[Federal Register Volume 75, Number 174 (Thursday, September 9, 2010)]
[Notices]
[Pages 55160-55198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22172]



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Part V





Department of Defense





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Science and Technology Reinvention Laboratory (STRL) Personnel 
Management Demonstration Project, Department of the Navy (DON), Naval 
Air System Command (NAVAIR), Naval Air Warfare Center, Weapons Division 
(NAWCWD) and Naval Air Warfare Center, Aircraft Division (NAWCAD); 
Notice

Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / 
Notices

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DEPARTMENT OF DEFENSE

Office of the Secretary


Science and Technology Reinvention Laboratory (STRL) Personnel 
Management Demonstration Project, Department of the Navy (DON), Naval 
Air System Command (NAVAIR), Naval Air Warfare Center, Weapons Division 
(NAWCWD) and Naval Air Warfare Center, Aircraft Division (NAWCAD)

AGENCY: Office of the Deputy Under Secretary of Defense (Civilian 
Personnel Policy), (DUSD (CPP)), Department of Defense (DoD).

ACTION: Notice of proposal to design and implement a personnel 
management demonstration project.

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SUMMARY: Section 342(b) of the National Defense Authorization Act 
(NDAA) for Fiscal Year (FY) 1995, Public Law (Pub. L.) 103-337 (10 
U.S.C. 2358 note), as amended by section 1109 of NDAA for FY 2000, 
Public Law 106-65, and section 1114 of NDAA for FY 2001, Public Law 
106-398, authorizes the Secretary of Defense to conduct personnel 
demonstration projects at DoD laboratories designated as Science and 
Technology Reinvention Laboratories (STRLs). The above-cited 
legislation authorizes DoD to conduct demonstration projects to 
determine whether a specified change in personnel management policies 
or procedures would result in improved Federal personnel management. 
Section 1105 of the NDAA for FY 2010, Public Law 111-84, 123 Stat. 
2486, October 28, 2009, designates additional DoD laboratories as STRLs 
for the purpose of designing and implementing personnel management 
demonstration projects for conversion of employees from the personnel 
system which applied on October 28, 2009. The NAWCWD and the NAWCAD are 
listed in subsection 1105(a) of NDAA for FY 2010 as two of the newly 
designated STRLs. These two STRLs will be the participants in the 
demonstration project proposal described in this Federal Register 
Notice (FRN).

DATES: The NAWCWD and NAWCAD demonstration project proposal may not be 
implemented until a 30-day comment period is provided, comments 
addressed, and a final Federal Register notice published. To be 
considered, written comments must be submitted on or before October 12, 
2010. Implementation of this demonstration project, once approved, will 
begin no earlier than February 1, 2011 and no later than April 28, 
2011.

ADDRESSES: Send comments on or before the comment due date by mail to 
Ms. Betty A. Duffield, CPMS-PSSC, Suite B-200, 1400 Key Boulevard, 
Arlington, VA 22209-5144; by fax to (703) 696-5462; or by e-mail to 
<a href="/cdn-cgi/l/email-protection#2c6e495858550268594a4a454940486c4f5c415f02435f4802414540"><span class="__cf_email__" data-cfemail="1b597e6f6f62355f6e7d7d727e777f5b786b76683574687f35767277">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT:
    NAVAIR: Mr. Richard Cracraft, Naval Air Warfare Center, Weapons 
Division (NAWCWD), Code 730000D, 1 Administration Circle, Building 
00464, China Lake, CA 93555-6100.
    DoD: Ms. Betty A. Duffield, CPMS-PSSC, Suite B-200, 1400 Key 
Boulevard, Arlington, VA 22209-5144

SUPPLEMENTARY INFORMATION: 

1. Background

    Since 1966, many studies of Department of Defense (DoD) 
laboratories have been conducted on laboratory quality and personnel. 
Almost all of these studies have recommended improvements in civilian 
personnel policy, organization, and management. Pursuant to the 
authority provided in section 342(b) of Public Law 103-337, as amended, 
a number of DoD STRL personnel demonstration projects were approved. 
These projects are ``generally similar in nature'' to the Department of 
Navy's ``China Lake'' Personnel Demonstration Project. The terminology, 
``generally similar in nature,'' does not imply an emulation of various 
features, but rather implies a similar opportunity and authority to 
develop personnel flexibilities that significantly increase the 
decision authority of laboratory commanders and/or directors. The STRL 
Personnel Management Demonstration Projects involve broad-banded pay 
systems and simplified classification; compensation linked to 
performance, including contribution-based pay; recruitment and staffing 
changes; and enhanced training and development including critical 
skills training, Voluntary Emeritus Corps, and sabbaticals.
    This demonstration project involves: (1) Two appointment 
authorities (permanent and modified term); (2) extended probationary 
period for newly hired employees; (3) pay banding; (4) streamlined 
delegated examining; (5) modified reduction-in-force (RIF) procedures; 
(6) simplified job classification; (7) a mission aligned objectives and 
compensation based appraisal system; (8) market based starting 
salaries; (9) academic degree and certificate training; (10) 
sabbaticals; and (11) a Voluntary Emeritus Corps.

2. Overview

    The covered organizations transitioned to the National Security 
Personnel System (NSPS) late in 2008. Subsequently, section 1113 of 
NDAA for FY 2010, Public Law 111-84,123 Stat. 2486, required all 
employees to exit NSPS by no later than January 1, 2012. Another 
section of NDAA for FY 2010, section 1105, identifies NAWCAD and NAWCWD 
as STRLs and requires them to convert to an STRL demonstration project 
within 18 months of enactment of NDAA for FY 2010. This FRN provides 
notice of the proposal to design and implement an STRL demonstration 
project plan for the covered organizations.

3. Access to Flexibilities of Other STRLs

    Flexibilities published in this Federal Register shall be available 
for use by the STRLs previously enumerated in section 9902(c)(2) of 
title 5, United States Code, which are now designated in section 1105 
of the NDAA for FY 2010, Public Law 111-84, 123 Stat. 2486, October 28, 
2009, if they wish to adopt them in accordance with DoD Instruction 
1400.37; pages 73248 to 73252 of volume 73, Federal Register; and the 
fulfilling of any collective bargaining obligations.

    Dated: September 1, 2010.
Mitchell S. Bryman,
Alternate OSD Federal Register Liaison Officer, Department of Defense.

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems With the Present System
    C. Changes Required/Expected Benefits
    D. Participating Organizations
    E. Participating Employees and Union Representation
    F. Project Design
    G. Personnel Management Board
III. Personnel System Changes
    A. Pay Banding
    1. Occupational Families
    2. Pay Band Design
    3. Above GS-15 Positions
    B. Classification
    1. Occupational Series
    2. Classification Standards and Position Descriptions
    3. Fair Labor Standards Act
    4. Classification Authority
    5. Classification Appeals
    C. Mission Aligned Objectives and Compensation
    1. Overview
    2. Individual Mission Objectives (IMO)
    3. Rating Benchmarks
    4. Performance Feedback and Formal Ratings
    5. Pay Pools
    6. Performance Payout Determination
    7. Base Pay Increases and Bonuses

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    8. Extraordinary Achievement Allowance (EAA)
    9. Pay Growth Within a Pay Band
    10. Awards
    11. General Pay Increase
    12. Requests for Reconsideration
    13. Adverse Actions
    D. Hiring Authority
    1. Qualifications
    2. Delegated Examining
    3. Distinguished Scholastic Achievement Appointment Authority 
(DSAA) for Scientific and Engineering Positions
    4. Legal Authority
    5. Expanded Term Appointments
    6. Extended Probationary Period
    7. Termination of Probationary Employees
    8. Supervisory Probationary Periods
    9. Volunteer Emeritus Corps
    10. Direct Hire Authority for Scientists and Engineers With 
Advanced Degrees for Scientific and Engineering Positions
    11. Non-Citizen Hiring
    E. Internal Placement
    1. Employees Hired From Outside the NAWC STRL
    2. Promotion
    3. Reassignment
    4. Demotion or Placement in a Lower Pay Band
    5. Simplified Assignment Process
    6. Details and Temporary Promotions
    7. Exceptions to Competitive Procedures
    F. Pay Administration
    1. General
    2. Locality Pay
    3. Pay and Compensation Ceilings
    4. Pay Setting for Appointment
    5. Pay Setting for Promotion
    6. Pay Setting for Reassignment
    7. Pay Setting for Demotion or Placement in a Lower Pay Band
    8. Staffing Supplements
    9. Educational Pay Adjustment
    10. Developmental Promotions
    11. Pay Retention
    G. Employee Development
    1. Expanded Developmental Opportunity Program
    H. Reduction-in-Force (RIF) Procedures
    1. Competitive Areas
    2. Assignment Rights
    3. Crediting Performance in RIF
IV. Implementation Training
V. Movement Into and Out of the Demonstration Project
    A. Conversion From NSPS to the Demonstration Project
    1. Placement Into Demonstration Project Pay Plans and Pay Bands
    2. Pay Upon Conversion
    3. Fair Labor Standards Act (FLSA) Status
    4. Transition Equity
    5. Converting Employees on NSPS Term and Temporary Appointments
    6. Probationary Periods
    B. Conversion From Other Personnel Systems
    C. Movement Out of the NAVAIR STRL Demonstration Project
    1. Termination of Coverage Under the NAVAIR STRL Demonstration 
Project Pay Plans
    2. Determining a GS-Equivalent Grade and GS-Equivalent Rate of 
Pay for Pay Setting Purposes When a NAVAIR Employee's Coverage by a 
Demonstration Project Pay Plan Terminates or the Employee 
Voluntarily Exits the NAVAIR STRL Demonstration Project
    3. Supervision and Management Pay Band VI Employees
    4. Employees With Pay Retention
    5. Within-Grade Increase--Equivalent Increase Determinations
    D. Personnel Administration
    E. Automation Support
    1. General
    2. Defense Civilian Personnel Data System (DCPDS)
    F. Experimentation and Revision
VI. Project Duration
VII. Evaluation Plan
    A. Overview
    B. Evaluation Model
    C. Evaluation
    D. Method of Data Collection
VIII. Demonstration Project Costs
    A. Cost Discipline
    B. Developmental Costs
IX. Required Waivers to Law and Regulation
    A. Waivers to Title 5, U.S.C.
    B. Waivers to Title 5, CFR
Appendix A: NAWCAD and NAWCWD Duty Locations
Appendix B: Occupational Series by Occupational Family
Appendix C: Intervention Model
Appendix D: Individual Pay Band Level Rating Benchmarks Examples
Appendix E: Career Stage Rating Benchmarks Examples

I. Executive Summary

    NAWCAD is an organization within NAVAIR dedicated to maintaining a 
center of excellence for fixed- and rotary-wing aircraft and their 
propulsion systems, avionics systems, training systems, take-off and 
landing systems, and associated support and equipment including air 
traffic control and communications and ship/shore/air operations. 
NAWCAD has three primary locations: Patuxent River, MD; Lakehurst, NJ; 
and Orlando, FL. These facilities support research, development, test, 
evaluation, engineering, and fleet support of Navy and Marine Corps air 
vehicle systems and trainers. NAWCAD is a world leader in Naval 
aviation whose products and services include: Aircraft, avionics, air-
launched weapons, electronic warfare systems, cruise missiles, unmanned 
aerial vehicles, launch and arresting gear, training equipment and 
facilities, and all other equipment related to Navy and Marine Corps 
air power. The mission of the NAWCAD is to be the Navy's principal 
research, development/test, evaluation, engineering, and fleet support 
activity for naval aircraft, engines, avionics, aircraft support 
systems, and ship/shore/air operations. NAWCAD is the steward of the 
ranges, test facilities, laboratories, and aircraft necessary to 
support the Fleet's acquisition requirements.
    NAWCWD is an organization within NAVAIR dedicated to maintaining a 
center of excellence in weapons development for the DON. NAWCWD has two 
locations: China Lake, CA hosting the land test range and Point Mugu, 
CA hosting the sea test range. NAWCWD is a world leader in Research, 
Development, Acquisition, Test, and Evaluation (RDA, T&E) of guided 
missiles, advanced weapons and systems, complex software integration on 
tactical aircraft, energetic materials, and subsystems. It is also a 
Center of Excellence for weapons and armaments and live-fire 
survivability testing. The mission of the NAWCWD is to provide Navy and 
Marine Corps warriors with effective, affordable, integrated warfare 
systems, and lifecycle support to ensure battlespace dominance. The 
NAWCWD is the steward of the ranges, test facilities, and laboratories 
necessary to support the Fleet's acquisition requirements.
    The goal of this demonstration project is to enhance and sustain 
the quality and professionalism of the covered organizations' 
workforces through improvements in the efficiency and effectiveness of 
the human resource system. The project interventions will strive to 
achieve the best workforce for the mission, adjust the workforce for 
change, and improve workforce satisfaction. This demonstration project 
is built on the concepts, and uses much of the same language, as the 
other STRL demonstration projects already in place in DoD and is guided 
by 25 years of experience in operating the Navy's ``China Lake,'' 
demonstration project. The results of the project will be evaluated 
within five years of implementation.

II. Introduction

A. Purpose

    The purpose of the project is to demonstrate that the effectiveness 
of DoD STRLs can be enhanced by expanding opportunities available to 
employees and by allowing greater managerial control over personnel 
functions through a more responsive and flexible personnel system. 
Federal laboratories need more efficient, cost effective, and timely 
processes and methods to acquire and retain a highly creative, 
productive, educated, and trained workforce. This project, in its 
entirety, attempts to improve employees' opportunities and provide 
managers, at the lowest practical level, the authority, control, and 
flexibility needed to achieve the highest quality

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organization and hold them accountable for the proper exercise of this 
authority within the framework of an improved personnel management 
system.
    Many aspects of a demonstration project are experimental. 
Modifications may be made from time to time as experience is gained, 
results are analyzed, and conclusions are reached on how the system is 
working. The provisions of this project plan will not be modified, or 
extended to individuals or groups of employees not included in the 
project plan without the approval of the ODUSD(CPP). The provisions of 
DoDI 1400.37 are to be followed for any modifications, adoptions, or 
changes to this demonstration project plan.

B. Problems With the Present System

    The current Civil Service General Schedule (GS) system has existed 
in essentially the same form since 1949. Work is classified into one of 
fifteen overlapping pay ranges that correspond with the fifteen grades. 
Base pay is set at one of those fifteen grades and the ten interim 
steps within each grade. The Classification Act of 1949 rigidly defines 
types of work by occupational series and grade, with very precise 
qualifications for each job. This system does not quickly or easily 
respond to new ways of designing work and changes in the work itself.
    The performance management model that has existed since the passage 
of the Civil Service Reform Act in 1980 has come under extreme 
criticism. Employees frequently report there is inadequate 
communication of performance expectations and feedback on performance. 
There are perceived inaccuracies in performance ratings with general 
agreement that the ratings are inflated and often unevenly distributed 
by grade, occupation and geographic location.
    The present reduction-in-force (RIF) process is unresponsive to 
requirements for work force restructuring and requires enhancement to 
provide better retention of the highest performing employees with 
mission appropriate skills.
    The need to change the current hiring system is essential as the 
covered organizations must be able to recruit and retain scientific, 
engineering, acquisition, skilled technical, and other professional, 
administrative, and support employees. The covered organizations must 
be able to compete with the private sector for the best talent and be 
able to make job offers in a timely manner with the attendant bonuses 
and incentives to attract high quality employees.
    Current limitations on training, retraining, and otherwise 
developing employees make it difficult to correct skill imbalances and 
to prepare current employees for new lines of work to meet changing 
missions and emerging technologies.

C. Changes Required/Expected Benefits

    1. The primary benefit expected from this demonstration project is 
greater organizational effectiveness through increased employee 
satisfaction. The Department of the Navy ``China Lake'' and NIST 
demonstration projects produced impressive statistics on increased job 
satisfaction and quality of employees versus that for the Federal 
workforce in general. This project will demonstrate that a human 
resource system tailored to the mission and needs of the covered 
organizations' workforce will facilitate increased:
    a. Quality in the workforce and resultant products,
    b. Timeliness of key personnel processes,
    c. Retention of ``excellent performers,''
    d. Success in recruitment of personnel with critical skills,
    e. Management authority and accountability,
    f. Satisfaction of customers, and
    g. Workforce satisfaction with the personnel management system.
    2. An evaluation model was developed for the Director of Defense, 
Research and Engineering (DDR&E) in conjunction with STRLs, service 
representatives, and the Office of Personnel Management (OPM). The 
model, as modified in this plan, will measure the effectiveness of this 
demonstration project and will be used to measure the results of 
specific personnel system changes.

D. Participating Organizations

    NAWCAD and NAWCWD are organizations within the NAVAIR and are 
composed of five business units located at five diverse major 
geographic locations. The locations are: Lakehurst, NJ, Patuxent River, 
MD; Orlando, FL; China Lake, CA; and Pt. Mugu, CA. Additionally there 
are employees in a variety of other geographic locations shown in 
Appendix A. It should be noted that sites with fewer than 10 people may 
change. Successor organizations will continue coverage in the 
demonstration project.

E. Participating Employees and Union Representation

    This demonstration project will cover approximately 8,400 NAWCAD 
and NAWCWD civilian employees under title 5 U.S.C. in the occupations 
listed in Appendix B. The project plan does not cover members of the 
Senior Executive Service (SES), Scientific and Professional (ST) 
employees, Federal Wage System (FWS) employees, employees presently 
covered by the Defense Civilian Intelligence Personnel System (DCIPS), 
or DON centrally funded interns.
    The details and provisions covered under this Personnel Management 
Demonstration Project do not apply to any bargaining unit within NAWCAD 
or NAWCWD until a mutual agreement is reached between the STRL 
organization and the applicable exclusive representative. This 
demonstration project will not cover any bargaining unit members at 
implementation. If there is interest on the part of any of NAWCAD's or 
NAWCWD's bargaining units at any of their sites in participating in the 
NAWCAD or NAWCWD STRL demonstration project, negotiations would begin 
after publication of this Federal Register notice. The covered STRL 
organizations will fulfill their obligation to consult and/or negotiate 
with all labor organizations in accordance with 5 U.S.C. 4703(f) and 
7117, as applicable.

F. Project Design

    An overarching objective in the project design has been the 
development of a personnel system that provides a maximum opportunity 
for adaptability to meet the variety of requirements of organizations 
engaged in missions ranging from RDA, T&E of guided missiles, advanced 
weapons and systems, complex software integration on tactical aircraft, 
energetic materials and subsystems to fixed- and rotary-wing aircraft 
and their propulsion systems, avionics systems, training systems, take-
off and landing systems, associated support and equipment including air 
traffic control and communications, and ship/shore/air operations. This 
demonstration project is built upon the successes of the many 
demonstration projects that have preceded it and adapts many of the 
provisions and features that have been shown to be successful in these 
other STRL demonstration projects to the NAWCAD and NAWCWD 
organizations.

G. Personnel Management Board

    1. The covered organizations will create a Personnel Management 
Board to oversee and monitor the fair, equitable, and consistent 
implementation of the provisions of the demonstration project to 
include establishment of internal controls and accountability. Members 
of the board are senior leaders appointed by the Executive Directors of 
the covered organizations. As needed, ad

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hoc members will serve in an advisory capacity to the Board.
    2. The board will execute the following:
    a. Establish policies and issue guidance on the composition of pay 
pools in accordance with the guidelines of this proposal and internal 
procedures;
    b. Review operation of pay pools and provide guidance to Pay Pool 
Managers;
    c. Oversee disputes in pay pool issues;
    d. Establish policies and issue guidance on the formulation and 
execution of the civilian pay budget;
    e. Establish policies and issue guidance on the awards pools;
    f. Establish policies and issue guidance on hiring and promotion 
base pay as well as exceptions to pay-for-performance base pay 
increases;
    g. Establish policies and issue guidance on classification review 
and oversight, monitoring and adjusting classification practices and 
deciding board classification issues;
    h. Approve major changes in position structure;
    i. Address issues associated with multiple pay systems during the 
demonstration project;
    j. Establish policies and issue guidance on and approve Standard 
Performance Elements and Benchmarks;
    k. Assess the need for changes to demonstration project procedures 
and policies;
    l. Ensure in-house budget discipline;
    m. Establish policies and issue guidance for workforce staffing and 
budget plans;
    n. Develop policies and procedures for administering Developmental 
Opportunity Programs;
    o. Ensure that all employees are treated in a fair and equitable 
manner in accordance with the policies, regulations and guidelines 
covering this demonstration project; and,
    p. Monitor the evaluation of the project.

III. Personnel System Changes

A. Pay Banding

    The design of the pay banding system has the benefit of being 
preceded by exhaustive studies of pay banding systems currently 
practiced in the Federal sector. The pay banding system will replace 
both the current NSPS and GS structure. The flexibilities in this pay 
banding section are similar in nature to the authority granted to: The 
Naval Ocean Systems Center, San Diego, California 92152 and the Naval 
Weapons Center, China Lake, California 93555, 45 FR 26504, April 18, 
1980.
1. Occupational Families
    Occupations with similar characteristics will be grouped together 
into one of five occupational families with pay band levels designed to 
facilitate pay progression. Progression through the band depends on 
individual achievement, contribution to the mission goals, and 
accomplishment of higher level, broader scope, more difficult work 
assignments. Each occupational family will be composed of pay bands 
corresponding to recognized advancement and career progression expected 
within the occupations. These pay bands will replace individual grades 
and will not be the same for each occupational family. Each 
occupational family will be divided into three to six pay bands with 
each pay band covering the same base pay range that would be covered by 
one or more GS grades. Employees track into an occupational family 
based on their current series as provided in Appendix B. Note that 
where the current series does not exist outside of NSPS the employee 
will be placed in the appropriate OPM series before being placed into 
an STRL occupational family. Upon conversion into the demonstration 
project each employee is assured an initial placement in the STRL 
demonstration project without a loss in pay. The upper and lower pay 
rate for base pay of each band is defined by the GS rate for the grade 
and step as indicated in Figure 1 except for Pay Band V of the 
Engineering and Science occupational family. Comparison to the GS 
grades and NSPS pay bands was used in setting the upper and lower base 
pay dollar limits of the pay band levels. However, once employees are 
moved into the demonstration project, GS grades and NSPS pay bands will 
no longer apply. The current occupations have been examined, and their 
characteristics and distribution have served as guidelines in the 
development of the following five occupational families:
    a. Scientific and Engineering (S&E) (Pay Plan DP): This 
occupational family includes technical professional positions, such as 
engineers, physicists, chemists, mathematicians, operations research 
analysts, and computer scientists. Specific course work or educational 
degrees are required for these occupations. Four bands have been 
established for the S&E occupational family:
    (1) Band I is a student trainee developmental track covering GS-1, 
step 1, through GS-4, step 10.
    (2) Band II is a developmental track covering GS-5, step 1, through 
GS-11, step 10.
    (3) Band III is a full-performance technical track covering GS-12, 
step 1, through GS-13, step 10.
    (4) Band IV includes senior technical positions covering GS-14, 
step 1, through GS-15, step 10.
    b. S&E Technician (Pay Plan DT): This occupational family includes 
technician positions, such as engineering technicians, electronics 
technicians, physical science technicians, mathematic technicians, and 
geodetic technicians. These occupations require practical technical 
expertise in scientific or engineering support but specific course work 
or educational degrees are not required for these occupations. Four 
bands have been established for the S&E Technician occupational family:
    (1) Band I is an entry level trainee developmental track covering 
GS-1, step 1, through GS-4, step 10.
    (2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-9, step 10.
    (3) Band III is a full-performance technical track covering GS-10, 
step 1 through GS-11, step 10.
    (4) Band IV includes senior technical covering GS-12, step 1, 
through GS-13, step 10.
    c. Technical Specialist (Pay Plan DS): This occupational family 
includes such positions as logistics management specialists, equipment 
specialists, computer specialists, and telecommunications specialists. 
Employees in these positions may or may not require specific course 
work or educational degrees. Five bands have been established for this 
occupational family:
    (1) Band I is a student trainee developmental track covering GS-1, 
step 1, through GS-4, step 10.
    (2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-9, step 10.
    (3) Band III is a full performance track covering GS-10, step 1, 
through GS-11, step 10.
    (4) Band IV is a senior specialist track covering GS-12, step 1, 
through GS-13, step 10.
    (5) Band V is an expert specialist track covering GS-14, step 1, 
through GS-15, step 10.
    d. Business Professional & Program Management (Pay Plan DA): This 
occupational family includes such positions as program managers, 
program acquisition specialists, budget officers, financial managers, 
accountants, administrative officers, human resources specialists, and 
management analysts. Employees in these positions

[[Page 55164]]

may or may not require specific course work or educational degrees. 
Five bands have been established for this occupational family:
    (1) Band I is a student trainee developmental track covering GS-1, 
step 1, through GS-4, step 10.
    (2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-9, step 10.
    (3) Band III is a full performance track covering GS-10, step 1, 
through GS-11, step 10.
    (4) Band IV is a senior specialist track covering GS-12, step 1, 
through GS-13, step 10.
    (5) Band V is an expert specialist track covering GS-14, step 1, 
through GS-15, step 10.
    e. Administrative Support (Pay Plan DG): This occupational family 
is composed of positions for which specific course work or an 
educational degree is not required. Clerical work usually involves the 
processing and maintenance of records. Assistant work requires 
knowledge of methods and procedures within a specific administrative 
area. This family includes such positions as secretaries, office 
managers, office automation clerks, security technician, safety 
technician, library technician and budget/program/computer assistants. 
Six bands have been established for this occupational family:
    (1) Band I includes entry-level/developmental positions covering 
GS-1, step 1, through GS-3, step 10.
    (2) Band II* includes developmental and low-range full-performance 
positions covering GS-4, step 1, through GS-5, step 10.
    (3) Band III* includes mid-range full-performance technicians/
assistants/secretaries covering GS-5, step 1, through GS-6, step 10.
    (4) Band IV* includes high-range full-performance technicians/
assistants/secretaries covering GS-6, step 1, through GS-7, step 10.
    (5) Band V includes senior technicians/assistants/secretaries 
covering GS-8, step 1, through GS-9, step 10.
    (6) Band VI includes expert technicians/assistants/secretaries 
covering GS-10, step 1, through GS-11, step 10.
    * Band III overlaps with band II and IV. These bands replicate a 
feature used by the Navy's ``China Lake'' project.
    f. The Supervision and Management pay band includes all employees 
performing supervisory functions. This pay band is not applicable to 
team leaders. To be classified to these pay bands the supervisor must 
perform the full range of supervisory duties. To meet the full range of 
supervisory duties the supervisor must perform 3 of the first 4, and a 
total of 6 or more of the following:
    (1) Plan work and prepare performance plans covering work to be 
accomplished by subordinates, set and adjust short-term priorities, and 
prepare schedules for completion of work;
    (2) Assign work to subordinates based on priorities, selective 
consideration of the difficulty and requirements of assignments, and 
the capabilities of employees;
    (3) Evaluate work performance of subordinates and recommend 
official performance ratings;
    (4) Give advice, counsel, or instruction to employees on both work 
and administrative matters;
    (5) Interview candidates for positions in the unit; recommend 
appointment, promotion, or reassignment to such positions;
    (6) Hear and resolve complaints from employees, referring group 
grievances and more serious unresolved complaints to a higher level 
supervisor or manager;
    (7) Effect minor disciplinary measures, such as warnings and 
reprimands, recommending other action in more serious cases;
    (8) Identify developmental and training needs of employees, 
providing or arranging for needed development and training;
    (9) Find ways to improve production or increase the quality of the 
work directed;
    (10) Make appropriate distinctions in levels of performance while 
equitably applying performance standards.
    A supervisory position cannot be established on the basis of only 
one subordinate position. These pay bands can include any series.
    (1) Band II is a supervision and management track covering GS-6, 
step 1, through GS-8, step 10.
    (2) Band III is a supervision and management track covering GS-9, 
step 1, through GS-11, step 10.
    (3) Band IV is a supervision and management track covering GS-12, 
step 1, through GS-14, step 10.
    (4) Band V is a supervision and management track covering GS-14, 
step 1, through GS-15, step 10.
    (5) Band VI is reserved for those S&E professional positions 
classified above GS-15.
    * Band IV overlaps with band V. These bands replicate a feature 
used by the NAVSEA Warfare Centers' STRL demonstration project.
2. Pay Band Design
    The demonstration project pay bands for the occupational families 
and how they relate to the current GS and NSPS framework are shown in 
Figure 1.
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3. Above GS-15 Positions
    The pay banding plan for the Supervision and Management 
occupational family includes a pay band VI to provide the ability to 
accommodate positions having duties and responsibilities that exceed 
the GS-15 classification criteria. This pay band is based on the Above 
GS-15 Position concept found in other STRL personnel management 
demonstration projects that was created to solve a critical 
classification problem. The STRLs have positions warranting 
classification above GS-15 because of their technical expertise 
requirements including inherent supervisory and managerial 
responsibilities. However, these positions are not considered to be 
appropriately classified as Scientific and Professional Positions (STs) 
because of the degree of supervision and level of managerial 
responsibilities. Neither are these positions appropriately classified 
as Senior Executive Service (SES) positions because of their 
requirement for advanced specialized scientific or engineering 
expertise and because the positions are not at the level of general 
managerial authority and impact required for an SES position.
    The original Above GS-15 Position concept was to be tested for a 
five-year period. The number of trial positions was set at 40 with 
periodic reviews to determine appropriate position requirements. The 
Above GS-15 Position concept is currently being evaluated by DoD 
management for its effectiveness; continued applicability to the 
current STRL scientific, engineering, and technology workforce needs; 
and appropriate allocation of billets based on mission requirements. 
The degree to which the laboratory plans to participate in this concept 
and develop classification, compensation and performance management 
policy, guidance, and implementation processes will be based on the 
final outcome of the DoD evaluation. Additional guidance will be 
included in NAWCAD/NAWCWD internal issuances.

B. Classification

    The flexibilities in this Classification section are similar in 
nature to the authority granted to the Naval Ocean Systems Center, San 
Diego, California 92152 and the Naval Weapons Center, China Lake, 
California 93555, 45 FR 26504, April 18, 1980.
1. Occupational Series
    The present GS classification system has over 400 occupational 
series, which are divided into 23 occupational groupings. The covered 
organizations currently have positions in approximately 132 
occupational series that fall into 21 occupational groupings. All 
positions listed in Appendix B will be in the classification structure. 
Provisions will be made for including other occupations in response to 
changing missions.
2. Classification Standards and Position Descriptions
    The present system of OPM classification standards will be used for 
the identification of proper series and occupational titles of 
positions within the demonstration project. Current OPM position 
classification standards will not be used to grade positions in this 
project. However, the grading criteria in those standards will be used 
as a framework to develop new and simplified standards for the purpose 
of pay band determinations. The objective is to record the essential 
criteria for each pay band within each occupational family by stating 
the characteristics of the work, the responsibilities of the position, 
and the competencies required. New position descriptions will replace 
the current job descriptions. The classification standard for each pay 
band will serve as an important component in the new position 
description, which will also include position-specific information, and 
provide selective placement factors and other data element information 
pertinent to the job.
    Specialty area codes (SAC) written as narrative descriptions and 
assigned a specific identification code may be used to further 
differentiate types of work and the competencies required for 
particular positions within an occupational family and pay band. Each

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code represents a specialization or type of work within the occupation.
3. Fair Labor Standards Act
    Fair Labor Standards Act (FLSA) exemption and non-exemption 
determinations will be consistent with criteria found in 5 CFR part 
551. All employees are covered by the FLSA unless they meet the 
criteria for exemption. The duties and responsibilities outlined in the 
classification standards for each pay band will be compared to the FLSA 
criteria. As a general rule, the FLSA status can be matched to 
occupational family and pay band as indicated in Figure 2. For example, 
positions classified in Pay Band I of the S&E occupational family are 
typically nonexempt, meaning they are covered by the overtime 
entitlements prescribed by the FLSA. An exception to this guideline 
includes supervisors/managers whose primary duty meets the definitions 
outlined in the OPM GS Supervisory Guide. Therefore, supervisors/
managers in any of the pay bands who meet the foregoing criteria are 
exempt from the FLSA. Supervisors with classification authority will 
make the determinations on a case-by-case basis by comparing assigned 
duties and responsibilities to the classification standards for each 
pay band and the 5 CFR part 551 FLSA criteria. Additionally, the advice 
and assistance of the servicing Human Resources Office (HRO) and the 
servicing Human Resources Service Center (HRSC) can be obtained in 
making determinations. The benchmark position descriptions will not be 
the sole basis for the determination; the actual duties performed are 
the controlling criteria. Exemption criteria will be narrowly construed 
and applied only to those employees who clearly meet the spirit of the 
exemption.
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    N--Non-Exempt from FLSA; E--Exempt from FLSA; N/E--Exemption 
status determined on a case-by-case basis.

    Note: Although typical exemption status under the various pay 
bands is shown in the above table, actual FLSA exemption 
determinations are made on a case-by-case basis.

4. Classification Authority
    The covered organizations' Executive Directors will have delegated 
classification authority for all pay bands with the exception of 
Supervision and Management band VI and may, in turn, re-delegate this 
authority to appropriate levels. Classification authority for Science 
and Engineering band V will be consistent with DoD guidance. Position 
descriptions will be developed to assist managers in exercising 
delegated position classification authority. Managers will identify the 
occupational family, job series, functional code, specialty work code, 
pay band level, and the appropriate acquisition codes. Human resources 
specialists will provide ongoing consultation and guidance to managers 
and supervisors throughout the classification process. These decisions 
will be documented on the position description.
5. Classification Appeals
    Classification appeals under this demonstration project will be 
processed using the following procedures: An employee may appeal the 
determination of occupational family, occupational series, position 
title, and pay band of his/her position at any time. An employee must 
formally raise the area of concern to supervisors in the immediate 
chain of command, either verbally or in writing. If the employee is not 
satisfied with the supervisory response, he/she may then appeal to the 
Executive Director of his/her organization. If the employee is not 
satisfied with the Executive Director's response, he/she may then 
appeal to the DoD appellate level. Appeal decisions rendered by DoD 
will be final and binding on all administrative, certifying, payroll, 
disbursing, and accounting officials of the government. Classification 
appeals are not accepted on positions which exceed the equivalent of a 
GS-15 level. Additional guidance will be included in the NAWCAD/NAWCWD 
internal issuances.
    An employee may not appeal the accuracy of the position 
description, the demonstration project classification criteria, or the 
pay-setting criteria; the assignment of occupational series to the 
occupational family; the propriety of a pay schedule; or matters 
covered by an administrative or negotiated grievance procedure, or an 
alternative dispute resolution procedure.
    The evaluations of classification appeals under this demonstration 
project are based upon the demonstration project classification 
criteria. Case files will be forwarded for adjudication through the 
HRO/HRSC providing personnel service and will include copies of 
appropriate demonstration project criteria.

C. Mission Aligned Objectives and Compensation

1. Overview
    The purpose of mission aligned objectives and compensation is to 
directly link the work of the employee to the mission of the 
organization and provide a mechanism for recognizing

[[Page 55167]]

the impact of the employee's accomplishments and contributions to help 
achieve that mission. It also provides an effective, efficient, and 
flexible method for assessing, compensating, and managing the covered 
organization's workforce. It is essential for the development of a 
highly productive workforce and to provide management at the lowest 
practical level, the authority, control, and flexibility needed to 
achieve a quality organization and meet mission requirements. Mission 
aligned objectives and compensation allows for more employee 
involvement in the assessment process, strives to increase 
communication between supervisor and employee, promotes a clear 
accountability of performance, facilitates employee career progression, 
and provides an understandable and rational basis for pay changes by 
linking mission directly to both annual evaluations and compensation 
outcomes.
    The mission aligned objectives and compensation system uses annual 
payouts that are based on the employee's accomplishments and 
contributions to mission accomplishment rather than within-grade 
increases, quality step increases, promotions from one grade to another 
where both grades are now in the same pay band (i.e., there are no 
within-band promotions), and performance awards. In addition to 
objectives, other factors that can be considered in determining overall 
payout include organizational performance, team performance, or a 
combination of individual performance, contribution, and/or 
compensation. If elements other than the employee's individual 
accomplishments and contributions against their objectives and their 
compensation will be taken into consideration, this must be a part of 
the written performance plan. The employee must be advised of the 
applicability of these factors within the same time requirements as the 
individual mission objectives. The normal rating period will be one 
year. Objectives, representing joint efforts of employees and their 
supervisors, must be in place within 30 days from the beginning of each 
rating period and the minimum rating period will be 90 days. First-time 
hires into demonstration project positions must have plans in place 
within 30 days of the effective date of their entry into the 
demonstration project and current demonstration project employees who 
change positions during the performance year should have their plans 
updated with new objectives no later than 30 days after assignment to 
the new position. Mission aligned compensation and rewards payouts can 
be in the form of increases to base pay and/or in the form of bonuses 
that are not added to base pay but rather are given as a lump sum cash 
bonus. Other awards such as special acts, time-off awards, etc., will 
be retained separately from the pay-for-performance payouts.
    Employees who do not meet the 90 day minimum requirement will be 
ineligible for a normal rating and will be given a presumptive rating. 
They may receive only the general pay increase and they may also 
receive title 5 cash awards if appropriate.
    The system will have the flexibility to be modified, if necessary, 
as more experience is gained under the project. The flexibilities in 
this Mission Aligned Objectives and Compensation section are similar in 
nature to the authority granted to: (1) The Naval Ocean Systems Center, 
San Diego, California 92152 and the Naval Weapons Center, China Lake, 
California 93555, 45 FR 26504, April 18, 1980, and (2) the Army 
Research Laboratory (ARL), 65 FR 3500, January 21, 2000.
2. Individual Mission Objectives (IMO)
    Individual mission objectives will be directly related to achieving 
the mission of the employee's organization. They define a target level 
of activity, expressed as a tangible, measurable objective, against 
which actual achievement can be compared. These objectives will 
specifically identify what is expected of the employee during the 
rating period and will typically consist of three to ten results-
oriented statements. It is expected that these objectives will also 
incorporate important behavioral practices such as teamwork and 
cooperation where they are key to successful accomplishment of the 
assignment. A Supervision/EEO objective is mandatory for all managers/
supervisors. The employee and his/her supervisor will jointly develop 
the employee's individual mission objectives at the beginning of the 
rating period. These are to be reflective of the employee's duties/
responsibilities, pay band and pay level in the band as well as the 
mission/organizational goals and priorities. Objectives will be 
reviewed annually and revised upon changes in pay reflecting increased 
responsibilities commensurate with pay increases. Use of generic one-
size-fits-all objectives will be avoided, as individual mission 
objectives are to define an individual's specific responsibilities and 
expected accomplishments for the performance year. In contrast, rating 
benchmarks as described in the next paragraph will identify 
characteristics, against which the accomplishment of objectives will be 
measured. As a part of this demonstration project, training focused on 
overall organizational objectives and the development of individual 
mission objectives will be held for both supervisors and employees.
    Individual mission objectives may be jointly modified, changed or 
deleted as appropriate during the rating cycle. As a general rule, 
objectives should only be changed when circumstances outside the 
employee's control prevent or hamper the accomplishment of the original 
objectives. It is also appropriate to change objectives when mission or 
workload shifts occur.
    All objectives are critical. A critical mission objective is 
defined as an attribute of job performance that is of sufficient 
importance that achievement below the minimally acceptable level 
requires remedial action and may be the basis for removing an employee 
from his/her position. Non-critical objectives will not be used. Each 
of the objectives may be assigned a weight, which reflects its 
importance in accomplishing an individual's mission objectives. The 
minimum weight assigned may not be less than 10%. The sum of the 
weights for all of the elements must equal 100. At the beginning of the 
rating period, higher level managers will review the objectives and 
weights assigned to employees within the pay pool, to verify 
consistency and appropriateness.
3. Rating Benchmarks
    Rating benchmarks define characteristics that will be used to 
evaluate the employee's success in accomplishing his/her individual 
mission objectives. The use of characteristics for scoring purposes 
helps to ensure comparable scores are assigned while accommodating 
diverse individual objectives. A single set of rating benchmarks for 
each band or rating benchmarks by career stage may be used for 
evaluating the annual performance of all NAWCAD and NAWCWD personnel 
covered by this plan. An example of each type of benchmark is shown at 
Appendices D and E. The set of benchmarks used may evolve over time, 
based on experience gained during each rating cycle. This evolution is 
essential to capture the critical characteristics the organization 
encourages in its workforce toward meeting individual and 
organizational objectives. This is particularly true in an environment 
where technology and work processes are changing at an increasingly 
rapid pace. The Personnel Management Board will annually review the set 
of benchmarks and set

[[Page 55168]]

them for the entire organization before the beginning of the rating 
period.
4. Performance Feedback and Formal Ratings
    The most effective means of communication is person-to-person 
discussion between supervisors and employees of requirements, 
performance goals, and desired results. Employees and supervisors alike 
are expected to actively participate in these discussions for optimum 
clarity regarding expectations and identify potential obstacles to 
meeting goals. In addition, employees should explain (to the extent 
possible) what they need from their supervisor to support goal 
accomplishment. The timing of these discussions will vary based on the 
nature of work performed, but will occur at least at the mid-point and 
end of the rating period. The supervisor and employee will discuss job 
performance and accomplishments in relation to the expectations in the 
mission aligned objectives. At least one review, normally the mid-point 
review, will be documented as a formal progress review. More frequent, 
task specific discussions may be appropriate in some organizations. In 
cases where work is accomplished by a team, team discussions regarding 
goals and expectations will be appropriate. The employee will provide a 
statement of his/her accomplishments to the supervisor at both the mid-
point and end of the rating period.
    At the end of the rating period, following a review of the 
employee's accomplishments, the supervisor will rate each of the 
individual mission objectives. Benchmark performance standards will be 
developed that describe the level of performance associated with a 
score. Using these benchmarks, the supervisor decides where the 
achievements and contributions of the employee most closely match the 
benchmarks and assigns an appropriate score. It should be noted that 
these scores are not discussed with the employee or considered final 
until all scores are reconciled and approved by the Pay Pool Manager. 
The rating scores will then be multiplied by the objective-weighting 
factor to determine the weighted score expressed to two decimal points. 
The weighted scores for each objective will then be totaled to 
determine the employee's overall appraisal score and rounded to a whole 
number as follows: If the first two digits to the right of the decimal 
are .51 or higher, it will be rounded to the next higher whole number; 
if the first two digits to the right of the decimal are .50 or lower, 
then the decimal value is truncated.
    The covered STRL organizations will use a five-level rating 
methodology with associated payout point ranges in which level five 
signifies the highest level of performance. The rater will prepare and 
recommend the rating, number of payout points, and the distribution of 
the payout between base pay increase and bonus, as applicable, for each 
employee. These recommendations will then be reviewed by the pay pool 
panel to ensure equitable rating criteria and methodologies have been 
applied to all pay pool employees. The final determination of the 
rating, number of payout points, and payout distribution will be a 
function of the pay pool panel process and will be approved by the Pay 
Pool Manager. The criteria used to determine the number and 
distribution of payout points to assign an employee may include 
assessment of the employee's contribution towards achieving the 
mission, the employee's type and level of work, the employee's current 
compensation and the criticality of their contribution to mission 
success, consideration of specific achievements, or other job-related 
significant accomplishments or contributions. The proposed rating and 
payout point schema is:

------------------------------------------------------------------------
  Rating              Description                   Payout points
------------------------------------------------------------------------
        5  Exceptional.....................  5, 6
        4  Exceeds Mission Expectations....  3, 4
        3  Mission Success.................  0, 1, 2
        2  Partial Mission Success.........  0
        1  Unacceptable....................  0
------------------------------------------------------------------------

     Employees with a total score of two or above will receive the 
equivalent of the GS January general pay increase (GPI). Employees with 
a total score of one will not receive the January GPI. A rating of one 
or below will result in a rating of Unacceptable, and the employee will 
not receive the January GPI and will require administrative action to 
address the performance deficiency. A score of one or below on a single 
objective will also result in a rating of Unacceptable.
    Employees in receipt of a Letter of Warning of Unacceptable 
Performance at the end of the performance year will have their rating 
deferred until the end of the improvement period. At the end of the 
improvement period, the supervisor will assign a final rating and 
submit it to the pay pool panel for consideration.
5. Pay Pools
    Following the initial scoring of each employee by the rater, the 
rating officials in an organizational unit, along with their next level 
of supervision, will review and compare recommended ratings to ensure 
consistency and equity of the ratings. In this step, each employee's 
individual mission objectives, accomplishments, preliminary scores and 
pay are compared. Through discussion and consensus building, consistent 
and equitable ratings are reached. Managers will not prescribe a 
distribution of ratings. The Pay Pool Manager will then chair a final 
review with the rating officials who report directly to him or her to 
validate these ratings and resolve any scoring issues. If consensus 
cannot be reached in this process, the Pay Pool Manager makes all final 
decisions. After this reconciliation process is complete, ratings are 
finalized. Payouts proceed according to each employee's final rating 
and payout distribution. Upon approval of this plan, implementing 
procedures and regulations will provide details on this process to 
employees and supervisors.
    The covered organizations' employees will be placed into pay pools. 
Neither the Pay Pool Manager, supervisors, or pay pool panel members 
within a pay pool will in any way recommend or participate in setting 
their own rating or individual payout except for the normal employee 
self-assessment process. Pay pools are combinations of organizational 
units (e.g., level 3 competencies (divisions), level 4 competencies 
(branches), and level 5 competencies (sections)), functional categories 
or other groupings of employees that are defined for the purpose of 
determining payouts under the mission aligned objectives and 
compensation system. The guidelines in the next paragraph are provided 
for determining pay pools. These guidelines will normally be followed. 
However, the Executive Directors of the covered organizations may 
deviate from the guidelines if there is a compelling need to do so.
    The Executive Directors of the covered organizations will establish 
pay pools. Typically, pay pools will have between 35 and 300 employees. 
A pay pool should be large enough to encompass a reasonable 
distribution of ratings but not so large as to compromise rating 
consistency. Large pay pools may use sub pay pools subordinate to the 
pay pool due to the size of the pay pool population, the complexity of 
the mission, or other similar criteria. Pay pool panel members will not 
serve on pay pools where their

[[Page 55169]]

own ratings and payouts are determined. Supervisors and non-supervisors 
may be placed in separate pay pools. Decisions regarding the amount and 
distribution of the payouts are based on the employee's most recent 
rating of record for the performance year, the criteria listed in 
section III.C.4 above, the type and nature of the funding available to 
the pay pool, and the number of payout points assigned by the pay pool. 
Additional guidance on pay pool design and composition will be included 
in NAWCAD/NAWCWD internal issuances.
    Funds within a pay pool available for performance payouts are 
calculated from anticipated pay increases under the existing system and 
divided into two components, base pay and bonus. The funds within a pay 
pool used for base pay increases are those that would have been 
available from within-grade increases, quality step increases and 
promotions under the GS system (excluding the costs of promotions still 
provided under the pay banding system). This amount will initially be 
defined based on historical data and will initially be set at no less 
than 2.4% of total base pay annually. The funds available to be used 
for bonus payouts are funded separately within the constraints of the 
organization's overall award budget. This amount will initially be 
defined based on historical data and will initially be set at no less 
than one percent of total base pay annually. As changes in the 
demographics of the workforce or other exigencies occur, adjustments 
may be made to these two factors. The sum of these two factors is 
referred to as the pay pool percentage factor. The Personnel Management 
Board will annually review the pay pool funding and recommend 
adjustments to the Executive Directors to ensure cost discipline over 
the life of the demonstration project. Cost discipline is assured 
within each pay pool by limiting the total base pay increase to the 
funds allocated by the Personnel Management Board.
6. Performance Payout Determination
    The payout an employee will receive is based on the total 
performance rating from the mission aligned objectives and compensation 
assessment process. An employee will receive a payout as a percentage 
of base pay. This percentage is based on the number of payout points 
that equates to their final appraisal score.
    The value of a payout point cannot be exactly determined until the 
rating and reconciliation process is completed and all scores are 
finalized. The payout point value is expressed as a percentage. The 
formula that computes the value of each payout point uses base pay 
rates and is based on:
    a. The sum of the base pay of all the employees in the pay pool 
times the pay pool percentage factor;
    b. The employee's base pay;
    c. The number of payout points awarded to each employee in the pay 
pool; and
    d. The total number of payout points awarded in the pay pool.
    This formula assures that each employee within the pool receives a 
payout point amount equal to all others in the same pool who are at the 
same rate of base pay and receiving the same score. The formula is 
shown in Figure 3.
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    An individual payout is calculated by first multiplying the payout 
points earned by the payout point value and multiplying that product by 
base pay. An adjustment is then made to account for locality pay or 
staffing supplement. A Pay Pool Manager is accountable for staying 
within pay pool limits and final decisions on base pay increases and/or 
bonuses to individuals based on rater recommendations, the final score, 
the pay pool funds available, and the employee's base pay.
7. Base Pay Increases and Bonuses
    The amount of money available for the performance payouts is 
divided into two components, base pay increases and bonuses. The base 
pay and bonus funds are based on the pay pool funding formula 
established annually. Once the individual performance amounts have been 
determined, the next step is to determine what portion of each payout 
will be in the form of a base pay increase as opposed to a bonus 
payment. The payouts made to employees from the pay pool may be a mix 
of base pay and bonus, such that all of the allocated funds are 
disbursed. To continue to provide performance incentives while also 
ensuring cost discipline, base pay increases may be limited or capped. 
Certain employees will not be able to receive the projected base pay 
increase due to base pay caps. Base pay is capped when an employee 
reaches the maximum rate of base pay in an assigned pay band or when a 
control point applies (see below). Also, for employees receiving 
retained rates above the applicable pay band maximum, the entire 
performance payout will be in the form of a bonus payment.
    When capped, the total payout an employee receives will be in the 
form of a bonus versus the combination of base pay and bonus. Bonuses 
are cash payments and are not part of the base pay for any purpose 
(e.g., lump sum payments of annual leave on separation, life insurance, 
and retirement). The maximum base pay rate under this demonstration 
project will be the unadjusted base pay rate of GS-15, Step 10, except 
for employees in Pay Band VI of the Supervision and Management career 
path.
8. Extraordinary Achievement Allowance (EAA)
    a. NAWCAD and NAWCWD will employ an Extraordinary Achievement 
Allowance designed to optimize organizational effectiveness. An EAA is 
defined as a temporary monetary allowance up to 25 percent of base pay, 
which, when added to an employee's rate of base pay, may not exceed the 
rate of basic pay for Executive Level IV. It is paid on either a bi-
weekly basis concurrent with normal pay days or as a lump sum following 
completion of a designated contribution period, or combination of 
these, at the discretion of the Executive Director/Commanding Officer 
of the appropriate Naval Air Warfare Center. It is not base pay for any 
purpose, e.g., retirement, life insurance, severance pay, promotion, or 
any other payment or benefit calculated as a percentage of base pay. 
The EAA will be available to certain employees whose present 
contributions are worthy of a higher career level and whose level of

[[Page 55170]]

achievement is expected to continue at the higher career level for at 
least one year.
    b. Award of the EAA will generally be appropriate under the 
following circumstances: (1) Employees have reached the top of their 
target career levels, (2) when it is not certain that the higher level 
contributions will continue indefinitely (e.g., a special project 
expected to be of one to five-year duration), (3) when no further 
promotion or base pay opportunities are available, or externally 
imposed limits make changes to higher career levels unavailable, and 
(4) when the approval time required to effect the action will 
unreasonably delay appropriate compensation for the employee's 
achievements but in all situations, when current market conditions 
compensate similar contributions at a greater rate in private industry 
and academia than the organization is able to do under normal 
compensation conditions.
    c. To be eligible for EAA, employees must meet the criteria below:
    (1) Employees in the S&E, Technical, Business Professional and 
Program Management career tracks are eligible for the EAA if their 
contribution to the organization is deemed worthy, as determined by the 
appropriate NAWC Executive Director/Commander.
    (2) Employees may receive an EAA for up to five years. The EAA 
authorization will be reviewed and reauthorized as necessary, but at 
least annually at the time of the Mission Aligned Objectives and 
Compensation System appraisal through nomination by the Pay Pool 
Manager and approval by the appropriate Executive Director/Commander.
    (3) Monetary payment may be up to 25 percent of base pay.
    (4) Nominees are required to sign a statement indicating they 
understand that the EAA is a temporary allowance; it is not a part of 
base pay for any purpose; it is subject to review at any time, but at 
least on an annual basis, and the reduction or termination of the EAA 
is neither appealable nor grievable.
    All other details regarding nomination, termination, reduction, 
allocation, and budget determination will be stipulated by internal 
business rules, policies, or procedures established by the Personnel 
Management Board.
9. Pay Growth Within a Pay Band
    As a compensation management tool the Personnel Management Board 
may establish pay ranges appropriate for a group or class of positions 
within a pay band or pay bands. Advancement of pay beyond the assigned 
pay range will generally require approval above the Pay Pool Manager 
prior to finalizing the pay pool decisions. The request must 
demonstrate that the complexity and responsibility of the position have 
substantially changed and the duties of the position are expected to 
continue at this level in the future thus warranting assignment of the 
position to a higher pay range. Control points may apply in every 
occupational family and pay band. Additional guidance will be included 
in NAWCAD/NAWCWD internal issuances.
10. Awards
    To provide additional flexibility in motivating and rewarding 
individuals and groups, some portion of the performance award budget 
will be reserved for special acts and other categories as they occur. 
Awards may include, but are not limited to, special acts, patents, 
invention awards, suggestions, on-the-spot, and time-off. The funds 
available to be used for traditional title 5 U.S.C. awards are 
separately funded within the constraints of the organization's budget.
    While not directly linked to the Mission Aligned Objectives and 
Compensation system, this additional flexibility is important to 
encourage outstanding accomplishments and innovation in achieving the 
diverse mission of the covered organizations. Additionally, to foster 
and encourage teamwork among its employees, organizations may give 
group awards. Thus, a team leader may recommend and a supervisor may 
allocate a sum of money to a team for outstanding performance.
    The NAWCAD and NAWCWD Commanders will have the authority to grant 
special act awards to covered employees of up to $25,000 IAW the 
criteria of SECNAVINST 12451.3. This authority may be delegated to the 
Executive Directors of the covered organizations.
11. General Pay Increase
    Employees who receive an unacceptable rating of record will not 
receive performance payouts or any portion of the general pay increase 
and as a result will ``migrate'' downward in the pay band. This occurs 
because the rate of base pay in a pay band increases as the result of 
the general pay increase (5 U.S.C. 5303). If their performance rating 
continues as Unacceptable, employees who reach the bottom of the 
overlapping pay scales (they remain identified in the higher 
classification level as long they are covered in that range) will cross 
the line into the next lower classification level without specific 
adverse or performance-based action. This migration is necessary for an 
employee whose performance over a period of time has been deficient 
enough to merit the employee's placement in lower level duties/
responsibilities where new opportunities for acceptable performance 
exist. Clearly the employee who has experienced several performance 
evaluations and who, in each case, has been given a year to demonstrate 
improvement has been provided equal or better ``due process'' than the 
obviously unsatisfactory employee who is accorded immediate adverse or 
performance-based action procedures and downgraded or removed after the 
required 30-day notice period. Further, it should be noted that in 
these instances the employee's pay will remain constant, the downward 
migration results from the need to comply with statutory pay levels. 
Adverse or performance-based action procedures will cover demotion 
between levels or removal where performance is clearly so 
unsatisfactory as to preclude retention in the current pay band or as 
an employee.
12. Requests for Reconsideration
    An employee may request reconsideration of the rating-of-record 
received under the mission aligned objectives and compensation system. 
A rating of record or job objective rating may be reconsidered by 
request of an employee only through the process specified in this 
subpart and implementing issuances. This process will be the sole and 
exclusive agency administrative process for employees to request 
reconsideration of a rating of record. Consistent with this part, Pay 
Pool Managers will make the decision on reconsiderations of rating of 
record. Pay Pool Managers' decisions are final. A payout point 
assignment determination, payout distribution determination, or any 
other payout matter will not be subject to the reconsideration process 
or any other agency administrative grievance system.
    In the event a reconsideration or negotiated grievance decision 
results in an adjusted rating of record the revised rating will be 
referred to the Pay Pool Manager for recalculation of the employee's 
performance payout amount and distribution. Any adjustment to base pay 
will be retroactive to the effective date of the performance payout. 
Base pay adjustments will be based on the payout point range 
appropriate for the adjusted rating of record. Payout point values for 
the adjusted rating of record will reflect the payout point value paid 
to other

[[Page 55171]]

members across the pay pool for that rating cycle. Decisions made 
through the reconsideration process or a negotiated grievance procedure 
will not result in recalculation of the payout made to other employees 
in the pay pool.
13. Adverse Actions
    Except where specifically waived or modified in this plan, adverse 
action procedures under 5 CFR part 752 remain unchanged.

D. Hiring Authority

    Competitive service positions will be filled through Merit 
Staffing, direct-hire authority, or Delegated Examining.
1. Qualifications
    The qualifications required for placement into a position in a pay 
band within an occupational family will be determined using the OPM 
``Operating Manual: Qualifications Standards for General Schedule 
Positions.'' Since the pay bands are anchored to the GS grade levels, 
the minimum qualification requirements for a position will be the 
requirements corresponding to the lowest GS grade incorporated into 
that pay band. For example, for a position in the S&E occupational 
family Pay Band II, individuals must meet the basic requirements for a 
GS-5 as specified in the OPM ``Qualification Standard for Professional 
and Scientific Positions.''
    Selective factors may be established for a position in accordance 
with the OPM's ``Operating Manual: Qualifications Standards for General 
Schedule Positions,'' when determined to be critical to successful job 
performance. These factors will become part of the minimum requirements 
for the position, and applicants must meet them in order to be 
eligible. If used, selective factors will be stated as part of the 
qualification requirements in vacancy announcements and recruiting 
bulletins.
2. Delegated Examining
    NAWCAD and NAWCWD propose to demonstrate a streamlined examining 
process for both permanent and non-permanent positions. This authority 
will be supported by the applicable servicing Human Resource Offices 
and Human Resources Service Centers in accordance with the Department 
of Navy's common business processes, systems, and tools. The ``Rule of 
Three'' will be eliminated. When there are no more than 15 qualified 
applicants and no preference eligibles, all eligible applicants are 
immediately referred to the selecting official without rating and 
ranking. Rating and ranking will be required only when the number of 
qualified candidates exceeds 15 or there is a mix of preference and 
non-preference applicants. Statutes and regulations covering veterans' 
preference will be observed in the selection process and when rating 
and ranking are required. If the candidates are rated and ranked, a 
random number selection method will be used to determine which 
applicants will be referred when scores are tied after the rating 
process. Veterans will be referred ahead of non-veterans with the same 
score. Additional guidance on operating processes will be included in 
NAWCAD/NAWCWD internal issuances.
3. Distinguished Scholastic Achievement Appointment Authority (DSAA) 
for Scientific and Engineering Positions
    The covered organizations will use the Distinguished Scholastic 
Achievement Appointment Authority. The DSAA uses an alternative 
examining process, which provides the authority to appoint individuals 
with undergraduate or graduate degrees through the doctoral level to 
professional positions up to the equivalent of GS-12 (DP-03 or DS-04). 
This enables the covered organizations to respond quickly to hiring 
needs for eminently qualified candidates possessing distinguished 
scholastic achievements. Candidates may be appointed provided they meet 
the minimum standards for the position as published in OPM's 
``Operating Manual: Qualifications Standards for General Schedule 
Positions'' and the candidate has a cumulative grade point average of 
3.5 (on a 4.0 scale) or better in their field of study (or other 
equivalent score) or are within the top 10 percent of a university's 
major school of graduate studies for professional occupations, etc.
4. Legal Authority
    For actions taken under the auspices of the demonstration project, 
the legal authority, Public Law 103-337, as amended, will be used. For 
all other actions, the nature of action codes and legal authority codes 
prescribed by OPM, DoD, or DON will continue to be used.
5. Expanded Term Appointments
    NAWCAD and NAWCWD conduct a variety of projects that range from 
three to six years. The current four-year limitation on term 
appointments, as described in 5 CFR part 316, often forces the 
termination of term employees prior to completion of projects they were 
hired to support. This disrupts the research and development process 
and affects the organization's ability to accomplish the mission and 
serve its customers. Under the demonstration project, the covered 
organizations will have authority to hire individuals under a modified 
term appointment for a period of more than one year but not more than 
five years when the need for an employee's services is not permanent. 
These appointments may be extended one additional year, for a total of 
6 years. The Executive Directors are authorized to extend term 
appointments. Employees hired under the modified term appointment 
authority are in a non-permanent status, but may be eligible for 
conversion to career-conditional or career appointments in the 
competitive service. To be converted, the employee must have (1) been 
selected for the term position under competitive procedures, with the 
announcement specifically stating that the individual(s) selected for 
the term position may be eligible for conversion to a career-
conditional or career appointment at a later date; (2) served a minimum 
of two years of continuous service in the term position; and (3) be 
performing at the acceptable level of performance with a current rating 
of record of Mission Success or higher.
6. Extended Probationary Period
    The purpose of extending the probationary period and trial period 
is to allow supervisors an adequate period of time to fully evaluate an 
employee's ability to complete a cycle of work and to fully assess an 
employee's contribution and conduct.
a. Competitive Service
    NAWCAD and NAWCWD will implement an extended initial probationary 
period for competitive service employees. The one-year probationary 
period will be extended to three years for newly appointed career-
conditional, career employees and the one-year trial period will be 
extended to three years for newly appointed term employees to positions 
classified to series in the Science and Engineering, Business and 
Program Management, and Technical Specialist occupational families. For 
employees in positions classified to series in the S&E Technician and 
Administrative Support occupational families the one-year probationary 
period will be extended to two years for newly appointed career-
conditional, career employees and the one-year trial period will be 
extended to two years for newly appointed term employees. The term 
newly appointed includes conversion to new

[[Page 55172]]

appointments, including conversions from term appointments and the 
excepted service, for this purpose.
    Employees who have completed an initial probationary or trial 
period prior to their conversion into the NAWC STRL will not be 
required to serve a new or extended initial probationary or trial 
period. Employees who are serving an initial probationary or trial 
period upon conversion into the NAWC's STRL will serve the time 
remaining on their initial probationary period or trial and may have 
their initial probationary or trial period extended in accordance with 
the demonstration project regulation and implementing issuances.
    If a probationary or trial employee's performance is determined to 
be Mission Success or higher and the supervisor expects that the 
Mission Success or higher performance will continue into the future, 
the supervisor has the option of ending the probationary or trial 
period at an earlier date, but not before the employee has completed 
one year of continuous service. If the probationary or trial period is 
terminated before the end of the two- or three-year period, the 
immediate supervisor will provide written reasons for his/her decision 
to the next level of supervision for concurrence prior to implementing 
the action.
    Aside from extending the time period for all newly appointed 
career-conditional, career and term employees all other features of the 
initial probationary period as defined in 5 CFR part 315 and trial 
period as described in 5 CFR part 316 are retained including the 
potential to remove an employee without providing the full substantive 
and procedural rights afforded a non-probationary employee.
b. Excepted Service
    NAWCAD and NAWCWD will implement an extended initial trial period 
for excepted service employees who are appointed on a permanent or 
conditional basis or who are given a time-limited appointment lasting 
three or more years. The trial period will be three years for newly 
appointed excepted service employees to positions classified to series 
in the Science and Engineering, Business and Program Management, and 
Technical Specialist occupational families. For employees in positions 
classified to series in the S&E Technician and Administrative Support 
occupational families the trial period will be extended to two years 
for newly appointed excepted service employees. The term newly 
appointed includes conversion to new appointments for this purpose.
    Employees who have completed an initial trial period prior to their 
conversion into the NAWC STRL will not be required to serve a new or 
extended initial trial period. Employees who are serving an initial 
trial period upon conversion into the NAWC's STRL will serve the time 
remaining on their initial trial period and may have their initial 
trial period extended in accordance with the demonstration project 
regulation and implementing issuances.
    If a trial employee's performance is determined to be Mission 
Success or higher and the supervisor expects that the Mission Success 
or higher performance will continue into the future, prior to the end 
of the two- or three-year trial period, a supervisor has the option of 
ending the trial period at an earlier date, but not before the employee 
has completed one year of continuous service. If the trial period is 
terminated before the end of the two- or three-year period, the 
immediate supervisor will provide written reasons for his/her decision 
to the next level of supervision for concurrence prior to implementing 
the action.
7. Termination of Probationary Employees
    Probationary employees may be terminated when they fail to 
demonstrate proper conduct, technical competency, and/or acceptable 
performance for continued employment, and for conditions arising before 
employment. When a supervisor decides to terminate an employee during 
the probationary period because his/her work performance or conduct is 
unacceptable, the supervisor shall terminate the employee's services by 
written notification stating the reasons for termination and the 
effective date of the action. The information in the notice shall, at a 
minimum, consist of the supervisor's conclusions as to the inadequacies 
of the employee's performance or conduct, or those conditions arising 
before employment that support the termination.
8. Supervisory Probationary Periods
    NAWCAD and NAWCWD will implement an extended supervisory 
probationary period. The probationary period for new supervisors will 
be two years. Except for the increased length, supervisory probationary 
periods will be made consistent with 5 CFR part 315. Employees who have 
successfully completed an initial probationary period for supervisory 
positions will not be required to complete an additional two-year 
probationary period for initial appointment to a supervisory position. 
Employees who are serving an initial supervisory probationary period 
upon conversion into the NAWC's STRL will serve the time remaining on 
their initial supervisory probationary period and may have their 
supervisory probationary period extended in accordance with the 
demonstration project regulation and implementing issuances. If, during 
this probationary period, the decision is made to return the employee 
to a non-supervisory position for reasons related to supervisory 
performance and/or conduct, the employee will be returned to a 
comparable position of no lower base pay than the position from which 
promoted or reassigned immediately prior to the supervisory assignment.
9. Volunteer Emeritus Corps
    a. NAWCAD and NAWCWD will implement a Voluntary Emeritus Program. 
Under the demonstration project, the Executive Directors of the covered 
organizations will have the authority to offer retired or separated 
employees voluntary positions. This authority may be delegated only to 
members of the Senior Executive Service (SES). Voluntary Emeritus Corps 
assignments are not considered employment by the Federal government 
except for purposes of injury compensation. Thus, such assignments do 
not affect an employee's entitlement to buyouts or severance payments 
based on an earlier separation from Federal service. To be accepted 
into the Volunteer Emeritus Corps, a volunteer must be recommended by a 
NAWCAD or NAWCWD manager to the NAWCAD or NAWCWD Executive Director or 
an SES member to whom this authority has been delegated. Not everyone 
who applies is entitled to an emeritus position. The responsible 
official will document acceptance or rejection of the applicant. For 
acceptance, documentation must be retained throughout the assignment. 
For rejection, documentation will be maintained for two years.
    b. To ensure success and encourage participation, the volunteer's 
Federal retirement pay (whether military or civilian) will not be 
affected while serving in a voluntary capacity. Retired or separated 
Federal employees may accept an emeritus position without a break or 
mandatory waiting period. Voluntary Emeritus Corps volunteers will not 
be permitted to monitor contracts on behalf of the Government or to 
participate on any contracts or solicitations where a conflict of 
interest exists. The volunteers may be required to submit a financial 
disclosure form annually. The same rules that currently apply to source 
selection members will

[[Page 55173]]

apply to volunteers. An agreement will be established among the 
volunteer, the responsible official, and the servicing HRO. The 
agreement must be finalized before the assumption of duties and shall 
include:
    (1) A statement that the voluntary assignment does not constitute 
an appointment in the Civil Service is without compensation, and the 
volunteer waives any claims against the Government based on the 
voluntary assignment;
    (2) A statement that the volunteer will be considered a Federal 
employee only for the purpose of injury compensation;
    (3) The volunteer's work schedule;
    (4) Length of agreement (defined by length of project or time 
defined by weeks, months, or years);
    (5) Support provided by the organization (travel, administrative 
support, office space, and supplies);
    (6) A statement of duties;
    (7) A statement providing that no additional time will be added to 
a volunteer's service credit for such purposes as retirement, severance 
pay, and leave as a result of being a volunteer;
    (8) A provision allowing either party to void the agreement with 
two working days written notice;
    (9) The level of security access required by the volunteer (any 
security clearance required by the position will be managed by the 
employing organization);
    (10) A provision that any publication(s) resulting from his/her 
work will be submitted to the NAWCAD or NAWCWD Executive Director for 
review and approval;
    (11) A statement that he/she accepts accountability for loss or 
damage to Government property occasioned by his/her negligence or 
willful action;
    (12) A statement that his/her activities on the premises will 
conform to the regulations and requirements of the organization;
    (13) A statement that he/she will not release any sensitive or 
proprietary information without the written approval of the employing 
organization and further agrees to execute additional non-disclosure 
agreements as appropriate, if required, by the nature of the 
anticipated services; and,
    (14) A statement that he/she agrees to disclose any inventions made 
in the course of work performed at the NAWCAD or NAWCWD. The NAWCAD or 
NAWCWD Executive Director has the option to obtain title to any such 
invention on behalf of the U.S. Government. Should the NAWCAD or NAWCWD 
Executive Director elect not to take title, the NAWCAD or NAWCWD shall, 
at a minimum, retain a non-exclusive, irrevocable, paid-up, royalty-
free license to practice or have practiced the invention worldwide on 
behalf of the U.S. Government. Exceptions to the provisions in this 
procedure may be granted by the NAWCAD or NAWCWD Executive Director on 
a case-by-case basis.
10. Direct Hire Authority for Scientists and Engineers With Advanced 
Degrees for Scientific and Engineering Positions
a. Background
    The NAWCAD and NAWCWD Laboratories have an urgent need for direct 
hire authority to appoint qualified candidates possessing an advanced 
degree to permanent and temporary scientific and engineering positions. 
The market is extremely competitive with industry and academia for the 
small supply of highly-qualified and security clearable candidates with 
a Masters Degree or PhD in science or engineering. There are 35,000 
scientists and engineers employed in the DoD laboratories; 27% hold 
Masters Degrees, while 10% are in possession of a PhD The NAWCAD and 
NAWCWD Laboratories jointly employ 5974 scientists and engineers; 29% 
holding Masters Degrees, while 4% are in possession of a PhD Over the 
next five years, the NAWCAD and NAWCWD Laboratories plan to hire 
approximately 2,240 of the country's best and brightest scientists and 
engineers (S&Es) just to keep pace with attrition. This number does not 
include the impact that several actions such as the Base Realignment 
and Closure of weapons and armament work to China Lake, California that 
will result in need to hire additional scientists and engineers above 
normal attrition levels. Statistics indicate that the available pool of 
advanced degree, clearable candidates is substantially diminished by 
the number of non-U.S. citizens granted degrees by U.S. institutions. 
For instance, in 2006, 20% of Masters Degrees in science and over 35% 
of PhDs in science were awarded to temporary residents.
    It is expected that this hiring authority, together with 
streamlined recruitment processes, will be very effective in hiring 
candidates possessing a PhD and accelerating the hiring process. For 
instance, under a similar authority found in the NDAA for FY 2009, 
section 1108 (Pub. L. 110-417), October 28, 2009, one STRL had fifteen 
PhD selectees in 2009 for the sixteen vacancies for which they were 
using this hiring authority. Another STRL, using this expedited hiring 
authority in calendar year 2009, made thirty firm hiring offers in an 
average of thirteen days from receipt of paper work in the Human 
Resources Office. Of these thirty selectees, twenty-three possessed 
PhDs.
    This authority will be administered by the servicing Human 
Resources Office and Human Resources Service Center in accordance with 
the Department of Navy's common business processes, systems and tools 
and consistent with veterans' preference and merit principles. Use of 
this appointing authority must comply with 'veterans' preference and 
merit systems principles when recruiting and appointing candidates with 
advanced degrees to covered occupations. Qualified candidates 
possessing an advanced degree may be appointed to both competitive and 
excepted service without regard to the provisions of subchapter 1 of 
chapter 33 of title 5, United States Code, other than sections 3303, 
3321, and 3328 of such title.
    The hiring threshold for this authority shall be consistent with 
DoD policy and legislative language as expressed in any National 
Defense Authorization Act addressing such.
    When completing the personnel action, the following will be given 
as the authority for the Career-Conditional, Career, Term, Temporary, 
or special demonstration project appointment authority: Section 1108, 
NDAA for FY 09. Evaluation of this hiring authority will include 
information and data on its use such as numerical limitation, hires 
made, declinations, how many veterans hired, declinations, difficulties 
encountered, and/or recognized efficiencies.
b. Definitions
    (1) Scientific and engineering positions are defined as all 
professional positions in scientific and engineering occupations (with 
a positive education requirement) utilized by the laboratory.
    (2) An advanced degree is a Master's or higher degree from an 
accredited college or university in a field of scientific or 
engineering study directly related to the duties of the position to be 
filled.
    (3) Qualified candidates are defined as candidates who:
    (a) Meet the minimum standards for the position as published in 
OPM's operating manual, ``Qualification Standards for General Schedule 
Positions,'' or the laboratory's demonstration project qualification 
standards specific to the position to be filled;
    (b) Possess an advanced degree; and
    (c) Meet any selective factors.
    (4) The term ``employee'' is defined by Section 2105 of title 5, 
U.S.C.

[[Page 55174]]

11. Non-Citizen Hiring
    Where Executive Orders or other regulations limit hiring non-
citizens to the excepted service, both NAWCAD and NAWCWD will have the 
authority to approve the hiring of non-citizens into competitive 
service positions when qualified U.S. citizens are not available, and 
the candidate meets all applicable immigration and security 
requirements. If a non-citizen candidate is the only qualified 
candidate for the position, the candidate may be appointed. The 
selection is subject to approval by the NAWCAD and NAWCWD Executive 
Director/Commanding Officer or approving manager, as delegated by the 
appropriate Center Executive Director/Commanding Officer. This 
authority may only be delegated to members of the Senior Executive 
Service (SES).

E. Internal Placement

1. Employees Hired From Outside the NAWC STRL
    Employees entering into the NAWC from non-STRL pay systems or from 
other Federal activities not as the result of a mass organizational 
conversion will be moved into the demonstration project in the career 
path and at the level and pay consistent with the duties and 
responsibilities of the STRL position and individual qualifications.
    When an employee is permanently placed (except by conversion under 
section V.A or by promotion under section II.E.2) in an STRL position 
from a GS or FWS position through a management-directed action (except 
for actions taken for misconduct or unacceptable performance), 
including a management directed reassignment or realignment, or any 
placement as a result of a reduction in force (RIF), or placement via 
the Priority Placement Program (PPP), Reemployment Priority List (RPL), 
or Interagency Career Transition Assistance Plan (ICTAP), the employee 
will receive a WGI adjustment. The WGI adjustment is calculated based 
on the number of calendar days between the effective date of the 
employee's last equivalent increase and the date of conversion into 
NSPS, regardless of the number of days in a non-pay status (if any). 
The maximum adjustment may not exceed a full WGI.
    An employee who enters into an STRL position from a GS or FWS 
position through an employee-initiated reassignment, promotion, or 
change to lower grade may, at the discretion of the authorized 
management official, also receive a WGI adjustment equivalent increase 
as described in the paragraph above. The decision to grant this 
increase will be reviewed and approved by an official who is at a 
higher level than the official who made the initial decision.
    In either case, this increase occurs before any other discretionary 
reassignment increases provided under the STRL, may not cause the 
employee's base salary to exceed the maximum rate of the assigned pay 
band, and is in addition to any other discretionary reassignment 
increase the employee may be eligible to receive.
2. Promotion
    A promotion is the movement of an employee to a higher pay band in 
the same occupational family or to a higher pay band in a different 
occupational family. It also includes movement of an employee currently 
covered by a non-demonstration project personnel system to a 
demonstration project position in a pay band with a higher level of 
work. Positions with known promotion potential to a specific band 
within an occupational family will be identified when they are filled. 
Not all positions in an occupational family will have promotion 
potential to the same band. Movement from one occupational family to 
another will depend upon individual competencies, qualifications and 
the needs of the organization. Supervisors may consider promoting 
qualified employees at any time, since promotions are not directly tied 
to the mission aligned objectives and compensation system. Progression 
within a pay band is based upon performance base pay increases; as 
such, these actions are not considered promotions and are not subject 
to the provisions of this section. Promotions will follow Merit System 
Principles and basic Federal merit promotion policy that provides for 
competitive and non-competitive promotions.
    To be promoted competitively or non-competitively from one band to 
the next, an employee must meet the minimum qualifications for the job 
and have a current rating of record of Mission Success or better or 
equivalent under a different performance appraisal system. If an 
employee does not have a current performance rating, the employee will 
be treated the same as an employee with a rating of record of Mission 
Success as long as there is no documented evidence of less than 
acceptable performance.
    Higher pay band or higher level of work means a pay band designated 
to be a higher level of work than an employee's currently assigned 
band, based on the demonstration classification structure and career 
progression patterns, either within or across varying pay schedules and 
career groups, regardless of the specific earning potential of the 
band. When moving from a non-demonstration position to a demonstration 
position, the band of the demonstration position is determined to be at 
a higher level of work than the grade or level of the non-demonstration 
position based on application of the demonstration classification 
structure and career progression patterns. Additional guidance will be 
included in NAWCAD/NAWCWD internal issuances.
3. Reassignment
    A reassignment occurs when an employee moves, voluntarily or 
involuntarily, to a different position or set of duties within his/her 
pay band or to a position in a comparable pay band, or from a non-
demonstration project position to a demonstration project position at a 
comparable level of work, on either a temporary or permanent basis. The 
employee must meet the qualifications requirements for the occupational 
family and pay band. When an employee is reassigned either within his/
her current pay band or to a comparable pay band, an authorized 
management official will set pay at an amount no less than the 
employee's current base pay.
    Comparable pay band or comparable level of work means pay bands 
with the equivalent level of work, based on the demonstration 
classification structure and career progression patterns, within and 
across varying pay schedules and career groups, regardless of the 
specific earning potential of the bands. When moving from a non-
demonstration position to a demonstration position, the band of the 
demonstration position is determined to be at a comparable level of 
work to the grade or level of the non-demonstration position based on 
application of the demonstration classification structure and career 
progression patterns. Additional guidance will be included in NAWCAD/
NAWCWD internal issuances.
4. Demotion or Placement in a Lower Pay Band
    A demotion is the placement of an employee into a lower pay band or 
movement from a non-demonstration project position to a demonstration 
project position at a lower level of work. Demotions may be for cause 
(performance or conduct) or for reasons other than cause (e.g., erosion 
of duties, reclassification of duties to a lower pay band, application 
under competitive announcements, at the employee's request, or 
placement actions resulting from RIF procedures).

[[Page 55175]]

    Lower pay band or lower level of work means a pay band designated 
to be a lower level of work than an employee's currently assigned band, 
based on the demonstration classification structure and career 
progression patterns, either within or across varying pay schedules and 
career groups, regardless of the specific earning potential of the 
band. When moving from a non-demonstration position to a demonstration 
position, the band of the demonstration position is determined to be at 
a lower level of work than the grade or level of the non-demonstration 
position based on application of the demonstration classification 
structure and career progression patterns. Additional guidance will be 
included in NAWCAD/NAWCWD internal issuances.
5. Simplified Assignment Process
    Today's environment of downsizing and workforce fluctuations 
mandates that the organization have maximum flexibility to assign 
duties and responsibilities to individuals. Pay banding can be used to 
address this need, as it enables the organization to have maximum 
flexibility to assign an employee with or without a change in base pay, 
within broad descriptions, consistent with the needs of the 
organization and the individual's qualifications and level. Subsequent 
assignments to projects, tasks, or functions anywhere within the 
organization requiring the same level, area of expertise, and 
qualifications would not constitute an assignment outside the scope or 
coverage of the current position description. For instance, a technical 
expert could be assigned to any project, task, or function requiring 
similar technical expertise. Likewise, a manager could be assigned to 
manage any similar function or organization consistent with that 
individual's qualifications. This flexibility allows broader latitude 
in assignments and further streamlines the administrative process and 
system.
6. Details and Temporary Promotions
    NAWCAD and NAWCWD will implement an Expanded Detail and Temporary 
Promotion Authority providing the authority to (1) to effect details up 
to one year to specified positions at the same or similar level; and 
(2) to effect details or temporary promotions to a higher pay band 
position up to one year within a 24-month period without competition. 
The specifics of these authorities will be stipulated by local business 
rules, policies, or procedures as organizational experience dictates.
7. Exceptions to Competitive Procedures
    The following actions are exceptions to competitive procedures:
    a. Re-promotion to a position which is in the same pay band or GS 
equivalent and occupational family as the employee previously held on a 
permanent basis within the competitive service.
    b. Promotion, reassignment, demotion, transfer or reinstatement to 
a position having promotion potential no greater than the potential of 
a position an employee currently holds or previously held on a 
permanent basis in the competitive service.
    c. A position change permitted by reduction-in-force procedures.
    d. Promotion without current competition when the employee was 
appointed through competitive procedures to a position with a 
documented target level.
    e. A temporary promotion, or detail to a position in a higher pay 
band, up to one year in a 24-month period.
    f. A promotion due to the reclassification of positions based on 
accretion (addition) of duties.
    g. A promotion resulting from the correction of an initial 
classification error or the issuance of a new classification standard.
    h. Consideration of a candidate who did not receive proper 
consideration in a competitive promotion action.
    Additional guidance will be included in NAWCAD/NAWCWD internal 
issuances.

F. Pay Administration

1. General
    Pay administration policies will be established by the Personnel 
Management Board. These policies will be exempt from DON pay setting 
policies, but will conform to basic governmental pay setting policy 
except for flexibilities contained herein. Employees whose performance 
is acceptable will receive the full annual general pay increase and the 
full locality pay. The covered organizations may make full use of 
recruitment, retention and relocation incentive payments as provided 
for by OPM. Pay retention will follow current law and regulations at 5 
U.S.C. 5362, 5363, and 5 CFR part 536, except as described in this 
regulation and waived or modified in section IX, the waiver section of 
this plan. Pay band retention will not be used in this demonstration 
project.
2. Locality Pay
    Employees with a performance rating of Partial Mission Success or 
better will be entitled to the locality pay authorized for their 
official duty station in accordance with 5 CFR part 531 subpart F. 
Employees with a performance rating of Unacceptable will be entitled to 
only the locality pay increase; they cannot receive any other pay 
increase or award. In addition, the locality-adjusted pay of any 
employee may not exceed the rate for Executive Level IV. Geographic 
movement within the demonstration project will result in the employee's 
locality pay being recomputed using the newly applicable locality pay 
percentage, which may result in a higher or lower locality pay and, 
thus, a higher or lower adjusted base pay.
3. Pay and Compensation Ceilings
    An employee's total monetary compensation paid in a calendar year 
may not exceed the base pay of Level I of the Executive Schedule 
consistent with 5 U.S.C. 5307 and 5 CFR part 530 subpart B. In 
addition, each pay band will have its own pay ceiling, just as grades 
do in the GS. Base pay rates for the various pay bands will be directly 
keyed to the GS rates, except for the Pay Band VI of the Supervision 
and Management occupational family. Other than where a retained rate 
applies, base pay will be limited to the maximum base pay payable for 
each pay band.
4. Pay Setting for Appointment
    Employees whose appointment to a demonstration project position is 
their initial appointment to the Federal service may have pay set at 
the lowest base pay in the band or anywhere within the band consistent 
with the special qualifications of the individual and the unique 
requirements of the position. These special qualifications may be in 
the form of education, training, experience or any combination thereof 
that is pertinent to the position in which the employee is being 
placed. Both national and local labor market conditions and pay rates 
may also be taken into consideration to ensure that the Warfare Centers 
are able to compete for the talent, skills, abilities, and competencies 
needed to enable them to remain on the cutting edge of science and 
technology. Guidance on pay setting for new hires will be established 
by the Personnel Management Board. Highest Previous Rate (HPR) will be 
considered in placement actions authorized under rules similar to the 
HPR rules in 5 CFR 531.221. Use of HPR will be at the supervisor's 
discretion, but if used, HPR is subject to policies established by the 
Personnel Management Board.

[[Page 55176]]

5. Pay Setting for Promotion
    The minimum base pay increase upon promotion to a higher pay band 
will be 6% or the minimum base pay rate of the new pay band, whichever 
is greater. The maximum amount of the pay increase may not exceed 20%, 
or other such amount as established by the Personnel Management Board. 
The maximum base pay increase for promotion may be exceeded when 
necessary to allow for the minimum base pay increase. For employees 
covered by a staffing supplement, the demonstration extended base pay 
is considered base pay for promotion calculations. When a temporary 
promotion is terminated, the employee's pay entitlements will be re-
determined based on the employee's position of record, with appropriate 
adjustments to reflect pay events during the temporary promotion, 
subject to the specific policies and rules established by the Personnel 
Management Board. The Personnel Management Board may establish 
additional pay setting policies for promotions, including increasing 
the promotion amount beyond 20% with the approval of the NAWCAD and 
NAWCWD Commanders or Executive Directors. In no case may those 
adjustments increase the base pay for the position of record beyond the 
applicable maximum base pay for the pay band.
6. Pay Setting for Reassignment
    a. Covered organizations may choose to adopt the flexibility to pay 
an increase in base pay upon reassignment. If adopted, such an increase 
will be subject to the specific guidelines established by the Personnel 
Management Board and will not exceed 5% as a cost containment measure. 
A reassignment may be effected without a change in base pay. Employees 
may be eligible for an increase to base salary upon temporary or 
permanent reassignment as described in section III.E.3. A decision to 
increase an employee's pay under this section will be based upon clear 
Personnel Management Board business rules that will define criteria 
necessary to justify a pay increase. Examples of criteria may include, 
but are not limited to, one or more of the following factors:
    (1) A determination that an employee's responsibilities will 
significantly increase;
    (2) Critical mission or business requirements;
    (3) Need to advance multi-functional competencies;
    (4) Labor market conditions, e.g., availability of candidates and 
labor market rates;
    (5) Reassignment from a nonsupervisory to a supervisory position;
    (6) Employee's past and anticipated performance and contribution;
    (7) Physical location of position;
    (8) Specialized skills, knowledge, or education possessed by the 
employee in relation to those required by the position; and
    (9) Base pay of other employees in the organization performing 
similar work.
    b. When an employee is reassigned within his/her current pay band 
or to a comparable pay band, an authorized management official will set 
pay at an amount no less than the employee's current base pay and may 
increase the employee's current base pay by up to and including 5%. If 
the employee's current base pay exceeds the maximum of the new pay 
band, no increase can be provided. There is no limit to the number of 
times an employee can be reassigned, but local business rules will be 
established to monitor and control all cases that receive reassignment 
base pay changes to ensure fairness and consistency across the 
workforce. Reassignment base pay thresholds may be modified by internal 
business rules, policies, or procedures as organizational experience 
dictates.
7. Pay Setting for Demotion or Placement in a Lower Pay Band
    Employees demoted for cause (performance or conduct) are not 
entitled to pay retention and will receive a minimum of a 5% decrease 
in base pay or the minimum rate of the lower pay band whichever is 
greater. Employees demoted for reasons other than cause (e.g., erosion 
of duties, reclassification of duties to a lower pay band, application 
under competitive announcements, at the employee's request, or 
placement actions resulting from RIF procedures) may be entitled to pay 
retention in accordance with the provisions of 5 U.S.C. 5363 and 5 CFR 
part 536, except as waived or modified in sections III.F.11 and IX of 
this plan.
    Employees, who receive an unacceptable rating, do not receive 
performance payouts or the general pay increase. This action may result 
in base pay that is identified in a lower pay band. This occurs because 
the minimum rate of base pay in a pay band increases as the result of 
the general pay increase (5 U.S.C. 5303) while the employee's pay does 
not change. The employee will be placed in the lower pay band and their 
salary will remain unchanged. This situation (a reduction-in-band level 
with no reduction in pay as a result of an unacceptable rating) will 
not be considered an adverse performance based action.
8. Staffing Supplements
    At the time of conversion or OPM approval of a new SSR that would 
be applicable to covered employees, the NAWCAD and NAWCWD may 
incorporate the use of special salary rates (SSR) in demonstration 
project pay ranges. Currently there are no NSPS Targeted Local Market 
Supplements in use by NAWCAD or NAWCWD so no employees converting from 
NSPS will be affected if staffing supplements are not implemented at 
conversion. If staffing supplements are adopted, either at the time of 
conversion or later, NAWCAD and NAWCWD will implement them via an 
extension to the demonstration pay ranges and a supplement to a covered 
employee's salary. Employees assigned to occupational categories and 
geographic areas where GS SSRs apply may be entitled to a staffing 
supplement if the maximum adjusted base pay rate for the demonstration 
band to which the employee is assigned is exceeded by a GS special rate 
for the employee's occupational category and geographic area. The 
Personnel Management Board may establish additional policies and 
provide guidance on the use and application of the staffing supplement 
including provisions for in band adjustments and limiting application 
of this feature to fewer occupations than covered by the GS SSR. An 
extension to the demonstration pay ranges will be used to extend the 
maximum salary of the pay band for those occupations for which a 
staffing supplement is approved. The increase of an employee's base pay 
into this extension will be determined by the annual performance 
assessment and payout, there is no automatic entitlement to a staffing 
supplement. Only if an employee's annual assessment and associated 
payout would cause their base pay to fall within the area of the 
staffing supplement extension to the pay range for the pay band would 
they be paid at this level.
    The extension to the pay range will be the maximum special salary 
rate for the banded grades. An employee's base pay is increased by the 
standard locality increase until the base pay exceeds the maximum GS 
basic pay for the banded grades. If the employee's base pay will exceed 
the maximum GS basic pay for the banded grades then the staffing 
supplement will be applied when authorized. The staffing supplement 
percent will be set equal to the locality percent and the staffing 
supplement and

[[Page 55177]]

payout is calculated as shown in the following example.
BILLING CODE 5001-06-P
[GRAPHIC] [TIFF OMITTED] TN09SE10.119

BILLING CODE 5001-06-C
    If the pay scale extension is discontinued or reduced either 
because the GS SSR has been discontinued or reduced, for NAWC budgetary 
constraints or other NAWC managerial decisions, the employees receiving 
a staffing supplement will receive retained pay. There will be no 
change in the adjusted base pay when placed on pay retention.
9. Educational Pay Adjustment
    NAWCAD and NAWCWD will establish an educational base pay adjustment 
which is separate from the incentive pay process and may not cause the 
employee's pay to exceed the maximum base pay rate of his or her 
assigned pay band. An educational pay adjustment is defined as an 
increase in an employee's base pay by other than the incentive pay 
process within the employee's current band level to an amount which 
does not exceed the top of the band. The educational pay adjustment may 
be used to adjust the pay of individuals who have acquired a level of 
mission-related education that would otherwise make the employee 
qualified for an appointment at a higher level and would be used in 
lieu of a new appointment. For example, this authority may be used to 
adjust the pay of graduate level Student Career Experience Program 
(SCEP) students or employees who have obtained an advanced degree, 
e.g., a PhD in a field related to the work of their position or the 
mission of their organization. An employee may receive an educational 
base pay adjustment or a reassignment base pay increase but not both at 
the same time.
10. Developmental Promotions
    NAWCAD and NAWCWD will employ developmental promotions to achieve 
compensation growth commensurate to an employee's progression while in 
developmental assignments. A developmental promotion is an increase to 
base pay that may be provided to employees participating in NAWCAD and 
NAWCWD training programs or in other developmental capacities as 
determined by Personnel Management Board policy. Developmental 
promotions recognize growth and development in the acquisition of job 
related competencies combined with successful performance of job 
objectives. The use of developmental promotions is limited to (1) 
employees in a developmental pay band of a non-supervisory pay schedule 
and who are in developmental or trainee level positions; and (2) 
employees in positions which are assigned to a Student Career 
Experience Program (SCEP).
    Standards by which developmental promotion increases are provided 
and criteria by which additional base pay increases will be determined 
will be established and documented in internal business rules, 
policies, or procedures. The amount of the developmental

[[Page 55178]]

promotion increase generally will not exceed 20 percent of an 
employee's base pay. The decision to grant a developmental promotion 
exceeding 20 percent of an employee's base pay must be made on a case-
by-case basis and approved by the appropriate Executive Director/
Commanding Officer or their delegate as established by internal 
business rules, policies, or procedures. This authority may be 
delegated only to members of the Senior Executive Service (SES). The 
amount of the developmental promotion increase may not cause the 
employee's base pay to exceed the top of the employee's pay band or 
that set by internal business rule, policy, or procedure. To qualify 
for a developmental promotion, an employee must have a rating of record 
of Mission Success or better. A developmental promotion may be awarded 
to an employee who does not have a rating of record if an authorizing 
official conducts a performance assessment and determines that the 
employee is performing at the Mission Success level or better. This 
performance assessment does not constitute a rating of record. If an 
employee has a current performance rating below Mission Success and the 
supervisor believes the employee's performance has improved to the 
Mission Success level or better, the employee has demonstrated this 
improved performance for 90 days or more and it is expected that this 
level of performance will continue, the supervisor may conduct a 
performance assessment and forward it to the Pay Pool Manager for 
approval. If the Pay Pool Manager concurs with the supervisor's 
assessment, then the employee may be given a developmental promotion. 
There is no entitlement to an additional assessment beyond the annual 
assessment; this decision is totally at managerial discretion. If an 
additional assessment is made, it is not a rating of record and there 
will be no retroactive pay changes associated with it.
    A developmental promotion increase may not be granted unless an 
employee is in a pay and duty status under the NAWCAD/NAWCWD STRL 
demonstration project on the effective date of the increase.
11. Pay Retention
    Pay retention will follow current law and regulations at 5 U.S.C. 
5362, 5363, and 5 CFR part 536, except as waived or modified in the 
Staffing Supplements section and section IX of this plan. Pay band 
(grade) retention does not apply under this demonstration project. The 
NACWAD or NAWCWD Executive Director may also grant pay retention to 
employees who meet general eligibility requirements, but do not have 
specific entitlement by law, provided they are not specifically 
excluded.

G. Employee Development

1. Expanded Developmental Opportunity Program
    The Expanded Developmental Opportunity Program will be available to 
all demonstration project employees. Expanded developmental 
opportunities complement existing developmental opportunities such as 
long-term training, rotational job assignments, and developmental 
assignments to DON/DoD, and self-directed study via correspondence 
courses and local colleges and universities. Each developmental 
opportunity must result in a product, service, report, or study that 
will benefit the NAWCAD or NAWCWD or customer organization as well as 
increase the employee's individual effectiveness. The developmental 
opportunity period will not result in loss of (or reduction) in base 
pay, leave to which the employee is otherwise entitled, or credit for 
service time. The positions of employees on expanded developmental 
opportunities may be back-filled (i.e., with temporarily assigned, 
detailed, or promoted employees or with term employees). However, that 
position or its equivalent must be made available to the employee upon 
return from the developmental period. The Personnel Management Board 
will provide written guidance for employees on application procedures 
and develop a process that will be used to review and evaluate 
applicants for development opportunities.
a. Sabbaticals
    The Executive Directors of the covered organizations have the 
authority to grant paid or unpaid sabbaticals to all career employees. 
The purpose of a sabbatical will be to permit an employee to engage in 
study or uncompensated work experience that will benefit the 
organization and contribute to the employee's development and 
effectiveness. Each sabbatical must result in a product, service, 
report, or study that will benefit the NAWCAD or NAWCWD mission as well 
as increase the employee's individual effectiveness. Various learning 
or developmental experiences may be considered, such as advanced 
academic teaching; research; self-directed or guided study; and on-the-
job work experience.
    One paid sabbatical of up to twelve months in duration or one 
unpaid sabbatical of up to six months in a calendar year may be granted 
to an employee in any seven-year period. Employees will be eligible to 
request a sabbatical after completion of seven years of Federal 
service. Employees approved for a paid sabbatical must sign a service 
obligation agreement to continue in service in the covered 
organizations for a period of three times the length of the sabbatical. 
If an employee voluntarily leaves the covered organizations before the 
service obligation is completed, he/she is liable for repayment of 
expenses incurred by the covered organizations that are associated with 
training during the sabbatical. Expenses do not include salary costs. 
The Executive Directors of the covered organizations have the authority 
to waive this requirement. Criteria for such waivers will be addressed 
in the operating procedures. Specific procedures will be developed for 
processing sabbatical applications upon implementation of the 
demonstration project.
b. Critical Skills Training (Training for Degrees)
    The Executive Directors of the covered organizations have the 
authority to approve academic degree training consistent with 5 U.S.C. 
4107. Training is an essential component of an organization that 
requires continuous acquisition of advanced and specialized knowledge. 
Degree training is also a critical tool for recruiting and retaining 
employees with or acquiring critical skills. Academic degree training 
will ensure continuous acquisition of advanced specialized knowledge 
essential to the organization and ability to recruit and retain 
personnel critical to the present and future requirements of the 
organization. Degree or certificate payment may not be authorized where 
it would result in a tax liability for the employee without the 
employee's express and written consent. Any variance from this policy 
must be rigorously determined and documented. Guidelines will be 
developed to ensure competitive approval of degree or certificate 
payment and that those decisions are fully documented. Employees 
approved for degree training must sign a service obligation agreement 
to continue in service in the covered organizations for a period of 
three times the length of the training period. If an employee 
voluntarily leaves the NAWCAD or NAWCWD before the service obligation 
is completed, he/she is liable for repayment of expenses incurred by 
the covered organizations

[[Page 55179]]

related to the critical skills training. Expenses do not include salary 
costs. The Executive Directors of the covered organizations have the 
authority to waive this requirement. Criteria for such waivers will be 
addressed in the STRL internal operating procedures.

H. Reduction-in-Force (RIF) Procedures

    RIF procedures will be used when an employee faces separation or 
downgrading due to lack of work, shortage of funds, reorganization, 
insufficient personnel ceiling, the exercise of re-employment or 
restoration rights, or furlough for more than 30 calendar days or more 
than 22 discontinuous days. The procedures in 5 CFR part 351 will 
generally be followed with some modifications pertaining to the 
competitive areas, assignment rights, the addition of a performance 
sub-group and grade/pay band retention. Modified term appointment 
employees are in Tenure Group III for RIF purposes. RIF procedures are 
not required when separating these employees when their appointments 
expire.
1. Competitive Areas
    Separate RIF competitive areas for demonstration and non-
demonstration project employees will be established at each geographic 
location. Within the demonstration project separate competitive areas 
will be established for each demonstration occupational family. 
Demonstration supervisors will be placed in the competitive area for 
their occupational family but in separate competitive levels within 
that career field. Bumps and retreats will occur only within the same 
competitive area and only to positions for which the employee meets all 
qualification standards including medical and/or physical 
qualifications.
    Within each competitive area, competitive levels will be 
established based on the occupational family, pay band, series and SAC 
so that positions are similar enough in duties and qualifications that 
employees can perform the duties and responsibilities of any other 
position in the competitive level upon assignment to it, without any 
loss of productivity beyond what is normally expected. For S&E 
competitive levels the Warfare Centers may also choose to use the OPM 
classification functional code as a defining element.
2. Assignment Rights
    An employee may displace another employee by bump or retreat to one 
pay band below the employee's existing pay band. A preference eligible 
with a compensable service-connected disability of 30 percent or more 
may retreat to positions two pay bands below his/her current band.
3. Crediting Performance in RIF
    Reductions in force are accomplished using the existing procedures 
with the retention factors of: Tenure, veterans' preference, 
performance, and length of service, in that order. The performance 
subgroup will be based on the most recent three ratings of record 
during the preceding four years. There will be three groupings within 
the performance subgroup: Mission Superior (H), Mission Success (S) and 
Mission Deficiency (L). The most recent ratings of records will be 
combined to determine the performance subgroup. The High subgroup will 
include those employees who have consistently demonstrated superior 
performance. The Mission Success subgroup will include the next level 
of demonstrated performance and the Mission Deficiency subgroup will 
include those who have failed to achieve expected levels of performance 
for one or more years. Additional guidance on determining performance 
subgroups will be included in NAWCAD/NAWCWD internal issuances.
    Employees who have been rated under different patterns of summary 
rating levels and have at least the equivalent of a rating of record of 
three will receive RIF appraisal credit for the non-demonstration 
performance ratings equivalent to Mission Success based on the 
demonstration project's modal score for the employee's competitive 
area. If the employee received less than the equivalent of Mission 
Success, then that rating will be compared to the demonstration project 
one or two rating and best fit chosen. Additional guidance on ratings 
equivalency will be included in NAWCAD/NAWCWD internal issuances.
    In some cases, an employee may not have three ratings of record. If 
an employee has fewer than three annual ratings of record, then for 
each missing rating, RIF appraisal credit will be based on the 
demonstration project's modal score for the most recently completed 
appraisal period on record for the employee's competitive area. For an 
employee who has no ratings of record, all credit will be based on the 
repeated use of a single modal rating from the most recently completed 
appraisal period on record for the employee's competitive area.
    An employee who has received a written decision that his/her 
performance is unacceptable has no bump or retreat rights. An employee 
who has been demoted for unacceptable performance, and as of the date 
of the issuance of the RIF notice has not received a performance rating 
in the position to which demoted, will receive the same credit granted 
for a Level 3 rating of record. An employee with a current unacceptable 
rating of record has assignment rights only to a position held by 
another employee who has an unacceptable rating of record.

IV. Implementation Training

    Critical to the success of the demonstration project is the 
training developed to promote understanding of the broad concepts and 
finer details needed to implement and successfully execute this 
project. A new pay banding schema and performance management system 
both represent significant cultural change to the organization. 
Training will be tailored to address employee concerns and encourage 
comprehensive understanding of the demonstration project. Training will 
be required both prior to implementation and at various times during 
the life of the demonstration project. A training program will begin 
prior to implementation and will include modules tailored for 
employees, supervisors, senior managers, and administrative staff. 
Typical modules are:
    1. An overview of the demonstration project personnel system;
    2. How employees are converted into and out of the system;
    3. Pay banding;
    4. The mission aligned objectives and compensation system;
    5. Defining mission aligned performance objectives;
    6. How weights may be used with the mission aligned performance 
objectives;
    7. Assessing performance--giving feedback;
    8. New position descriptions; and
    9. Demonstration project administration and formal evaluation.
    Various types of training are being considered including videos, 
on-line tutorials, and train-the-trainer concepts.

V. Movement Into and Out of the Demonstration Project

A. Conversion From NSPS to the Demonstration Project

1. Placement Into Demonstration Project Pay Plans and Pay Bands
    The employee's NSPS occupational series, pay plan, pay band, and 
supervisory code will be considered upon converting into the 
demonstration project as follows:
    a. Determine the appropriate demonstration project pay plan. 
Employees will be converted into a pay

[[Page 55180]]

plan based on the occupational series of their position. There is a 
separate pay plan for supervisors; conversion to that pay plan will be 
without regard to the occupational series. In cases where the employee 
is assigned to a NSPS-unique occupational series, a corresponding OPM 
occupational series must be identified using OPM GS classification 
standards and guidance to determine the proper demonstration project 
pay plan.
    b. Determine the appropriate pay band. The appropriate pay band 
will be determined by establishing the corresponding demonstration 
project pay band for the employee's NSPS position using demonstration 
project pay band definitions, classification standards and guidance. 
Once the demonstration project pay band has been determined, the 
employee's position will be placed in the demonstration project pay 
band. In cases where a demonstration project pay band overlaps more 
than one NSPS pay band, placement will be made using demonstration 
project pay band definitions and classification criteria to determine 
the appropriate pay band in which to place the position.
2. Pay Upon Conversion
    Conversion from NSPS into the demonstration project will be 
accomplished with full employee pay protection. Adverse action 
provisions will not apply to the conversion action. In accordance with 
section 1113(c)(1) of NDAA 2010, which prohibits a loss of or decrease 
in pay upon transition from NSPS, employees converting to the 
demonstration project will retain the adjusted salary (as defined in 5 
CFR 9901.304) from their NSPS permanent position at the time the 
position converts. Upon conversion, the retained NSPS adjusted salary 
may not exceed Level IV of the Executive Schedule plus 5 percent. If 
the employee's base pay exceeds the maximum rate for his or her 
assigned demonstration project pay band, the employee will be placed on 
indefinite pay retention until an event, as described in 5 CFR 536.308, 
results in a loss of eligibility for or termination of pay retention. 
Increases to the retained rate after conversion will be in accordance 
with applicable regulations; however, for any NSPS employee whose 
retained rate exceeds EX-IV upon conversion, any adjustment to the 
retained rate in accordance with applicable pay retention regulations 
may not cause the employee's adjusted pay to exceed EX-IV plus 5 
percent.
    NAWCAD and NAWCWD do not have any employees who are covered by an 
NSPS targeted local market supplement (TLMS), but if such coverage 
occurs between the date of this FRN and conversion to the demonstration 
project such employees will no longer be covered by a TLMS. Instead 
they may receive a locality or similar supplement (e.g., a staffing 
supplement), or pay retention, if applicable. The adjusted base pay 
will not change upon conversion.
    Once converted, employees may receive other adjustments and/or 
differentials, as applicable, as described in this regulation or an 
implementing issuance.
3. Fair Labor Standards Act (FLSA) Status
    Since FLSA provisions were not waived under NSPS and duties do not 
change upon conversion to the demonstration project, the FLSA status 
determination will remain the same upon conversion. Employees will be 
converted to the demonstration project with the same FLSA status they 
had under NSPS.
4. Transition Equity
    During the first 12 months following conversion to the 
demonstration project, management may approve certain adjustments 
within the pay band for pay equity reasons stemming from conversion. 
For example, if an employee would have been otherwise promoted but 
demonstration project pay band placement no longer merits promotion, a 
pay equity adjustment may be authorized provided the adjustment does 
not cause the employee's base pay to exceed the maximum rate of his or 
her assigned pay band and the employee's performance warrants an 
adjustment. The decision to grant a pay equity adjustment is at the 
sole discretion of management and is not subject to employee appeal 
procedures.
    During the first 18 months following conversion, management may 
approve promotions of less than 6% or increases in base pay of not more 
than 20% provided the adjustment does not cause the employee's base pay 
to exceed the maximum rate of his or her assigned pay band. The 
employee's performance must warrant an adjustment and these actions 
will be limited to those necessary to mitigate compensation inequities 
that are directly related to the transition/conversion from NSPS to the 
demonstration project. For instance, inappropriate ``leap-frogging'' of 
more senior employees by more junior employees when the inversion of 
compensation levels are not warranted by performance or mission 
accomplishment outcomes. The Personnel Management Board will establish 
policy and guidance for this provision and this guidance will be 
included in NAWCAD/NAWCWD internal issuances.
5. Converting Employees on NSPS Term and Temporary Appointments
    a. Employees serving under term appointments at the time of 
conversion to the demonstration project will be converted to a modified 
term appointment provided they were hired for their current positions 
under competitive procedures. These employees will be eligible for 
conversion to career or career-conditional appointments in the 
competitive service provided they:
    (1) Have served two years of continuous service in the term 
position;
    (2) were selected for the term position under competitive 
procedures; and
    (3) are performing at a NSPS Valued Performer, demonstration 
Mission Success, or equivalent level under another system. Additional 
guidance will be included in NAWCAD/NAWCWD internal conversion 
issuances.
    Converted term employees who do not meet these criteria may 
continue on their term appointment up to the not-to-exceed date 
established under NSPS. Extensions of term appointments for employees 
who do not meet the above criteria may be granted after conversion in 
accordance with the provision of this regulation.
    b. Employees serving under temporary appointments under NSPS when 
their organization converts to the demonstration project will be 
converted and may continue on their temporary appointment up to the 
not-to-exceed date established under NSPS. Extensions of temporary 
appointments after conversion may be granted in accordance with 5 CFR 
213.104 for excepted service employees and 5 CFR part 316, subpart D, 
for competitive service employees.
6. Probationary Periods
    a. Initial probationary period. Employees who have completed an 
initial probationary period prior to conversion from NSPS will not be 
required to serve a new or extended initial probationary period. 
Employees who are serving an initial probationary period upon 
conversion from NSPS will serve the time remaining on their initial 
probationary period and may have their initial probationary period 
extended in accordance with the demonstration project regulation and 
implementing issuances.
    b. Supervisory probationary period. NSPS employees who have 
completed a

[[Page 55181]]

supervisory probationary period prior to conversion from NSPS will not 
be required to serve a new or extended supervisory probationary period. 
NSPS employees who are serving a supervisory probationary period upon 
conversion from NSPS will serve the time remaining on their supervisory 
probationary period and may have their supervisory probationary period 
extended in accordance with the demonstration project regulation and 
implementing issuances.

B. Conversion From Other Personnel Systems

    Employees who enter this demonstration project from other personnel 
systems (e.g., Defense Civilian Intelligence Personnel System, DoD 
Civilian Acquisition Workforce Demonstration Project, or other STRLs) 
due to a reorganization, mandatory conversion, Base Closure and 
Realignment Commission decision, or other directed action will be 
converted into the NAVAIR STRL demonstration project via movement of 
their positions using an appropriate Nature of Action Code. Employees' 
positions will be classified based upon the position classification 
criteria and pay band definitions under the laboratory demonstration 
project rules and their pay, upon conversion, maintained under 
applicable pay setting rules.

C. Movement Out of the NAVAIR STRL Demonstration Project

1. Termination of Coverage Under the NAVAIR STRL Demonstration Project 
Pay Plans
    In the event employees' coverage under the NAVAIR STRL 
demonstration project pay plans is terminated, employees move with 
their demonstration project positions to another system applicable to 
NAVAIR STRL employees. The grade of their demonstration project 
position in the new system will be based upon the position 
classification criteria of the gaining system. Employees when converted 
to their positions classified under the new system will be eligible for 
pay retention under 5 CFR part 536, if applicable.
2. Determining a GS-Equivalent Grade and GS-Equivalent Rate of Pay for 
Pay Setting Purposes When a NAVAIR Employee's Coverage by a 
Demonstration Project Pay Plan Terminates or the Employee Voluntarily 
Exits the NAVAIR STRL Demonstration Project
    a. If a demonstration project employee is moving to a GS or other 
pay system position, the following procedures will be used to translate 
the employee's project pay band to a GS-equivalent grade and the 
employee's project base pay to the GS-equivalent rate of pay for pay 
setting purposes. The equivalent GS grade and GS rate of pay must be 
determined before movement out of the demonstration project and any 
accompanying geographic movement, promotion, or other simultaneous 
action. For lateral reassignments, the equivalent GS grade and rate 
will become the employee's converted GS grade and rate after leaving 
the demonstration project (before any other action). For transfers, 
promotions, and other actions, the converted GS grade and rate will be 
used in applying any GS pay administration rules applicable in 
connection with the employee's movement out of the project (e.g., 
promotion rules, highest previous rate rules, pay retention rules), as 
if the GS converted grade and rate were actually in effect immediately 
before the employee left the demonstration project.
b. Equivalent GS-Grade-Setting Provisions
    An employee in a pay band corresponding to a single GS grade is 
provided that grade as the GS-equivalent grade. An employee in a pay 
band corresponding to two or more grades is determined to have a GS-
equivalent grade corresponding to one of those grades according to the 
following rules:
    (1) The employee's adjusted base pay under the demonstration 
project (including any locality payment or staffing supplement) is 
compared with step 4 rates in the highest applicable GS rate range. For 
this purpose, a GS rate range includes a rate in:
    (a) The GS base schedule;
    (b) the locality rate schedule for the locality pay area in which 
the position is located; or
    (c) the appropriate special rate schedule for the employee's 
occupational series, as applicable.

    If the series is a two-grade interval series, only odd-numbered 
grades are considered below GS-11.

    (2) If the employee's adjusted base pay under the demonstration 
project equals or exceeds the applicable step 4 adjusted base pay rate 
of the highest GS grade in the band, the employee is converted to that 
grade.
    (3) If the employee's adjusted base pay under the demonstration 
project is lower than the applicable step 4 adjusted base pay rate of 
the highest grade, the adjusted base pay under the demonstration 
project is compared with the step 4 adjusted base pay rate of the 
second highest grade in the employee's pay band. If the employee's 
adjusted base pay under the demonstration project equals or exceeds the 
step 4 adjusted base pay rate of the second highest grade, the employee 
is converted to that grade.
    (4) This process is repeated for each successively lower grade in 
the band until a grade is found in which the employee's adjusted base 
pay under the demonstration project rate equals or exceeds the 
applicable step 4 adjusted base pay rate of the grade. The employee is 
then converted at that grade. If the employee's adjusted base pay is 
below the step 4 adjusted base pay rate of the lowest grade in the 
band, the employee is converted to the lowest grade.
    (5) Exception: An employee will not be provided a lower grade than 
the grade held by the employee immediately preceding a conversion, 
lateral reassignment, or lateral transfer into the project, unless 
since that time the employee has either undergone a reduction in band 
or a reduction within the same pay band due to unacceptable 
performance.
c. Equivalent GS-Rate-of-Pay-Setting Provisions
    An employee's pay within the converted GS grade is set by 
converting the employee's demonstration project rates of pay to GS 
rates of pay in accordance with the following rules:
    (1) The pay conversion is done before any geographic movement or 
other pay-related action that coincides with the employee's movement or 
conversion out of the demonstration project.
    (2) An employee's adjusted base pay under the demonstration project 
(i.e., including any locality payment or staffing supplement) is 
converted to a GS adjusted base pay rate on the highest applicable GS 
rate range for the converted GS grade. For this purpose, a GS rate 
range includes a rate range in:
    (a) The GS base schedule,
    (b) an applicable locality rate schedule, or
    (c) an applicable special rate schedule.
    (3) If the highest applicable GS rate range is a locality pay rate 
range, the employee's adjusted base pay under the demonstration project 
is converted to a GS locality rate of pay. If this rate falls between 
two steps in the locality-adjusted schedule, the rate must be set at 
the higher step. The converted GS unadjusted rate of base pay would be 
the GS base rate corresponding to the converted GS locality rate (i.e., 
same step position).

[[Page 55182]]

    (4) If the highest applicable GS rate range is a special rate 
range, the employee's adjusted base pay under the demonstration project 
is converted to a special rate. If this rate falls between two steps in 
the special rate schedule, the rate must be set at the higher step. The 
converted GS unadjusted rate of base pay will be the GS rate 
corresponding to the converted special rate (i.e., same step position).
    (d) Employees with Pay Retention: If an employee is receiving a 
retained rate under the demonstration project, the employee's GS-
equivalent grade is the highest grade encompassed in his or her pay 
band level. Demonstration project operating procedures will outline the 
methodology for determining the GS-equivalent pay rate for an employee 
retaining a rate under the demonstration project.
3. Supervision and Management Pay Band VI Employees
    The Above GS-15 Position concept is currently being evaluated by 
DoD management for its effectiveness; continued applicability to the 
current STRL scientific, engineering, and technology workforce needs; 
and appropriate allocation of billets based on mission requirements. 
The nature and extent of the conversion out of the demonstration 
project process for employees in these positions will be determined by 
the final DoD guidance. Additional guidance may be included in NAWCAD/
NAWCWD internal issuances.
4. Employees With Pay Retention
    If an employee is receiving a retained rate under the demonstration 
project, the employee's GS-equivalent grade is the highest grade 
encompassed in his or her pay band level. Demonstration project 
operating procedures will outline the methodology for determining the 
GS-equivalent pay rate for an employee retaining a rate under the 
demonstration project.
5. Within-Grade Increase--Equivalent Increase Determinations
    Service under the demonstration project is creditable for within-
grade increase purposes upon conversion back to the GS pay system. 
Performance pay increases (including a zero increase) under the 
demonstration project are equivalent increases for the purpose of 
determining the commencement of a within-grade increase waiting period 
under 5 CFR 531.405(b).

D. Personnel Administration

    All personnel laws, regulations, and guidelines not waived by this 
plan will remain in effect. Basic employee rights will be safeguarded 
and Merit System Principles will be maintained. Servicing HRSCs will 
continue to process personnel-related actions and provide other 
appropriate services.

E. Automation Support

1. General
    One of the major goals of the demonstration project is to 
streamline the personnel processes to increase cost effectiveness. 
Automation must play an integral role in achieving that goal. Without 
the necessary automation to support the interventions proposed for the 
demonstration project, optimal cost benefit cannot be realized. In 
addition, adequate information to support decisionmaking must be 
available to managers if line management is to assume greater authority 
and responsibility for human resources management. Automation to 
support the demonstration project is required at the DON and DoD level, 
(in the form of changes to the Defense Civilian Personnel Data System) 
to facilitate processing and reporting of demonstration project 
personnel actions, and may be ultimately required by the Naval Air 
Warfare Centers to assist in processing of a variety of personnel-
related actions in order to facilitate management processes and 
decisionmaking.
2. Defense Civilian Personnel Data System (DCPDS)
    DCPDS is the Department of Defense's authoritative personnel data 
system and program of record and, as such, will be the system of choice 
for the STRL labs.

F. Experimentation and Revision

    Many aspects of a demonstration project are experimental. 
Modifications may be made from time to time as experience is gained, 
results are analyzed, and conclusions are reached on how the new system 
is working. DoDI 1400.37, July 28, 2009, provides instructions for 
adopting other STRL flexibilities, making minor changes to an existing 
demonstration project, and requesting new initiatives.

VI. Project Duration

    Public Law 103-337 removed any mandatory expiration date for this 
demonstration. The covered organizations, DON and DoD will ensure this 
project is evaluated for the first five years after implementation in 
accordance with 5 U.S.C. 4703. Modifications to the original evaluation 
plan or any new evaluation will ensure the project is evaluated for its 
effectiveness, its impact on mission, and any potential adverse impact 
on any employee groups. Major changes and modifications to the 
interventions would be made if formative evaluation data warranted and 
will be published in the Federal Register to the extent required. At 
the five-year point, the demonstration will be reexamined for permanent 
implementation, modification and additional testing, or termination of 
the entire demonstration project.

VII. Evaluation Plan

A. Overview

    Chapter 47 of 5 U.S.C. requires that an evaluation be performed to 
measure the effectiveness of the demonstration project and its impact 
on improving public management. A comprehensive evaluation plan for the 
entire demonstration program, originally covering 24 DoD laboratories, 
was developed by a joint OPM/DoD Evaluation Committee in 1995. This 
plan was submitted to the Office of Defense Research & Engineering and 
was subsequently approved. The main purpose of the evaluation is to 
determine whether the waivers granted result in a more effective 
personnel system and improvements in ultimate outcomes (i.e., 
organizational effectiveness, mission accomplishment, and customer 
satisfaction).

B. Evaluation Model

    Appendix C shows an intervention model for the evaluation of the 
demonstration project. The model is designated to evaluate two levels 
of organizational performance: Intermediate and ultimate outcomes. The 
intermediate outcomes are defined as the results from specific 
personnel system changes and the associated waivers of law and 
regulation expected to improve human resource (HR) management (i.e., 
cost, quality, timeliness). The ultimate outcomes are determined 
through improved organizational performance, mission accomplishment, 
and customer satisfaction. Although it is not possible to establish a 
direct causal link between changes in the HR management system and 
organizational effectiveness, it is hypothesized that the new HR system 
will contribute to improved organizational effectiveness.
    Organizational performance measures established by the organization 
will be used to evaluate the impact of a new HR system on the ultimate 
outcomes. The evaluation of the new HR system for any given 
organization will take into account the influence of three factors on 
organizational performance: Context,

[[Page 55183]]

degree of implementation, and support of implementation. The context 
factor refers to the impact which intervening variables (i.e., 
downsizing, changes in mission, or the economy) can have on the 
effectiveness of the program. The degree of implementation considers 
the extent to which the:
    (1) HR changes are given a fair trial period;
    (2) Changes are implemented; and
    (3) Changes conform to the HR interventions as planned.

The support of implementation factor accounts for the impact that 
factors such as training, internal regulations and automated support 
systems have on the support available for program implementation. The 
support for program implementation factor can also be affected by the 
personal characteristics (e.g., attitudes) of individuals who are 
implementing the program.

    The degree to which the project is implemented and operated will be 
tracked to ensure that the evaluation results reflect the project as it 
was intended. Data will be collected to measure changes in both 
intermediate and ultimate outcomes, as well as any unintended outcomes, 
which may happen as a result of any organizational change. In addition, 
the evaluation will track the impact of the project and its 
interventions on veterans and other protected groups, the Merit Systems 
Principles, and the Prohibited Personnel Practices. Additional measures 
may be added to the model in the event that changes or modifications 
are made to the demonstration plan.
    The intervention model at Appendix C will be used to measure the 
effectiveness of the personnel system interventions implemented. The 
intervention model specifies each personnel system change or 
``intervention'' that will be measured and shows:
    (1) The expected effects of the intervention,
    (2) The corresponding measures, and
    (3) The data sources for obtaining the measures.

Although the model makes predictions about the outcomes of specific 
interventions, causal attributions about the full impact of specific 
interventions will not always be possible for several reasons. For 
example, many of the initiatives are expected to interact with each 
other and contribute to the same outcomes. In addition, the impact of 
changes in the HR system may be mitigated by context variables (e.g., 
the job market, legislation, and internal support systems) or support 
factors (e.g., training and automation support systems).

C. Evaluation

    A modified quasi-experimental design will be used for the 
evaluation of the STRL Personnel Demonstration Program. Because most of 
the eligible laboratories are participating in the program, a title 5 
U.S.C. comparison group will be compiled from the Central Personnel 
Data File (CPDF). This comparison group will consist of workforce data 
from Government-wide research organizations in civilian Federal 
agencies with missions and job series matching those in the DoD 
laboratories. This comparison group will be used primarily in the 
analysis of pay banding costs and turnover rates.

D. Method of Data Collection

    Data from several sources will be used in the evaluation. 
Information from existing management information systems and from 
personnel office records will be supplemented with perceptual survey 
data from employees to assess the effectiveness and perception of the 
project. The multiple sources of data collection will provide a more 
complete picture as to how the interventions are working. The 
information gathered from one source will serve to validate information 
obtained through another source. In so doing, the confidence of overall 
findings will be strengthened as the different collection methods 
substantiate each other.
    Both quantitative and qualitative data will be used when evaluating 
outcomes. The following data will be collected:
    (1) Workforce data;
    (2) Personnel office data;
    (3) Employee attitude surveys;
    (4) Focus group data;
    (5) Local site historian logs and implementation information;
    (6) Customer satisfaction surveys; and
    (7) Core measures of organizational performance.
    The evaluation effort will consist of two phases, formative and 
summative evaluation, covering at least five years to permit inter- and 
intra-organizational estimates of effectiveness. The formative 
evaluation phase will include baseline data collection and analysis, 
implementation evaluation, and interim assessments. The formal reports 
and interim assessments will provide information on the accuracy of 
project operation, and current information on impact of the project on 
veterans and protected groups, Merit System Principles, and Prohibited 
Personnel Practices. The summative evaluation will focus on an overall 
assessment of project outcomes after five years. The final report will 
provide information on how well the HR system changes achieved the 
desired goals, which interventions were most effective, and whether the 
results can be generalized to other Federal installations.

VIII. Demonstration Project Costs

A. Cost Discipline

    An objective of the demonstration project is to ensure in-house 
cost discipline. A baseline will be established at the start of the 
project and salary expenditures will be tracked yearly. Implementation 
costs (including project development, automation costs, and evaluation 
costs) are considered one-time costs and will not be included in the 
cost discipline. The Personnel Management Board will track personnel 
cost changes and recommend adjustments if required to achieve the 
objective of cost discipline.

B. Developmental Costs

    Costs associated with the development of the personnel 
demonstration project include software automation, training, and 
project evaluation. All funding will be provided through the 
organization's budget. The projected annual expenses are summarized in 
Table 1. Project evaluation costs are not expected to continue beyond 
the first five years unless the results warrant further evaluation.
BILLING CODE 5001-06-P

[[Page 55184]]

[GRAPHIC] [TIFF OMITTED] TN09SE10.120

BILLING CODE 5001-06-C

IX. Required Waivers to Law and Regulation

    Public Law 106-398 gave the DoD the authority to experiment with 
several personnel management innovations. In addition to the 
authorities granted by the law, the following are waivers of law and 
regulation that will be necessary for implementation of the 
demonstration project. In due course, additional laws and regulations 
may be identified for waiver request. The following waivers and 
adaptations of certain title 5 U.S.C. and title 5 CFR provisions are 
required only to the extent that these statutory provisions limit or 
are inconsistent with the actions contemplated under this demonstration 
project. Nothing in this plan is intended to preclude the demonstration 
project from adopting or incorporating any law or regulation enacted, 
adopted, or amended after the effective date of this demonstration 
project.

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

    Chapter 5, section 552a: Records. Waive to the extent required to 
clarify that volunteers under the Voluntary Emeritus Corps are 
considered employees of the Federal Government for purposes of this 
section.
    Chapter 31, section 3111: Acceptance of volunteer service. Waive to 
allow for a Volunteer Emeritus Corps in addition to student volunteers.
    Chapter 33, subchapter I--Examination, Certification, and 
Appointment: Waived except for sections 3302, 3321, and 3328 to allow 
for direct hire authority for scientists and engineers with advanced 
degrees for professional positions.
    Chapter 33, section 3317(a): Competitive service, certification 
from register (in so far as ``rule of three'' is eliminated under the 
demonstration project).
    Chapter 33, subchapter 1, Section 3318(a): Competitive Service, 
Selection from Certificate. Waived in its entirety to eliminate the 
requirement for selection using the ``rule of three.'' Veterans' 
preference provisions remain unchanged.
    Chapter 33, section 3321: Competitive Service; Probationary Period. 
This section waived to the extent necessary to replace grade with ``pay 
band level and allow probationary periods of up to 3 years.
    Chapter 33, section 3341: Details. Waived as necessary to extend 
the time limits for details.
    Chapter 35, section 3502: Waived to the extent to allow for 
performance retention subgroups and 3502(c) waived in its entirety.
    Chapter 41, section 4108(a)-(c): Waived to the extent necessary to 
require the employee to continue in the service of the covered 
organizations for the period of the required service and to the extent 
necessary to permit the Executive Director of the covered 
organizations, to waive in whole or in part a right of recovery.
    Chapter 43, section 4302: Waived to the extent necessary to 
substitute ``pay band'' for ``grade.''
    Chapter 43, section 4303: Waived to the extent necessary to (1) 
substitute ``pay band'' for ``grade'' and (2) provide that moving to a 
lower pay band as a result of not receiving the general pay increase 
because of poor performance is not an action covered by the provisions 
of sections 4303(a)-(d).
    Chapter 43, section 4304(b)(1) and (3): Responsibilities of the 
OPM. Waived in its entirety to remove the responsibilities of the OPM 
with respect to the performance appraisal system.
    Chapter 45, section 4502: Limitation of cash awards to $10K. Waived 
to allow NAWCAD and NAWCWD Commanders to approve awards up to $25K.
    Chapter 51 Classification, section 5101--5112: Purpose; 
Definitions, application; Determination of applicability; Basis for 
grading positions; Standards for classification of positions; Basis for 
classifying positions; Classification of positions; Classification of 
positions above GS-15 ; Review of classification of positions, 
Revocation and restoration of authority to classify positions, and 
general authority of the Office of Personnel Management:-- Waived to 
the extent that white collar employees will be covered by pay banding 
and to the extent that classification appeals will be decided by the 
NAWC Executive Director with final appeal to the Department of Defense.
    Chapter 53, sections 5301, 5302(1), (8) and (9), 5303, and 5304: 
Pay Comparability System. Waived to the extent necessary to allow (1) 
demonstration project employees to be treated as GS employees, (2) 
basic rates of pay under the demonstration project to be treated as 
scheduled rates of pay, and (3) the demonstration project pay system to 
be adjusted by the GS annual adjustments to pay schedules.
    Chapter 53, section 5305: Special Pay Authority. Waived to the 
extent necessary to allow for use of a staffing supplement in lieu of 
the special pay authority.
    Chapter 53, sections 5331-5336: GS Pay Rates. Waived in its 
entirety to allow for the demonstration project's pay banding system 
and pay provisions.
    Chapter 53, sections 5361-5366: Grade and Pay Retention. Waived to 
the extent necessary to: (1) Replace ``grade'' with ``pay band''; (2) 
allow demonstration project employees to be treated as GS employees; 
(3) provide that an employee on pay retention whose rating of record is 
``Unacceptable'' is not entitled to 50 percent of the amount of the 
increase in the maximum rate of base pay payable for the pay band of 
the employee's position; (4) provide that pay retention does not apply 
to reduction in base pay due solely to the reallocation of 
demonstration project pay rates in the implementation of a staffing 
supplement; (5) allow no provision of grade or pay band retention under 
this demonstration project and (6) allow demonstration project 
employees receiving a staffing supplement to retain the adjusted base 
pay if the staffing supplement is discontinued or reduced. This waiver 
applies to ST employees only if they move to a GS-equivalent position 
within the demonstration project under conditions that trigger 
entitlement to pay retention.
    Chapter 55, section 5542(a)(1)-(2): Overtime rates; computation. 
Waived to the extent necessary to provide that the

[[Page 55185]]

GS-10 minimum special rate (if any) for the special rate category to 
which a project employee belongs is deemed to be the ``applicable 
special rate'' in applying the pay cap provisions in 5 U.S.C. 5542.
    Chapter 55, section 5545(d): Hazardous duty differential. Waived to 
the extent necessary to allow demonstration project employees to be 
treated as GS employees.
    Chapter 55, section 5547(a)-(b): Limitation on premium pay. Waived 
to the extent necessary to provide that the GS-15 maximum special rate 
(if any) for the special rate category to which a project employee 
belongs is deemed to be the ``applicable special rate'' in applying the 
pay cap provisions in 5 U.S.C. 5547.
    Chapter 57, section 5753, 5754, and 5755: Recruitment and 
relocation, bonuses, incentives, and supervisory differentials. Waived 
to the extent necessary to allow employees and positions under the 
demonstration project to be treated as employees and positions under 
the GS.
    Chapter 59, section 5941: Allowances based on living costs and 
conditions of environment; employees stationed outside continental U.S. 
or Alaska. Waived to the extent necessary to provide that cost-of-
living allowances paid to employees under the demonstration project are 
paid in accordance with regulations prescribed by the President (as 
delegated to OPM).
    Chapter 75, sections 7501(1), 7511(a)(1)(A)(ii), and 
7511(a)(1)(C)(ii): Adverse Actions--Definitions. Waived to the extent 
necessary to allow for up to a three-year probationary period and to 
permit termination during the extended probationary period without 
using adverse action procedures for those employees serving a 
probationary period under an initial appointment except for those with 
veterans' preference.
    Chapter 75, section 7512(3): Adverse actions. Waived to the extent 
necessary to replace ``grade'' with ``pay band.''
    Chapter 75, section 7512(4): Adverse actions. Waived to the extent 
necessary to provide that adverse action provisions do not apply to (1) 
conversions from GS special rates or NSPS Targeted Local Market 
Supplements to demonstration project pay, as long as total pay is not 
reduced and (2) reductions in pay due to the removal of a supervisory 
or team leader pay adjustment upon voluntary movement to a non-
supervisory or non-team leader position.

B. Waivers to Title 5, CFR

    Part 293, subpart D: Personnel Records. Employee Performance File 
System Records. Waived to the extent necessary to be consistent with 
the demonstration project's mission aligned objectives and compensation 
system and to allow definition and establishment of its automated 
system of records and retention requirements.
    Part 300, sections 300.601 through 300.605: Time-in-Grade 
restrictions. Waived to eliminate time-in-grade restrictions in the 
demonstration project.
    Part 308, sections 308.101 through 308.103: Volunteer service. 
Waived to allow for a Voluntary Emeritus Corps in addition to student 
volunteers.
    Part 315, section 315.801(a), 315.801(b)(1), (c), and (e), and 
315.802(a) and (b)(1): Probationary period and Length of probationary 
period. Waived to the extent necessary to allow for up to a three-year 
probationary period and to permit termination during the extended 
probationary period without using adverse action procedures for those 
employees serving a probationary period under an initial appointment 
except for those with veterans' preference.
    Part 315, section 315.901: Statutory requirement. Waived to the 
extent necessary to replace ``grade'' with ``pay band.''
    Part 315, section 315.905: Length of the probationary period. 
Waived to the extent necessary to allow for a two-year supervisory/
managerial probationary period.
    Part 316, section 316.301: Purpose and duration. Waived to the 
extent necessary to allow for term appointments for more than 4 years.
    Part 316, section 316.303: Tenure of term employees. Waived to the 
extent necessary to allow term employees to acquire competitive status.
    Part 316, section 316.304: Trial Period. Waived to the extent 
necessary to allow for up to a three year trial period.
    Part 332, section 332.402: ``Rule of three'' will not be used in 
the demonstration project. When there are no more than 15 qualified 
applicants and no preference eligible, all eligible applicants are 
referred to the selection official without rating or rankings. Statutes 
and regulations covering veterans' preference are observed in the 
selection process and when rating and ranking are required.
    Part 332, section 332.404: Order of selection from certificates. 
Waived to the extent necessary to eliminate the requirement for 
selection using the ``rule of three.''
    Part 335, section 335.103: Agency promotion programs. Waived to the 
extent necessary to extend the length of details and temporary 
promotions without requiring competitive procedures.
    Part 337, section 337.101(a): Rating applicants. Waived to the 
extent necessary to allow referral without rating when there are 15 or 
fewer qualified candidates and no qualified preference eligibles.
    Part 340, subpart A, subpart B, and subpart C: Other than Full-Time 
Career Employment. These subparts are waived to the extent necessary to 
allow a Volunteer Emeritus Corps.
    Part 351, section 351.401: Determining retention standing. Waived 
to the extent necessary to allow use of performance subgroups in 
determining retention standing.
    Part 351, section 351.402(b): Competitive area. Waived to the 
extent necessary to allow separate competitive areas for demonstration 
and non-demonstration project employees and to allow separate 
competitive areas for each demonstration occupational family.
    Part 351, section 351.403: Competitive level. Waived to the extent 
necessary to replace ``grade'' with ``pay band'' and to allow use of 
demonstration project criteria, such as specialty area code, to be used 
in the definition of competitive levels.
    Part 351, section 351.501: Order of retention--competitive service. 
Waived as necessary to allow use of performance subgroups in 
determining retention standing and allow no additional years of service 
based on performance.
    Part 351, section 351.502: Order of retention--excepted service. 
Waived as necessary to allow use of performance subgroups in 
determining retention standing and allow no additional years of service 
based on performance.
    Part 351, section 351.504: Credit for performance. Waived as 
necessary to allow for use of performance subgroups rather than adding 
years of service based on performance.
    Part 351, section 351.701: Assignment involving displacement. 
Waived to the extent that bump and retreat rights are limited to one 
pay band with the exception of 30 percent preference eligibles who are 
limited to two bands (or equivalent of five grades), and to limit the 
assignment rights of employees with an unacceptable current rating of 
record to a position held by another employee with an unacceptable 
rating of record.

[[Page 55186]]

    Part 410, section 410.309: Agreements to continue in service. 
Waived to the extent necessary to allow the Executive Directors of the 
covered organizations to determine requirements related to continued 
service agreements.
    Part 430, subpart B: Performance Appraisal for GS, Prevailing Rate, 
and Certain Other Employees. Waived to the extent necessary to be 
consistent with the demonstration project's mission aligned objectives 
and compensation system.
    Part 430, section 430.208(a)(1) and (2): Rating Performance. Waived 
to allow presumptive ratings for new employees hired 90 days or less 
before the end of the appraisal cycle or for other situations not 
providing adequate time for an appraisal.
    Part 432, Performance based reduction-in-grade and removal actions: 
Modified to the extent that an employee may be removed, reduced in pay 
band level with a reduction in pay, reduced in pay without a reduction 
in pay band level and reduced in pay band level without a reduction in 
pay based on unacceptable performance. Also, modified to delete 
reference to critical element. For employees who are reduced in pay 
band level without a reduction in pay, Sections 432.105 and 432.106(a) 
do not apply.
    Part 432, section 432.102: Coverage. Waived to the extent that the 
term ``grade'' is replaced with ``pay band.''
    Part 432, section 432.104: Addressing unacceptable performance. 
References to ``critical elements'' are deleted as all elements are 
critical and adding that the employee may be ``reduced in pay band 
level, or pay, or removed'' if performance does not improve to an 
acceptable level during a reasonable opportunity period.
    Part 432, section 432.105(a)(2): Proposing and taking action based 
on unacceptable performance: Waive ``If an employee has performed 
acceptably for 1 year'' to allow for ``within two years from the 
beginning of a PIP.''
    Part 451, subpart A, section 451.103(c)(2): Waived with respect to 
performance awards under the NAVAIR Extraordinary Achievement Allowance 
and demo incentive awards authority.
    Part 451, subpart A, section 451.106 and 451.107: Waived to allow 
the NAWCAD and NAWCWD Commanders authority to grant special act awards 
to covered employees of up to $25,000.
    Part 511, subpart A, subpart B, and subpart F: Classification 
within the General Schedule. Waived in its entirety.
    Part 530, subpart C: Special Rate Schedules for Recruitment and 
Retention. Waived in its entirety to allow for staffing supplements.
    Part 531, subpart B.: Determining Rate of Basic Pay. Waived to the 
extent necessary to allow for pay setting, including educational pay 
adjustments and pay for performance under the provisions of the 
demonstration project.
    Part 531, subparts D and E: Within-Grade Increases, and Quality 
Step Increases. Waived in its entirety.
    Part 531, subpart F: Locality-Based Comparability Payments. Waived 
to the extent necessary to allow (1) demonstration project employees, 
except employees in Pay Band V of the S&E occupational family, to be 
treated as GS employees and (2) base rates of pay under the 
demonstration project to be treated as scheduled annual rates of pay.
    Part 536: Grade and Pay Retention. Waived to the extent necessary 
to (1) replace ``grade'' with ``pay band;'' (2) provide that pay 
retention provisions do not apply to conversions from GS special rates 
to demonstration project pay, as long as total pay is not reduced, and 
to movement from a supervisory position to a non-supervisory position, 
as long as total pay is not reduced; (3) allow demonstration project 
employees to be treated as GS employees; (4) provide that pay retention 
provisions do not apply to movements to a lower pay band as a result of 
not receiving the general increase due to an annual performance rating 
of ``Unacceptable;'' (5) provide that an employee on pay retention 
whose rating of record is ``Unacceptable'' is not entitled to 50 
percent of the amount of the increase in the maximum rate of base pay 
payable for the pay band of the employee's position; (6) allow no 
provision of grade or pay band retention under this demonstration 
project; (7) provide that pay retention does not apply to reduction in 
base pay due solely to the reallocation of demonstration project pay 
rates in the implementation of a staffing supplement and (8) allow 
demonstration project employees receiving a staffing supplement to 
retain the adjusted base pay if the staffing supplement is discontinued 
or reduced. This waiver applies to ST employees only if they move to a 
GS equivalent position within the demonstration project under 
conditions that trigger entitlement to pay retention.
    Part 550, sections 550.105 and 550.106: Bi-weekly and annual 
maximum earnings limitations. Waived to the extent necessary to provide 
that the GS-15 maximum special rate (if any) for the special rate 
category to which a project employee belongs is deemed to be the 
``applicable special rate'' in applying the pay cap provisions in 5 
U.S.C. 5547.
    Part 550, section 550.703: Definitions. Waived to the extent 
necessary to modify the definition of ``reasonable offer'' by replacing 
``two grade or pay levels'' with ``one band level'' and ``grade or pay 
level'' with ``band level.''
    Part 550, section 550.902: Definitions. Waived to the extent 
necessary to allow demonstration project employees to be treated as GS 
employees. This waiver does not apply to employees in Pay Band V of the 
S&E occupational family.
    Part 575, subparts A, B, C, and D: Recruitment Incentives, 
Relocation Incentives, Retention Incentives. Waived to the extent 
necessary to allow employees and positions under the demonstration 
project covered by pay banding to be treated as employees and positions 
under the GS.
    Part 591, subpart B: Cost-of-Living Allowance and Post 
Differential--Non-foreign Areas. Waived to the extent necessary to 
allow (1) demonstration project employees to be treated as employees 
under the GS and (2) employees in Band V of the S&E occupational family 
to be treated as ST employees for the purposes of these provisions.
    Part 752, sections 752.101, 752.201, 752.301 and 752.401: Principal 
statutory requirements and Coverage. Waived to the extent necessary to 
allow for up to a three-year probationary period and to permit 
termination during the extended probationary period without using 
adverse action procedures for those employees serving a probationary 
period under an initial appointment except for those with veterans' 
preference.
    Part 752, section 752.401: Coverage. Waived to the extent necessary 
to replace ``grade'' with ``pay band,'' and to provide that a reduction 
in pay band level is not an adverse action if it results from the 
employee's rate of base pay being exceeded by the minimum rate of base 
pay for his/her pay band.
    Part 752, section 752.401(a)(4): Coverage. Waived to the extent 
necessary to provide that adverse action provisions do not apply to (1) 
conversions from GS special rates or NSPS Targeted Local Market 
Supplements to demonstration project pay, as long as total pay is not 
reduced and (2) movement from a supervisory pay band to a non-
supervisory pay band as long as total pay is not reduced.
BILLING CODE 5001-06-P

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BILLING CODE 5001-06-C

Appendix D: Individual Pay Band Level Rating Benchmarks Examples

    These are examples for illustration purposes only, the actual 
benchmarks may be different from what is shown here. These are an 
example showing a benchmark for each pay band level in an 
occupational family:

Scientific and Engineering (S&E) (Pay Plan DP)

Example Rating Benchmarks

Band II

    Level 3:
    <bullet> With guidance, effectively achieved the stated 
objective.
    <bullet> With guidance, organized and prioritized own tasks to 
deliver the objective, adjusting work plans and overcoming obstacles 
as necessary.
    <bullet> Demonstrated high standards of personal and 
professional conduct and represented the organization or work unit 
effectively.

Level 5

    Additions at the Level 5:
    <bullet> Contributed results beyond what was expected; results 
were far superior in quality, quantity, timeliness and/or impact to 
the stated objective.
    <bullet> Exhibited the highest standards of professionalism.

Band III

    Level 3:
    <bullet> Effectively achieved the stated objective, anticipating 
and overcoming significant obstacles. Adapts established methods and 
procedures when needed.
    <bullet> Results were technically sound, accurate, thorough, 
documented, and met applicable authorities, standards, policies, 
procedures and guidelines.
    <bullet> Planned, organized prioritized, and scheduled own work 
activities to deliver the objective in a timely and effective 
manner, making adjustments to respond to changing situations and 
anticipating and overcoming difficult obstacles as necessary.
    <bullet> Demonstrated high standards of personal and 
professional conduct and represented the organization or work unit 
effectively.

Level 5

    Additions at the Level 5:
    <bullet> Contributed results beyond what was expected; results 
were far superior in quality, quantity, and/or impact to the stated 
objective to what would be expected at this level.
    <bullet> Exhibited the highest standards of professionalism.

Appendix E: Career Stage Rating Benchmarks Examples

    These are examples for illustration purposes only, the actual 
benchmarks may be different from what is shown here. These are an 
example showing benchmarks by career stage, which may cover multiple 
pay band levels in multiple occupational families:

Example Rating Benchmarks

    Career Stage: Journey.
    Objective Rating: 1.
    Performance Standard:
    <bullet> Failed to achieve all or part of the stated critical 
element; or
    <bullet> Failed to provide products that were sound, accurate, 
thorough and documented, and regularly failed to meet applicable 
authorities, standards, policies, procedures and guidelines; or
    <bullet> Failed to plan, organize, prioritize, and schedule own 
work activities to deliver the critical element in a timely and 
effective manner. Relied on others to frequently assist with or redo 
work assignments; or
    <bullet> Demonstrated poor cooperation or inability to work with 
others.
    Career Stage: Journey.
    Objective Rating: 3.
    Performance Standard:
    <bullet> Effectively accomplished the stated critical element by 
achieving results that

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were technically sound, accurate, thorough, and documented and met 
applicable authorities, standards, policies, procedures and 
guidelines.
    <bullet> Planned, organized, prioritized and scheduled own work 
activities to deliver the critical element in a timely and effective 
manner, making adjustments to respond to changing situations as 
necessary.
    <bullet> Demonstrated high standards of teamwork and 
cooperation.
    Career Stage: Journey.
    Objective Rating: 5.
    Performance Standard: (Measured in addition to the above)
    <bullet> Achieved outcomes and results that are far superior in 
quality, quantity, timeliness and/or impact to what would ordinarily 
be expected at this level.
    <bullet> Accomplishments and outcomes were of such magnitude 
that they contributed to the organization exceeding its mission 
goals and objectives for the year.
    <bullet> Persisted in overcoming obstacles and put forth extra 
effort to accomplish difficult assignments.
    <bullet> Represented the organization or work unit effectively 
through model team cooperation.

[FR Doc. 2010-22172 Filed 9-8-10; 8:45 am]
BILLING CODE 5001-06-P


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