. 

5363 or 5 U.S.C. 3594 is not eligible for 

a basic pay increase except in 

conjunction with a rate range 

adjustment, as described in section 

III.A.10. At the discretion of the 

Administrator or the Administrator’s 

designee, a retained rate employee may 

receive the same lump-sum payment 

approved for an employee in the same 

pay pool who is at the applicable range 

maximum and who has the same 

performance rating of record and 

number of shares. 

4. Employees Who Cannot Receive a 

Performance Pay Increase 

Employees with a rating of record at 

Fully Meets Expectations with one or 

more elements rated at the Needs 

Improvement level are prohibited from 

receiving a performance payout. 

Employees with a rating of record below 

Fully Meets Expectations are prohibited 

from receiving a performance payout or 

general pay adjustment. When an 

employee’s pay is frozen because of 

performance below Fully Meets 

Expectations, his or her pay rate may 

fall below the normal minimum rate of 

the pay band, since that range minimum 

may be increasing. However, in no case 

may an employee’s rate of basic pay be 

reduced more than 5 percent below the 

normal range minimum. Details on 

adjusting the basic rate of pay to stay 

within the 5 percent extended minimum 

rate range can be found in III.A.10. 

If NNSA later chooses to give such an 

employee a new rating of record of Fully 

Meets Expectations before the end of the 

next appraisal period, as a result of the 

successful completion of a formal 

improvement plan, the employee is 

entitled to the same percentage of basic 

pay as the percentage that would have 

applied if the employee had been rated 

FME at the time the general pay 

adjustment was denied. This provision 

only applies to the annual general pay 

adjustment and is not retroactive. Under 

no circumstances is an employee 

eligible for a performance payout based 

on share distribution until the next 

appraisal period closes. 

D. Supervisory Bonuses 

NNSA may provide supervisors with 

annual supervisory bonuses. A 

supervisory bonus may not exceed 5 

percent of the employee’s rate of basic 

pay. A supervisory bonus is not basic 

pay for any purpose, nor may it be used 

in computing a lump-sum annual leave 

payment under 5 U.S.C. 5551–5552. A 

supervisory bonus is not an award 

under 5 U.S.C. chapter 45; it is a special 

lump-sum payment established under 

the demonstration project authority. 

Bonus expenditures will be funded 

through other NNSA funding sources. 

NNSA may establish supplementary 

policies and procedures to implement 

these bonuses, subject to OPM guidance. 

E. Reduction-in-Force 

1. If, during the life of the 

demonstration project, NNSA enters 

into a reduction-in-force (RIF), the RIF 

will be conducted in accordance with 5 

U.S.C. 1302, 3502, and 3508 and 5 CFR 

part 351, except as follows: 

(a) Each of the five career paths in 

each NNSA local commuting area will 

constitute separate competitive areas 

(i.e., separate from the other career 

paths, and separate from the 

competitive areas of other NNSA 

employees); 

(b) NNSA will establish competitive 

levels consisting of all positions in a 

competitive area which are in the same 

pay band and classification series, and 

which are similar enough in duties, 

qualification requirements, pay 

schedules, and working conditions so 

that the incumbent of one position may 

be reassigned to any of the other 

positions in the level without undue 

interruption. Each demonstration 

project competitive level will become a 

Retention List for purposes of 

competition when employees are 

released from their competitive levels, 

displaced by higher-standing 

employees, or placed during the 

exercise of assignment rights. 

(c) Assignment rights will be modified 

by substituting ‘‘one pay band’’ for 

‘‘three grades’’ and ‘‘two pay bands’’ for 

‘‘five grades.’’

(d) NNSA will use retention standing 

when it chooses to offer vacant 

positions within the meaning of 5 CFR 

351.704. 

2. Prior to conducting a RIF, NNSA 

will issue and implement a policy for 

the establishment and operation of an 

agency-level reemployment priority list 

(RPL) designed to assist current NNSA 

competitive service demonstration 

project employees who will be 

separated as a result of a RIF and, 

subsequently, former NNSA competitive 

service demonstration project 

employees who have been separated as 

a result of a RIF, or who have fully 

recovered from a compensable injury 

after more than one year, in their efforts 

to be reemployed at NNSA, by affording 

them priority consideration over certain 

outside job applicants for NNSA 

competitive service demonstration 

project vacancies. 

NNSA will develop and adopt 

supplemental RIF administration 

procedures to augment the RIF policies 

stipulated by this plan. 

IV. Training 

As NNSA has learned during the past 

three years of implementing and 

refining a new performance 

management program, training for all 

involved will be essential to the success 

of the demonstration project. Training 

will be provided to employees, 

supervisors, and managers before the 

project is launched and throughout the 

life of the project. It is important that 

employees perceive the performance 

management program as fair and 

transparent; therefore, supervisors and 

managers will be trained extensively in 

setting and communicating performance 

expectations; monitoring performance 

and providing timely feedback; 

developing employee performance and 

addressing poor performance; rating 

employees’ performance based on 

expectations; and involving employees 

in the development and implementation 

of the performance appraisal program. 

Supervisors and managers will be held 

accountable for the effective 

management of the performance of 

employees they supervise through 

performance expectations set for and 

appraisals made of their own 

performance in this regard. 

All employees will be trained in the 

performance appraisal process and the 

pay adjustment mechanism. Various 

types of training are being considered, 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72797 

including videos, on-line tutorials, and 

train-the-trainer concepts. 

V. Conversion 

A. Conversion to the Demonstration 

Project 

1. Employees whose positions become 

covered by the demonstration project 

will convert into the career path and 

pay band covering the occupational 

series and grade of their position of 

record. Employees will convert to the 

demonstration project with no change in 

their total rate of pay (including basic 

pay, plus any applicable locality 

payment, special rate supplement, or 

staffing supplement). Special 

conversion rules apply to special rate 

employees as described in section 

III.A.10, Staffing Supplements. Any 

simultaneous pay action that is 

scheduled to take effect under the GS 

pay system on the date of conversion 

must be processed before processing the 

conversion to the pay banding system. 

NNSA implementing policies will 

provide procedures for converting an 

employee on grade retention under 5 

U.S.C. 5362 or receiving a retained rate 

under 5 U.S.C. 5363 or a saved rate 

under 5 U.S.C. 3594 to the 

demonstration project. 

2. Immediately after conversion, 

eligible employees will receive an 

increase in basic pay reflecting the 

prorated value of the next scheduled 

within-grade increase (WGI). The 

prorated value is determined by 

calculating the portion of the time-instep employees have completed towards 

the waiting period for their next WGI. 

This WGI ‘‘buy-in’’ adjustment will not 

be paid to (1) employees who are at the 

step 10 rate for their grade immediately 

before conversion to the demonstration 

project, (2) employees who are receiving 

a retained rate of pay under 5 U.S.C. 

5363 or saved rate under 5 U.S.C. 3594 

immediately before conversion to the 

demonstration project, or (3) employees 

whose rating of record is below Fully 

Meets Expectations. 

3. Adverse action provisions under 5 

U.S.C. chapter 75, subchapter II, do not 

apply to reductions in pay upon 

conversion into the demonstration 

project as long as the employee’s total 

rate of pay (including basic pay, plus 

any applicable locality payment, special 

rate supplement, or staffing supplement) 

is not reduced upon conversion. 

4. The first performance-based pay 

increase under the project’s pay 

adjustment mechanism will be effective 

on the first day of the last full pay 

period in calendar year 2008. 

5. For employees who enter the 

demonstration project by lateral 

reassignment or transfer (i.e., not by 

conversion of position), NNSA may 

apply parallel pay conversion rules, 

including rules for providing a prorated 

adjustment reflecting time accrued 

toward a GS within-grade increase or 

similar within-range adjustment under 

another pay system. If conversion into 

the demonstration project is 

accompanied by a geographic move, the 

employee’s pay entitlements under the 

former pay system in the new 

geographic area must be determined 

before performing the pay conversion. 

B. Conversion to the General Schedule 

System 

NNSA implementing policies will 

provide procedures for converting an 

employee’s pay band and pay rate to a 

GS-equivalent grade and rate of pay if 

the employee moves out of the 

demonstration project to a GS position. 

The converted GS-equivalent grade and 

rate of pay will be determined before 

any geographic move, promotion, or 

other simultaneous action that occurs 

simultaneously with conversion back to 

the GS system. The new employing 

organization must use the converted GSequivalent grade and rate of pay in 

applying various pay administration 

rules that govern how pay is set in the 

GS position (e.g., rules for promotion 

and highest previous rate under 5 CFR 

part 531, subpart B, and pay retention 

under 5 CFR part 536). The converted 

GS grade and rate of pay are deemed to 

have been in effect at the time the 

employee left the demonstration project 

pay banding system. The rules for 

determining the converted GS grade for 

pay administration purposes do not 

apply to the determination of an 

employee’s GS-equivalent grade for 

other purposes, such as reduction-inforce or adverse action. NNSA will 

perform the computations for employees 

who remain within NNSA and DOE. 

NNSA may perform the computations, 

as a courtesy, for employees who move 

to other Federal agencies. At a 

minimum, NNSA will provide a copy of 

the conversion procedures to gaining 

Federal agencies for their use. If an 

employee moves out of the 

demonstration project to a non-GS 

system, the employee’s pay will be set 

under the pay-setting rules governing 

that system. 

VI. Project Duration 

The initial implementation period for 

the demonstration project will be 5 

years. However, with OPM’s 

concurrence, the project may be 

extended for additional testing or 

terminated before the expiration of the 

5-year period. 

VII. Project Modification 

Demonstration projects require 

modification from time to time as 

experience is gained, results are 

analyzed, and conclusions are reached 

on how the system is working. NNSA 

may modify and adjust over time 

features and elements of this project 

plan. NNSA will coordinate such 

modifications with OPM and gain its 

approval prior to implementing the 

modification. Depending on the nature 

and extent of the modification, OPM 

may require that the modification be 

published as a notice in the Federal 

Register. 

VIII. Project Evaluation 

Chapter 47 of title 5, United States 

Code, requires an evaluation of the 

results of the demonstration project. 

NNSA, in coordination with OPM, will 

develop a plan to evaluate the 

demonstration project to determine the 

extent to which the pay increases paid 

to participating employees reflect 

meaningful distinctions among their 

levels of performance and the extent to 

which the project is achieving its other 

stated goals. Workforce data will be 

analyzed to make this assessment and to 

determine whether the project is 

resulting in any adverse impact on 

particular groups of employees. Key 

indicators, including leadership 

commitment, communication, 

stakeholder involvement, training, 

planning, mission alignment, and the 

rewarding of performance, will be 

assessed to ensure compliance with 

stated project goals. 

To evaluate and assess this project, 

NNSA intends to use a new approach 

developed by OPM and piloted during 

OPM’s 2007 assessments of the 

Department of Defense’s and 

Department of Homeland Security’s 

Alternative Personnel Systems (APSs). 

This new approach is entitled the 

‘‘Alternative Personnel Systems 

Objectives-Based Assessment 

Framework.’’ Because demonstration 

projects are APSs, this Framework will 

be applicable. 

The Assessment Framework is an 

evaluation structure for determining the 

extent to which an agency is adequately 

preparing for and progressing on the 

goals and objectives of its APS. It 

describes assessment components, 

dimensions, elements, and indicators 

that may be adapted to address the 

project’s specific requirements. The 

Framework complements the approach 

used in previous demonstration projects 

where the evaluation assessed both the 

implementation and impact of specific 

interventions and determined whether 

mstockstill on PROD1PC66 with NOTICES

72798 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

these interventions were effective and 

likely to be beneficial Governmentwide. 

It uses a standard approach that assesses 

project implementation and the extent 

to which personnel system changes are 

meeting their intended objectives. The 

Assessment Framework allows 

stakeholders, including OPM, to draw 

conclusions about the success of the 

project. It includes a set of qualitative 

and quantitative standards which, based 

on past experience in both the public 

and private sectors, and input from key 

stakeholders in both OPM and other 

agencies, are essential to successfully 

implementing significant human capital 

reforms. 

There are two major components to 

the Framework: Preparedness and 

Progress. The Preparedness component 

assesses an agency’s readiness to 

implement a demonstration project. The 

Progress component assesses the extent 

to which the agency has achieved, or is 

in the process of achieving, the project’s 

goals and objectives. 

Each of the components includes five 

dimensions or key attributes. The 

dimensions of the Preparedness 

component are Leadership 

Commitment, Open Communication, 

Training, Stakeholder Involvement, and 

Implementation Planning. Agencies that 

provide adequate emphasis and effort in 

the Preparedness dimensions are well 

positioned to successfully implement a 

demonstration project or other APS. The 

dimensions of the Progress component 

are Mission Alignment, ResultsOriented Performance Culture, 

Workforce Quality, Equitable Treatment, 

and Implementation Plan Execution. 

Agencies that demonstrate Progress in 

achieving these broad goals are 

successfully implementing their APS. 

The following table depicts the 

Assessment Framework, including the 

dimensions (key attributes of the 

Preparedness and Progress components) 

and elements (specific features that 

define dimensions) for each component. 

APS OBJECTIVES-BASED ASSESSMENT FRAMEWORK

Dimension Element 

Preparedness 

LEADERSHIP COMMITMENT: 

Agency leaders are actively engaged in promoting and gaining 

workforce acceptance of the program, as well as prioritizing program implementation. Agency leaders provide appropriate resources for program implementation and are held accountable 

for effective execution.

Engagement—The extent and sufficiency of senior leader efforts to 

promote, provide information about, and gain widespread acceptance 

of the APS across an agency workforce via leadership outreach and 

communication programs. 

Accountability—Agency leaders identify APS implementation as an 

agency priority, and are responsible for playing an active role in the 

design, development and/or implementation of the APS. 

Resources—Agency leaders ensure an agency has established an appropriate organizational framework with sufficient resources and authorities to effectively design, develop, and implement the APS. 

Governance—Agency leaders ensure a clear governance process is 

established for the APS program, including an effective mechanism 

for resolving conflicts and finalizing decisions, and this governance 

process is being used to address disagreements regarding APS design, development, and implementation issues. 

OPEN COMMUNICATION: 

Agency provides accurate, up-to-date information on system features and implementation plans. Active outreach efforts are undertaken to provide information to employees and to address 

questions and concerns. Effective mechanisms are in place for 

gathering and considering feedback.

Information Access—Agencies ensure comprehensive information is 

available via a website accessible by all employees regarding key 

APS design features, training materials, rollout schedules, and other 

APS issues. 

Outreach—Agencies conduct regular outreach sessions such as town 

meetings, webinars, electronic newsletters and other information 

channels that provide employees with up-to-date information on APS 

status and issues. 

Feedback—Agencies provide employees with an accessible mechanism for providing feedback on APS features and issues, and establish practical procedures for considering this feedback. 

TRAINING: 

Agency developers and executes a comprehensive training strategy for effective training on relevant components of the program 

to users via a range of delivery methods.

Planning—An agency establishes a comprehensive training strategy 

that addresses the full range of APS components, tools, and roles. 

Delivery—An agency implements the training strategy to ensure all 

staff receive training appropriate for their role in the APS, with special emphasis on ensuring supervisors acquire the performance management competencies required to administer the APS effectively. 

STAKEHOLDER INVOLVEMENT: 

Stakeholders are actively involved in the program design and evaluation process and play a supportive role in the implementation 

of the program.

Inclusion—Agencies engage a broad spectrum of key stakeholder 

groups to capture a wide range of perspectives regarding APS design features, and to foster buy-in and support for the APS across 

these stakeholder groups. 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72799 

APS OBJECTIVES-BASED ASSESSMENT FRAMEWORK—Continued 

Dimension Element 

IMPLEMENTATION PLANNING: 

Agency establishes and implements a comprehensive planning 

process that coordinates activities across key work streams, 

such as HR business processes and procedures, tools and technology infrastructure, and change management, while providing 

mechanisms for assessing status and managing risk.

Work Stream Planning and Coordination—Agencies require an effective planning process that identifies and defines key work streams, 

highlights critical dependencies, provides for the management and 

mitigation of risk, and facilitates regular assessments of status 

against key milestones. 

HR Business Processes and Procedures—Prior to rolling out an APS, 

an agency documents the business processes and procedures associated with all APS components, such as staffing, pay pool administration, and performance management. 

Tools and Technology Infrastructure—Agencies develop appropriate 

technology tools and infrastructure to enable administering the APS. 

Structured Approach—Agencies develop a comprehensive change 

management strategy that addresses managing the mechanisms for 

people side of change. 

Progress 

MISSION ALIGNMENT: 

The program effectively links individual, team, and unit performance to organizational goals and desired results.Line of Sight—The degree to which employee performance expectations are linked to agency mission. 

Accountability—Identifies not only whether or not the linkage is present 

in performance plans, but also whether or not employees are actually accountable for achieving them. 

RESULTS-ORIENTED PERFORMANCE CULTURE: 

The program promotes a high performance workforce by differentiating between high and low performers and rewarding employees on the basis of performance while effectively managing payroll costs.Differentiating Performance—The extent to which performance ratings 

cover a full distribution of likely levels, versus clustering at the higher 

end of the scale. 

Pay for Performance—The relationship between pay raises and 

awards/bonuses and performance rating levels. 

Cost Management—The extent to which reliable cost estimates are associated with decisions and the extent to which decision makers are 

accountable for cost management. 

WORKFORCE QUALITY: 

Agency retains its high performers, keeps employees satisfied and 

committed, attracts high-quality new hires, and transitions its low 

performers out of the organization.

Recruitment—The extent to which the agency can improve its ability to 

recruit employees with the appropriate skills, based on the perceptions of supervisory employees. 

Flexibility—The agency’s Progress in providing supervisors with the 

personnel flexibility needed to re-deploy their staff, and the extent to 

which this flexibility is used. 

Retention—The ability of an agency to use the tools provided by the 

APS to increase the rewards to high performers, thereby helping assure that they remain with the agency, and to provide appropriately 

lower rewards to lower performers such that they either improve their 

performance or decide to leave the agency. 

Satisfaction and Commitment—Based on the premise that an agency’s 

mission performance is increased when its workforce is both committed and satisfied. 

EQUITABLE TREATMENT: 

The program promotes an environment of fairness and trust for 

employees, consistent with the Merit System Principles and free 

of Prohibited Personnel Practices.

Fairness—The objective is to measure the impact of the APS on the 

perceived fairness of agency-related practices. 

Transparency—This element will assess whether pay for performance 

processes and procedures are available and understood by stakeholders. 

Trust—The literature and historical data suggest that employee trust is 

essential to success not only of the APS, but also an agency’s overall effectiveness. This element will assess the impact of the APS on 

the level of trust employees have for their supervisors. 

IMPLEMENTATION PLAN EXECUTION: 

Agency demonstrates Progress in implementing the program in accordance with its comprehensive planning process.Work Stream Planning and Status—This element will assess the execution of the implementation process in accordance with the planning 

process, with attention to key work streams, critical dependencies, 

management and mitigation of risk, and regular assessment of status. 

Performance Management System Execution—This element will provide an assessment of the extent to which the performance management components of the APS are being as intended. 

Employee Support for APS—While not definitive as to the overall effectiveness of the APS, employee support is a strong indicator of implementation Progress and will be assessed. 

mstockstill on PROD1PC66 with NOTICES

72800 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

In addition to dimensions and 

elements, NNSA’s final Evaluation Plan, 

to be approved by OPM, will stipulate 

the indicators (characteristics used to 

measure or assess the agency’s 

performance against the elements), the 

assessment criteria (standards by which 

the individual indicators are judged), 

and planned data sources to be used to 

evaluate the project. Assessment criteria 

will be used to assess indicators; 

indicators will be used to assess 

elements, and elements will be used to 

assess dimensions. An example of 

indicators, assessment criteria, and data 

sources is included in the table below: 

PROGRESS

Dimension Element Indicator Assessment criteria Data sources 

Results-Oriented Performance Culture.Pay for Performance Extent to which pay/bonuses 

are linked to performance 

(e.g., mean pay increases 

and bonuses by performance level/band).

Following program implementation, there is a high association between performance ratings and salary increases (allowing for pay 

band limits).

Following program implementation, there is a high association between performance ratings and bonuses.

Payout matrices, salaries, bonuses, and performance ratings from workforce data. 

Perception of association between performance rating 

and financial reward.

Continuing improvement over 

baseline/prior year’s work.

Employee Survey. 

Awards/pay raises in my work 

unit depend on how well 

employees perform their 

jobs. 

The evaluation process will be 

conducted in two main phases over a 5- 

year period—formative and summative 

evaluation. The formative evaluation 

phase will include baseline data 

collection (i.e., collecting ‘‘current 

state’’ measures prior to the 

implementation of the project) and 

analyses, implementation and progress 

evaluation, and interim assessments. 

The formal reports and interim 

assessments will provide information on 

the project implementation and 

operation, as well as current 

information on the impact of the project 

on veterans and EEO groups, Merit 

System Principles, and Prohibited 

Personnel Practices. The summative 

evaluation will focus on an overall 

assessment of the demonstration project 

outcomes after five years. The final 

report will provide information on how 

well the interventions achieved the 

desired goals and will provide 

recommendations on broader Federal 

Government application. 

The project will be examined during 

each phase of the evaluation to assess 

that costs are being managed effectively. 

Moreover, cost discipline will be 

examined during each phase of the 

evaluation to ensure spending remains 

within acceptable limits. The evaluation 

will also address the extent to which the 

project has incorporated the elements 

required by section 1126 of Public Law 

108–136 (5 U.S.C. 4701 note) for payfor-performance systems in 

demonstration projects: (1) Adherence 

to merit principles set forth in section 

2301 of title 5; (2) a fair, credible, and 

transparent employee performance 

appraisal system; (3) a link between 

elements of the pay-for-performance 

system, the employee performance 

appraisal system, and the agency’s 

strategic plan; (4) a means for ensuring 

employee involvement in the 

implementation and operation of the 

pay-for-performance system; (5) 

adequate training and retraining for 

supervisors, managers, and employees 

in the implementation and operation of 

the pay-for-performance system; (6) a 

process for ensuring ongoing 

performance feedback and dialogue 

between supervisors, managers, and 

employees throughout the appraisal 

period, and setting timetables for 

review; (7) effective safeguards to ensure 

that the management of the system is 

fair and equitable and based on 

employee performance; and (8) a means 

of ensuring that adequate agency 

resources are allocated for the design, 

implementation, and administration of 

the pay-for-performance system. 

IX. Costs 

A. Buy-in Costs 

There will be added costs resulting 

from the within-grade increase ‘‘buy-in’’

provision described in section V; 

however, those costs will be offset to 

some degree by the elimination of 

within-grade step increases that 

otherwise would have occurred. 

B. Recurring Costs 

All funding will be provided through 

the organization’s budget. No additional 

funding will be requested specifically 

for this project; all costs will be charged 

to available funds through existing 

appropriations, including those 

incurred in the areas of project 

development, training, and project 

evaluation. 

X. Waiver of Laws and Regulations 

Required 

A. Title 5, United States Code 

Chapter 35, section 3594: Saved pay 

for former members of the Senior 

Executive Service (only to the extent 

necessary to (1) bar employees with a 

rating of record lower than Fully Meets 

Expectations from receiving saved rate 

increases under 5 U.S.C. 3594(c)(2); (2) 

provide a saved rate that is less than the 

maximum rate (including any locality 

adjustment or staffing supplement) of 

the upper range extension for an 

employee who receives a rating of 

record of Significantly Exceeds 

Expectations will be terminated and 

converted to an equal adjusted rate; (3) 

provide the range maximum rate used to 

compute saved rate adjustments is the 

normal range maximum rate (including 

any locality adjustment or staffing 

supplement); and (4) provide when a 

frozen saved rate for an employee with 

a rating of record below Fully Meets 

Expectations falls below the applicable 

adjusted rate for the normal band 

maximum, the saved rate will be 

terminated and the employee’s pay will 

be set at an adjusted rate equal to the 

saved rate). 

Chapter 51: Classification (except that 

(1) sections 5111 and 5112 are retained 

with ‘‘grade’’ replaced by ‘‘pay bands’’

and (2) for the purpose of applying any 

other laws, regulations, or policies that 

refer to GS employees or to chapter 51 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 72801 

of title 5, United States Code, the 

modified classification system 

established under this plan must be 

considered to be a GS classification 

system under chapter 51; this includes, 

but is not limited to, the reference to the 

General Schedule in section 5545(d) 

(relating to hazard pay)). 

Chapter 53, section 5302(1)A, (8) and 

(9): Definitions (only to the extent 

necessary to provide that employees 

under the demonstration project are not 

considered to be GS employees for the 

purposes of annual adjustments under 

section 5303 or similar provisions of 

law governing annual adjustments for 

employees covered by section 5303). 

Chapter 53, section 5303: Annual 

adjustments to pay schedules. 

Chapter 53, section 5304: Localitybased comparability payments (only to 

the extent necessary to (1) provide a 

locality rate that may not exceed the rate 

for EX–IV plus 5 percent for employees 

in the upper range extension; (2) apply 

an ‘‘effective’’ locality pay percentage 

for employees in the upper range 

extension under circumstances 

described in the plan); and (3) allow a 

frozen locality pay percentage for 

employees with a rating of record below 

Fully Meets Expectations, as provided 

in the plan 

Chapter 53, section 5305: Special pay 

authority. 

Chapter 53, sections 5331–5336: 

General Schedule pay rates (except that, 

for purposes of applying any other laws, 

regulations, or policies that refer to GS 

employees or to subchapter III of 

chapter 53 of title 5, United States, 

Code, the modified pay system 

established under this plan must be 

considered to be a GS pay system 

established under such subchapter III; 

this includes, but is not limited to, 

references to the General Schedule in 

section 5304 (relating to locality pay), 

section 5545(d) (relating to hazard pay), 

and sections 5753–5754 (dealing with 

recruitment, relocation, and retention 

incentives)). 

Chapter 53, section 5362: Grade 

retention. 

Chapter 53, section 5363: Pay 

retention (only to the extent necessary 

to (1) replace ‘‘grade’’ with ‘‘band;’’ (2) 

bar employees with a rating of record 

lower than Fully Meets Expectations 

from receiving retained rate increases 

under 5 U.S.C. 5363(b)(2)(B); (3) provide 

that pay retention provisions do not 

apply to conversions into the 

demonstration project from the General 

Schedule or other pay system, as long as 

the employee’s total pay rate is not 

reduced; (4) provide the pay (including 

any locality adjustment or staffing 

supplement) of an employee in the 

upper range extension who is rated 

below Significantly Exceeds 

Expectations will be converted to a 

retained rate before processing any other 

actions; (5) provide a retained rate that 

is less than the maximum rate 

(including any locality adjustment or 

staffing supplement) of the upper range 

extension for an employee who receives 

a rating of record of Significantly 

Exceeds Expectations will be terminated 

and converted to an equal adjusted rate; 

(6) provide the range maximum rate 

used to compute retained rate 

adjustments is the normal range 

maximum rate (including any locality 

adjustment or staffing supplement); (7) 

provide a retained rate under the 

enhanced pay retention provisions in 

section III.A.10. will be increased by 

100 percent of the dollar amount of any 

increase in the normal maximum rate of 

the employee’s band during the twoyear period beginning on the date the 

employee’s retained rate is established; 

and (8) provide when a retained rate for 

an employee with a rating of record 

below Fully Meets Expectations falls 

below the applicable adjusted rate for 

the normal band maximum, the retained 

rate will be terminated and the 

employee’s pay will be set at an 

adjusted rate equal to the retained rate) 

Chapter 55, section 5542(a): Overtime 

rates (only to the extent necessary to 

provide that the GS–10 minimum 

special rate (if any) for the special rate 

category that would otherwise apply to 

an employee (but for the existence of the 

demonstration project) is deemed to be 

the ‘‘applicable special rate of pay’’ in 

determining the overtime hourly rate 

cap) 

Chapter 55, section 5547: Limitation 

on premium pay (only to the extent 

necessary to provide that an applicable 

staffing supplement is added to the GS–

15, step 10, rate in lieu of the applicable 

locality payment) 

Chapter 75, section 7512(34): Adverse 

actions (only to the extent necessary to 

replace ‘‘grade’’ with ‘‘band’’) 

Chapter 75, section 7512(4): Adverse 

actions (only to the extent necessary to 

provide that adverse action provisions 

do not apply to conversions into the 

demonstration project from the General 

Schedule or other pay system, as long as 

the employee’s total rate of pay is not 

reduced) 

Note: If any of the provisions of title 5, 

United States Code, listed above are amended 

during the period this demonstration project 

is in effect, NNSA may choose to terminate 

the waiver of one or more such provisions 

with respect to employees participating in 

the project, without formally modifying the 

project itself. NNSA must notify OPM when 

any such waiver is terminated. 

B. Title 5, Code of Federal Regulations 

Part 210, subpart A, section 

210.102(b)(12): Reassignment (only to 

the extent necessary to modify the 

definition of reassignment to include 

the movement of an NNSA 

demonstration project employee from 

one position to another position with a 

pay adjustment). 

Part 300, subpart F, section 300.604: 

Restrictions (only to the extent 

necessary to restrict advancement to a 

higher pay band to candidates who have 

completed a minimum of 52 weeks in 

positions no more than one pay band 

lower than the position to be filled) 

Part 330, subpart B, section 330.201: 

Establishment and maintenance of 

Reemployment Priority List (RPL) (only 

to the extent necessary to establish and 

maintain a reemployment priority list 

exclusively for NNSA competitive 

service demonstration project 

employees) 

Part 351, subpart D, section 351.402: 

Competitive area (only to the extent 

necessary to permit the use of career 

paths in conjunction with 

organizational units and geographic 

locations when establishing competitive 

areas) 

Part 351, subpart D, section 351.403: 

Competitive level (only to the extent 

necessary to substitute ‘‘same pay band’’

for ‘‘same grade’’) 

Part 351, subpart G, section 351.701: 

Assignment involving displacement 

(only to the extent necessary to 

substitute ‘‘one pay band’’ for ‘‘three 

grades’’ and ‘‘two pay bands’’ for ‘‘five 

grades’’) 

Part 359, subpart G, section 359.705: 

Pay (only to the extent necessary to (1) 

bar employees with a rating of record 

lower than Fully Meets Expectations 

from receiving a saved rate increase 

under 5 CFR 359.705(d)(1); (2) provide 

a saved rate that is less than the 

maximum rate (including any locality 

adjustment or staffing supplement) of 

the upper range extension for an 

employee who receives a rating of 

record of Significantly Exceeds 

Expectations will be terminated and 

converted to an equal adjusted rate; (3) 

provide the range maximum rate used to 

compute saved rate adjustments is the 

normal range maximum rate (including 

any locality adjustment or staffing 

supplement); and (4) provide when a 

saved rate for an employee with a rating 

of record below Fully Meets 

Expectations falls below the applicable 

adjusted rate for the normal band 

maximum, the saved rate will be 

terminated and the employee’s pay will 

be set at an adjusted rate equal to the 

saved rate) 

mstockstill on PROD1PC66 with NOTICES

72802 Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices 

Part 430, subpart B, section 430.203: 

Definitions (only to the extent necessary 

to allow an additional rating of record 

to support a pay decision under section 

III.C.3 or 4 of this project plan) 

Part 511, subpart B: Coverage of the 

General Schedule 

Part 530, subpart C: Special Rate 

Schedules for Recruitment and 

Retention 

Part 531, subpart B: Determining Rate 

of Basic Pay 

Part 531, subpart D: Within-Grade 

Increases 

Part 531, subpart E: Quality Step 

Increases 

Part 531, section 531.604: 

Determining an employee’s locality rate 

(only to the extent necessary to (1) allow 

a frozen locality pay percentage for 

employees with a rating of record below 

Fully Meets Expectations, as provided 

in the plan; and (2) apply an ‘‘effective’’

locality pay percentage for employees in 

the upper range extension under 

circumstances described in the plan) 

Part 531, section 531.606: Maximum 

limits on locality rates (only to the 

extent necessary to provide a locality 

rate may not exceed the rate for EX-IV 

plus 5 percent for employees in the 

upper range extension). 

Part 536, subpart B: Grade Retention 

Part 536, subpart C: Pay Retention 

(only to the extent necessary to (1) 

replace ‘‘grade’’ with ‘‘band;’’ (2) bar 

employees with a rating of record lower 

than Fully Meets Expectations from 

receiving retained rate increases under 5 

CFR 536.305; (3) provide that pay 

retention provisions do not apply to 

conversions into the demonstration 

project from the General Schedule or 

other pay system, as long as the 

employee’s total pay rate is not 

reduced); (4) provide that a retained rate 

may not exceed the rate for EX-IV plus 

5 percent; (5) provide the pay (including 

any locality adjustment or staffing 

supplement) of an employee in the 

upper range extension who is rated 

below Significantly Exceeds 

Expectations will be converted to a 

retained rate before processing any other 

actions; (6) provide a retained rate that 

is less than the maximum rate 

(including any locality adjustment or 

staffing supplement) of the upper range 

extension for an employee who receives 

a rating of record of Significantly 

Exceeds Expectations will be terminated 

and converted to an equal adjusted rate; 

(7) provide the range maximum rate 

used to compute retained rate 

adjustments is the normal range 

maximum rate (including any locality 

adjustment or staffing supplement); (8) 

provide a retained rate under the 

enhanced pay retention provisions in 

section III.A.10. will be increased by 

100 percent of the dollar amount of any 

increase in the normal maximum rate of 

the employee’s band during the twoyear period beginning on the date the 

employee’s retained rate is established; 

and (9) provide when a retained rate for 

an employee with a rating of record 

below Fully Meets Expectations falls 

below the applicable adjusted rate for 

the normal band maximum, the retained 

rate will be terminated and the 

employee’s pay will be set at an 

adjusted rate equal to the retained rate). 

Part 550, sections 550.106–107: 

Biweekly and annual maximum 

earnings limitation (only to the extent 

necessary to provide that an applicable 

staffing supplement is added to the GS–

15, step 10, rate in lieu of the applicable 

locality payment. 

Part 550, section 550.113(a): 

Computation of overtime pay (only to 

the extent necessary to provide that the 

GS–10 minimum special rate (if any) for 

the special rate category that would 

otherwise apply to an employee (but for 

the existence of the demonstration 

project) is deemed to be the ‘‘applicable 

special rate of pay’’ in determining the 

overtime hourly rate cap). 

Part 550, section 550.703: Definitions 

(to the extent necessary to modify 

paragraph (c)(4) of the definition of 

‘‘reasonable offer’’ by replacing ‘‘two 

grade or pay levels’’ with ‘‘one pay band 

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

‘‘pay band level’’). 

Part 752, section 752.401(a)(3): 

Adverse actions (only to the extent 

necessary to replace ‘‘grade’’ with 

‘‘band’’). 

Part 752, section 752.401(a)(4): 

Adverse actions (only to the extent 

necessary to provide that adverse action 

provisions do not apply to conversions 

into the demonstration project from the 

General Schedule or other pay system, 

as long as the employee’s total rate of 

pay is not reduced. 

Note: If any of the provisions of title 5, 

Code of Federal Regulations, listed above are 

revised during the period this demonstration 

project is in effect, NNSA may choose to 

terminate the waiver of one or more such 

provisions with respect to employees 

participating in the project, without formally 

modifying the project itself. NNSA must 

notify OPM when any such waiver is 

terminated. 

[FR Doc. 07–6144 Filed 12–20–07; 8:45 am] 

BILLING CODE 6325–43–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

In the Matter of: Score One, Inc., 

Physical Property Holdings, Inc.; Order 

of Suspension of Trading 

December 19, 2007. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of the issuers 

listed below. For each issuer, questions 

have arisen regarding the adequacy and 

accuracy of press releases and other 

publicly-disseminated information 

concerning, among other things: (1) The 

companies’ assets; (2) the companies’

current business operations; (3) the 

companies’ current financial condition; 

(4) the issuance of the companies’

securities; and (5) transactions in the 

companies’ securities by insiders, 

consultants, and other individuals and 

entities. 

1. Score One, Inc. is a Nevada 

corporation headquartered in Hong 

Kong. The company is dually quoted on 

the Over-the-Counter Bulletin Board 

and Pink Sheets under the ticker symbol 

‘‘SREA.’’ The company has recently 

been the subject of spam e-mails touting 

the company’s shares. 

2. Physical Property Holdings, Inc. is 

a Delaware corporation headquartered 

in Hong Kong. The company is dually 

quoted on the Over-the-Counter Bulletin 

Board and Pink Sheets under the ticker 

symbol ‘‘PPYH.’’ The company has 

recently been the subject of spam emails touting the company’s shares. 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of Score One, Inc. and 

Physical Property Holdings, Inc. 

Therefore, it is ordered, pursuant to 

section 12(k) of the Securities Exchange 

Act of 1934, that trading in the 

securities of Score One, Inc. and 

Physical Property Holdings, Inc. is 

suspended for the period commencing 

at 9:30 a.m. EST, December 19, 2007, 

and terminating at 11:59 p.m. EST, on 

January 3, 2008. 

By the Commission. 

Nancy M. Morris, 

Secretary. 

[FR Doc. 07–6174 Filed 12–19–07; 10:15 am] 

BILLING CODE 8011–01–P 

mstockstill on PROD1PC66 with NOTICES