H. R. 1585—347 
the amount that would have been allocated for compensation 
of such employees for such fiscal year if they had not been 
converted to the National Security Personnel System, based 
on, at a minimum— 
‘‘(A) the number and mix of employees in such 
organizational or functional unit prior to the conversion 
of such employees to the National Security Personnel 
System; and 
‘‘(B) adjusted for normal step increases and rates of 
promotion that would have been expected, had such 
employees remained in their previous pay schedule. 
‘‘(5) To the maximum extent practicable, the regulations 
implementing the National Security Personnel System shall 
provide a formula for calculating the overall amount to be 
allocated for fiscal years after fiscal year 2012 for compensation 
of the civilian employees of an organization or functional unit 
of the Department of Defense that is included in the National 
Security Personnel System. The formula shall ensure that in 
the aggregate, employees are not disadvantaged in terms of 
the overall amount of pay available as a result of conversion 
to the National Security Personnel System, while providing 
flexibility to accommodate changes in the function of the 
organization, changes in the mix of employees performing those 
functions, and other changed circumstances that might impact 
pay levels. 
‘‘(6) Amounts allocated for compensation of civilian 
employees of the Department of Defense pursuant to para-
graphs (4) and (5) shall be available only for the purpose 
of providing such compensation. 
‘‘(7) At the time of any annual adjustment to pay schedules 
pursuant to section 5303, the rate of basic pay for each 
employee of an organizational or functional unit of the Depart-
ment of Defense that is included in the National Security 
Personnel System who receives a performance rating above 
unacceptable or who does not have a current rating of record 
for the most recently completed appraisal period shall be 
adjusted by no less than 60 percent of the amount of such 
adjustment. The balance of the amount that would have been 
available for an annual adjustment under section 5303 shall 
be allocated to pay pool funding, for the purpose of increasing 
rates of pay on the basis of employee performance. 
‘‘(8) Each employee of an organizational or functional unit 
of the Department of Defense that is included in the National 
Security Personnel System who receives a performance rating 
above unacceptable or who does not have a current rating 
of record for the most recently completed appraisal period shall 
receive— 
‘‘(A) locality-based comparability payments under sec-
tion 5304 and section 5304a in the same manner and 
to the same extent as employees under the General 
Schedule; or 
‘‘(B) the full measure of any other local market supple-
ment applicable to the employee if locality-based com-
parability payments referred to in subparagraph (A) are 
not generally applicable to the employee.
H. R. 1585—348 
Nothing in this paragraph shall be construed to make locality- 
based comparability payments or other local market supple-
ments payable to any category of employees or positions which 
were ineligible for such payments or supplements (as the case 
may be) as of the day before the date of the enactment of 
the National Defense Authorization Act for Fiscal Year 2004. 
‘‘(9) Any rate of pay established or adjusted in accordance 
with the requirements of this section shall be non-negotiable, 
but shall be subject to procedures and appropriate arrange-
ments of paragraphs (2) and (3) of section 7106(b), except 
that nothing in this paragraph shall be construed to eliminate 
the bargaining rights of any category of employees who were 
authorized to negotiate rates of pay as of the day before the 
date of the enactment of the National Defense Authorization 
Act for Fiscal Year 2004. 
‘‘(f) PROVISIONS REGARDING NATIONAL LEVEL BARGAINING.— 
‘‘(1) The Secretary may bargain with a labor organization 
which has been accorded exclusive recognition under chapter 
71 at an organizational level above the level of exclusive rec-
ognition. The decision to bargain above the level of exclusive 
recognition shall not be subject to review. The Secretary shall 
consult with the labor organization before determining the 
appropriate organizational level of bargaining. 
‘‘(2) Any such bargaining shall— 
‘‘(A) address issues that are— 
‘‘(i) subject to bargaining under chapter 71 and 
this chapter; 
‘‘(ii) applicable to multiple bargaining units; and 
‘‘(iii) raised by either party to the bargaining; 
‘‘(B) except as agreed by the parties or directed through 
an independent dispute resolution process agreed upon by 
the parties, be binding on all affected subordinate bar-
gaining units of the labor organization at the level of rec-
ognition and their exclusive representatives, and the 
Department of Defense and its subcomponents, without 
regard to levels of recognition; 
‘‘(C) to the extent agreed by the parties or directed 
through an independent dispute resolution process agreed 
upon by the parties, supersede conflicting provisions of 
all other collective bargaining agreements of the labor 
organization, including collective bargaining agreements 
negotiated with an exclusive representative at the level 
of recognition; and 
‘‘(D) except as agreed by the parties or directed through 
an independent dispute resolution process agreed upon by 
the parties, not be subject to further negotiations for any 
purpose, including bargaining at the level of recognition. 
‘‘(3) Any independent dispute resolution process agreed to 
by the parties for the purposes of paragraph (2) shall have 
the authority to address all issues on which the parties are 
unable to reach agreement. 
‘‘(4) The National Guard Bureau and the Army and Air 
Force National Guard may be included in coverage under this 
subsection.
H. R. 1585—349 
‘‘(5) Any bargaining completed pursuant to this subsection 
with a labor organization not otherwise having national con-
sultation rights with the Department of Defense or its sub-
components shall not create any obligation on the Department 
of Defense or its subcomponents to confer national consultation 
rights on such a labor organization. 
‘‘(g) PROVISIONS RELATED
TO SEPARATION
AND RETIREMENT 
INCENTIVES.— 
‘‘(1) The Secretary may establish a program within the 
Department of Defense under which employees may be eligible 
for early retirement, offered separation incentive pay to sepa-
rate from service voluntarily, or both. This authority may be 
used to reduce the number of personnel employed by the 
Department of Defense or to restructure the workforce to meet 
mission objectives without reducing the overall number of per-
sonnel. This authority is in addition to, and notwithstanding, 
any other authorities established by law or regulation for such 
programs. 
‘‘(2)(A) The Secretary may not authorize the payment of 
voluntary separation incentive pay under paragraph (1) to more 
than 25,000 employees in any fiscal year, except that employees 
who receive voluntary separation incentive pay as a result 
of a closure or realignment of a military installation under 
the Defense Base Closure and Realignment Act of 1990 (title 
XXIX of Public Law 101–510; 10 U.S.C. 2687 note) shall not 
be included in that number. 
‘‘(B) The Secretary shall prepare a report each fiscal year 
setting forth the number of employees who received such pay 
as a result of a closure or realignment of a military base 
as described under subparagraph (A). 
‘‘(C) The Secretary shall submit the report under subpara-
graph (B) to the Committee on Armed Services and the Com-
mittee on Governmental Affairs of the Senate, and the Com-
mittee on Armed Services and the Committee on Government 
Reform of the House of Representatives. 
‘‘(3) For purposes of this section, the term ‘employee’ means 
an employee of the Department of Defense, serving under an 
appointment without time limitation, except that such term 
does not include— 
‘‘(A) a reemployed annuitant under subchapter III of 
chapter 83 or chapter 84, or another retirement system 
for employees of the Federal Government; 
‘‘(B) an employee having a disability on the basis of 
which such employee is or would be eligible for disability 
retirement under any of the retirement systems referred 
to in subparagraph (A); or 
‘‘(C) for purposes of eligibility for separation incentives 
under this section, an employee who is in receipt of a 
decision notice of involuntary separation for misconduct 
or unacceptable performance. 
‘‘(4) An employee who is at least 50 years of age and 
has completed 20 years of service, or has at least 25 years 
of service, may, pursuant to regulations promulgated under 
this section, apply and be retired from the Department of 
Defense and receive benefits in accordance with chapter 83 
or 84 if the employee has been employed continuously within 
the Department of Defense for more than 30 days before the
H. R. 1585—350 
date on which the determination to conduct a reduction or 
restructuring within 1 or more Department of Defense compo-
nents is approved. 
‘‘(5)(A) Separation pay shall be paid in a lump sum or 
in installments and shall be equal to the lesser of — 
‘‘(i) an amount equal to the amount the employee would 
be entitled to receive under section 5595(c), if the employee 
were entitled to payment under such section; or 
‘‘(ii) $25,000. 
‘‘(B) Separation pay shall not be a basis for payment, 
and shall not be included in the computation, of any other 
type of Government benefit. Separation pay shall not be taken 
into account for the purpose of determining the amount of 
any severance pay to which an individual may be entitled 
under section 5595, based on any other separation. 
‘‘(C) Separation pay, if paid in installments, shall cease 
to be paid upon the recipient’s acceptance of employment by 
the Federal Government, or commencement of work under a 
personal services contract as described in paragraph (6). 
‘‘(6)(A) An employee who receives separation pay under 
such program may not be reemployed by the Department of 
Defense for a 12-month period beginning on the effective date 
of the employee’s separation, unless this prohibition is waived 
by the Secretary on a case-by-case basis. 
‘‘(B) An employee who receives separation pay under this 
section on the basis of a separation occurring on or after the 
date of the enactment of the Federal Workforce Restructuring 
Act of 1994 (Public Law 103–226; 108 Stat. 111) and accepts 
employment with the Government of the United States, or 
who commences work through a personal services contract with 
the United States within 5 years after the date of the separation 
on which payment of the separation pay is based, shall be 
required to repay the entire amount of the separation pay 
to the Department of Defense. If the employment is with an 
Executive agency (as defined by section 105) other than the 
Department of Defense, the Director may, at the request of 
the head of that agency, waive the repayment if the individual 
involved possesses unique abilities and is the only qualified 
applicant available for the position. If the employment is within 
the Department of Defense, the Secretary may waive the repay-
ment if the individual involved is the only qualified applicant 
available for the position. If the employment is with an entity 
in the legislative branch, the head of the entity or the 
appointing official may waive the repayment if the individual 
involved possesses unique abilities and is the only qualified 
applicant available for the position. If the employment is with 
the judicial branch, the Director of the Administrative Office 
of the United States Courts may waive the repayment if the 
individual involved possesses unique abilities and is the only 
qualified applicant available for the position. 
‘‘(7) Under this program, early retirement and separation 
pay may be offered only pursuant to regulations established 
by the Secretary, subject to such limitations or conditions as 
the Secretary may require. 
‘‘(h) PROVISIONS RELATING TO REEMPLOYMENT.— 
‘‘(1) Except as provided under paragraph (2), if an annu-
itant receiving an annuity from the Civil Service Retirement
H. R. 1585—351 
and Disability Fund becomes employed in a position within 
the Department of Defense, his annuity shall continue. An 
annuitant so reemployed shall not be considered an employee 
for purposes of subchapter III of chapter 83 or chapter 84. 
‘‘(2)(A) An annuitant retired under section 8336(d)(1) or 
8414(b)(1)(A) receiving an annuity from the Civil Service Retire-
ment and Disability Fund, who becomes employed in a position 
within the Department of Defense after the date of enactment 
of the National Defense Authorization Act for Fiscal Year 2004 
(Public Law 108–136), may elect to be subject to section 8344 
or 8468 (as the case may be). 
‘‘(B) An election for coverage under this paragraph shall 
be filed not later than the later of 90 days after the date 
the Department of Defense— 
‘‘(i) prescribes regulations to carry out this subsection; 
or 
‘‘(ii) takes reasonable actions to notify employees who 
may file an election. 
‘‘(C) If an employee files an election under this paragraph, 
coverage shall be effective beginning on the first day of the 
first applicable pay period beginning on or after the date of 
the filing of the election. 
‘‘(D) Paragraph (1) shall apply to an individual who is 
eligible to file an election under subparagraph (A) and does 
not file a timely election under subparagraph (B). 
‘‘(3) The Secretary shall prescribe regulations to carry out 
this subsection. 
‘‘(i) ADDITIONAL PROVISIONS RELATING TO PERSONNEL MANAGE-
MENT.— 
‘‘(1) Subject to the requirements of chapter 71 and the 
limitations in subsection (b)(3), the Secretary of Defense, in 
establishing and implementing the National Security Personnel 
System under subsection (a), shall not be limited by any provi-
sion of this title or any rule or regulation prescribed under 
this title in establishing and implementing regulations relating 
to— 
‘‘(A) the methods of establishing qualification require-
ments for, recruitment for, and appointments to positions; 
and 
‘‘(B) the methods of assigning, reassigning, detailing, 
transferring, or promoting employees. 
‘‘(2) In implementing this subsection, the Secretary shall 
comply with the provisions of section 2302(b)(11), regarding 
veterans’ preference requirements, as provided for in subsection 
(b)(3). 
‘‘(j) PHASE-IN.—The Secretary may not, in any calendar year, 
add any organizational or functional unit to the National Security 
Personnel System which would cause the total number of employees 
added to such System in such year to exceed 100,000.’’. 
(b) IMPLEMENTATION.— 
(1) The requirements of section 9902 of title 5, United 
States Code, as amended by this section, may be implemented 
through rules promulgated jointly by the Secretary of Defense 
and the Director of the Office of Personnel Management after 
notice and opportunity for public comment or through Depart-
ment of Defense rules or internal agency implementing 
issuances. Rules promulgated jointly by the Secretary and the