513 
rorist incident occurring during the employee’s service with 
an Armed Force. 
‘‘(b) RETROACTIVE PAYMENT IN CERTAIN CASES.— 
Subsection (a) applies in the case of an employee who dies 
on or after October 7, 2001, as a result of injuries incurred 
in connection with the employee’s service with an Armed 
Force in the theater of operations of Operation Enduring 
Freedom or Operation Iraqi Freedom. 
‘‘(c) OTHER BENEFITS.—The death gratuity payable 
under this section is in addition to any death benefits other-
wise provided for in law. 
‘‘(d) ELIGIBLE SURVIVORS.— 
‘‘(1) Subject to paragraph (5), a death gratuity 
payable upon the death of a person covered by sub-
section (a) shall be paid to or for the living survivor 
highest on the following list: 
‘‘(A) The employee’s surviving spouse. 
‘‘(B) The employee’s children, as prescribed 
by paragraph (2), in equal shares. 
‘‘(C) If designated by the employee, any one 
or more of the following persons: 
‘‘(I) The employee’s parents or persons 
in loco parentis, as prescribed by paragraph 
(3). 
‘‘(ii) The employee’s brothers. 
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514 
‘‘(iii) The employee’s sisters. 
‘‘(D) The employee’s parents or persons in 
loco parentis, as prescribed by paragraph (3), in 
equal shares. 
‘‘(E) The employee’s brothers and sisters in 
equal shares. 
Subparagraphs (C) and (E) of this paragraph include 
brothers and sisters of the half blood and those 
through adoption. 
‘‘(2) Paragraph (1)(B) applies, without regard 
to age or marital status, to— 
‘‘(A) legitimate children; 
‘‘(B) adopted children; 
‘‘(C) stepchildren who were a part of the de-
cedent’s household at the time of death; 
‘‘(D) illegitimate children of a female dece-
dent; and 
‘‘(E) illegitimate children of a male dece-
dent— 
‘‘(I) who have been acknowledged in 
writing signed by the decedent; 
‘‘(ii) who have been judicially deter-
mined, before the decedent’s death, to be his 
children; 
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515 
‘‘(iii) who have been otherwise proved, 
by evidence satisfactory to the employing 
agency, to be children of the decedent; or 
‘‘(iv) to whose support the decedent had 
been judicially ordered to contribute. 
‘‘(3) Subparagraphs (C) and (D) of paragraph 
(1), so far as they apply to parents and persons in 
loco parentis, include fathers and mothers through 
adoption, and persons who stood in loco parentis to 
the decedent for a period of not less than one year at 
any time before the decedent became an employee. 
However, only one father and one mother, or their 
counterparts in loco parentis, may be recognized in 
any case, and preference shall be given to those who 
exercised a parental relationship on the date, or most 
nearly before the date, on which the decedent became 
an employee. 
‘‘(4) Beginning on the date of the enactment of 
this paragraph, a person covered by this section may 
designate another person to receive not more than 50 
percent of the amount payable under this section. The 
designation shall indicate the percentage of the 
amount, to be specified only in 10 percent increments 
up to the maximum of 50 percent, that the designated 
person may receive. The balance of the amount of the 
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516 
death gratuity shall be paid to or for the living sur-
vivors of the person concerned in accordance with 
subparagraphs (A) through (E) of paragraph (1). 
‘‘(5) If a person entitled to all or a portion of 
a death gratuity under paragraph (1) or (4) dies be-
fore the person receives the death gratuity, it shall be 
paid to the living survivor next in the order pre-
scribed by paragraph (1). 
‘‘(e) DEFINITIONS.—(1) The term ‘contingency oper-
ation’ has the meaning given to that term in section 
1482a(c) of title 10, United States Code. 
‘‘(2) The term ‘employee’ has the meaning provided in 
section 8101 of this title, but also includes a non-
appropriated fund instrumentality employee, as defined in 
section 1587(a)(1) of title 10.’’. 
(b) CLERICAL AMENDMENT.—The table of sections at 
the beginning of chapter 81 of such title is amended by in-
serting after the item relating to section 8102 the following 
new item: 
‘‘8102a. Death gratuity for injuries incurred in connection with employee’s service 
with an Armed Force.’’. 
SEC. 1106. MODIFICATIONS TO THE NATIONAL SECURITY 
PERSONNEL SYSTEM. 
(a) IN GENERAL.—Section 9902 of title 5, United 
States Code, is amended— 
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517 
(1) in subsection (a), by striking ‘‘Notwith-
standing any other provision of this part, the’’ and 
inserting ‘‘The’’; 
(2) in subsection (b)(4)— 
(A) by striking ‘‘collectively as provided for 
in this chapter,’’ and inserting ‘‘collectively,’’; 
and 
(B) by striking ‘‘the provisions of this chap-
ter and’’; 
(3) in subsection (b)(6), by striking subpara-
graph (I) and inserting the following: 
‘‘(I) A pay-for-performance evaluation sys-
tem to reward individual or group performance. 
Any such system— 
‘‘(i) shall be based on an equitable 
method for appraising and compensating 
employees; 
‘‘(ii) shall ensure that rates of pay (in-
cluding those described in subchapter IV of 
chapter 53 and those payable to employees 
paid from nonappropriated funds) are ad-
justed at the same time and by the same 
percentages as would be required under sec-
tions 5303 through 5304a for rates subject 
to those sections, except that no such adjust-
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518 
ment may be made if or to the extent that 
the resulting rate would exceed the max-
imum rate allowable under such system; 
‘‘(iii) may not be implemented before 
the 
requirements 
described 
in 
section 
4703(b) have been met by the Secretary and 
the Director jointly with respect to such sys-
tem; 
‘‘(iv) may not provide for any waiver 
with respect to such system that would not 
be allowable under any paragraph of section 
4703(c); and 
‘‘(v) shall be subject to the provisions of 
subsections (f) and (g) of section 4703.’’; 
(4) in subsection (c)(1), by striking ‘‘October 1, 
2008’’ each place it appears and inserting ‘‘October 
1, 2011’’; 
(5) in subsection (d)— 
(A) in the matter before paragraph (1), by 
striking ‘‘are (to the extent not otherwise speci-
fied in this title)—’’ and inserting ‘‘are—’’; and 
(B) in paragraph (2), by inserting ‘‘43,’’ 
after ‘‘41,’’ and by inserting ‘‘75, 77,’’ after 
‘‘73,’’; 
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519 
(6) in subsection (e)(3), by striking the period at 
the end and inserting ‘‘, except as provided in sub-
section (b)(6)(I)(ii).’’; 
(7) in subsection (f)(4), strike ‘‘The’’ and insert 
‘‘Subject to subsection (d)(2), the’’; 
(8) in subsection (g)— 
(A) by striking paragraph (2) and inserting 
the following: 
‘‘(2) The decision to bargain at a level above the level 
of exclusive recognition shall be mutually agreed to by the 
Secretary and the labor organization at an organizational 
level above the level of exclusive recognition.’’; 
(B) in paragraph (3), by striking ‘‘are ex-
cluded from’’ and inserting ‘‘may be included 
in’’; and 
(C) by striking paragraph (4); and 
(9) by striking subsections (h), (k), and (m) and 
redesignating subsections (i), (j), and (l) as sub-
sections (h), (i), and (j), respectively. 
(b) SAVINGS PROVISION.—Any rate of pay which is 
in effect with respect to an employee immediately before this 
section takes effect, and which was determined under a per-
formance management system established under section 
9902(b)(6) of title 5, United States Code, shall remain in 
effect until— 
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520 
(1) such rate is modified, superseded, or rendered 
inapplicable— 
(A) in accordance with such system, as last 
in effect before this section takes effect; or 
(B) in accordance with a system established 
under such section 9902(b)(6), as amended by 
this section (hereinafter referred to as a ‘‘suc-
cessor system’’); or 
(2) such employee otherwise ceases to be covered 
by such system (as described in paragraph (1)(A)), 
whether by transferring to a position not covered by 
the system (as so described) or otherwise. 
The performance management system (as described in para-
graph (1)(A)) shall remain in effect, in accordance with its 
terms, until all employees who, immediately before this sec-
tion takes effect, are subject to the system (as so described) 
have either become subject to a successor system or have oth-
erwise ceased to be covered by the system (as so described). 
Such system (as so described) shall not apply in the case 
of any employee, or during any period of time, not de-
scribed in the preceding sentence. 
SEC. 1107. ANNUITY COMMENCING DATES. 
(a) CIVIL SERVICE RETIREMENT SYSTEM.—Section 
8345(b)(1) of title 5, United States Code, is amended by 
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521 
striking ‘‘the first day of the month after’’ both places it 
appears and inserting ‘‘the day after’’. 
(b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM.— 
Section 8464(a) of such title is amended to read as follows: 
‘‘(a) Except as otherwise provided in this chapter— 
‘‘(1) an annuity payable from the Fund com-
mences on the day after— 
‘‘(A) separation from the service, in the case 
of an employee or Member retiring under section 
8412 or 8414; or 
‘‘(B) pay ceases, and the applicable age and 
service requirements are met, in the case of an 
employee or Member retiring under section 8413; 
and 
‘‘(2) an annuity payable from the Fund com-
mences on the day after separation from the service 
or the day after pay ceases and the requirements for 
title to an annuity are met in the case of an employee 
or Member retiring under section 8451.’’. 
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522 
SEC. 1108. FLEXIBILITY IN SETTING PAY FOR EMPLOYEES 
WHO MOVE FROM A DEPARTMENT OF DE-
FENSE OR COAST GUARD NONAPPROPRIATED 
FUND INSTRUMENTALITY POSITION TO A PO-
SITION IN THE GENERAL SCHEDULE PAY SYS-
TEM. 
The first sentence of section 5334(f) of title 5, United 
States Code, is amended by striking ‘‘any step of such grade 
that does not exceed the highest previous rate of basic pay 
received by that employee during the employee’s service de-
scribed in section 2105(c).’’ and inserting ‘‘any step of such 
grade that does not exceed— 
‘‘(1) if the highest previous rate of basic pay re-
ceived by that employee during the employee’s service 
described in section 2105(c) is equal to a rate of the 
appropriate grade, such rate of the appropriate grade; 
‘‘(2) if the employee’s highest previous rate of 
basic pay (as described in paragraph (1)) is between 
two rates of the appropriate grade, the higher of those 
two rates; or 
‘‘(3) if the employee’s highest previous rate of 
basic pay (as described in paragraph (1)) exceeds the 
maximum rate of the appropriate grade, the max-
imum rate of the appropriate grade.’’. 
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523 
SEC. 1109. TRANSPORTATION OF DEPENDENTS, HOUSE-
HOLD EFFECTS, AND PERSONAL PROPERTY 
TO FORMER HOME FOLLOWING DEATH OF 
FEDERAL 
EMPLOYEE 
WHERE 
DEATH 
RE-
SULTED 
FROM 
DISEASE 
OR 
INJURY 
IN-
CURRED IN A COMBAT ZONE. 
(a) IN GENERAL.—Section 5742 of title 5, United 
States Code, is amended by adding at the end the following: 
‘‘(f)(1) The benefits of subsection (b)(2) may not be de-
nied, solely because the dependents were residing within the 
continental United States when the employee died, if such 
employee died as a result of disease or injury incurred while 
holding a position or performing one or more functions in 
support of military operations of the United States in a 
combat zone. 
‘‘(2) For purposes of paragraph (1)— 
‘‘(A) the term ‘continental United States’ has the 
meaning given such term by section 5721(3); and 
‘‘(B) the term ‘combat zone’ has the meaning 
given such term by section 1580 of title 10.’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply with respect to deaths occurring on 
or after the date of the enactment of this Act. 
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