In April 2003, the Department of Defense (DOD) sent a proposal entitled "The DefenseTransformation for the 21st Century Act" to Congress. (1) Changes in the uniformed military personnel and acquisitionsystems were the principal focus of the proposal. However, it also recommended changes to thestatutory bases for much of DOD's civilian personnel system, which covers some 700,000 civilianemployees (about 26% of federal civilian executive branch personnel worldwide). (2) On May 22, 2003, the House of Representatives passed H.R. 1588 , the NationalDefense Authorization Act for FY2004, amended, by a 361 to 68 (Roll No. 221) vote. (3) As reported to the House,H.R. 1588 included provisions at Subtitle A of Title XI related to government-widepersonnel management. The bill also included provisions for a National Security Personnel System(NSPS) for DOD at Subtitle B. Many of the provisions had originated in DOD's April 2003 proposaland had been included in H.R. 1836 , the Civil Service and National Security PersonnelImprovement Act, reported to the House, amended ( H.Rept. 108-116 , part 1), by the Committee onGovernment Reform on May 19, 2003. (4) The provisions were added to H.R. 1588 during ArmedServices Committee markup. (5) Several additional amendments were made to the personnelmanagement provisions during House consideration and passage of H.R. 1588. The Senateversion of the defense authorization bill, S. 1050 , as passed by the Senate, amended,on May 22, 2003, on a 98 to 1 (No. 194) vote, did not include these Title XI personnel managementprovisions (but included other personnel provisions at Title XI). On June 4, 2003, the Senate struckall after the enacting clause and substituted the text of S. 1050 in H.R. 1588. TheSenate then passed H.R. 1588, amended, by voice vote the same day. (6) H.R. 1588, aspassed by the Senate, included, at Title XI, personnel provisions on pay authority for criticalpositions, the experimental personnel program for scientific and technical personnel, and personnelinvestigations that were not included in the House-passed version of the bill or S. 1166 . Senator Susan Collins, Chairman of the Senate Committee on Governmental Affairs,introduced S. 1166 , the National Security Personnel System Act, on June 2, 2003, andit was referred to the Senate Governmental Affairs Committee. On June 4, 2003, the committeeconducted a hearing on the bill. Following the hearing, Senators Voinovich and Thomas Carperasked the Comptroller General, David Walker, to respond to several additional questions. Hisresponse, submitted on July 3, 2003, included the following comments. [I]t is critical that agencies or components have in placethe human capital infrastructure and safeguards before implementing new human capital reforms.This institutional infrastructure includes, at a minimum (1) a human capital planning process thatintegrates the agency's human capital policies, strategies, and programs with its program mission,goals, and desired outcomes, (2) the capabilities to develop and implement a new human capitalsystem effectively, and (3) a modern, effective, credible and, as appropriate, validated performanceappraisal and management system that includes adequate safeguards, such as reasonable transparencyand appropriate accountability mechanisms, to ensure the fair, effective, and nondiscriminatoryimplementation of the system. Although we do not believe that DOD should wait forthe full implementation of the new human capital system at the Department of Homeland Security(DHS), ... we do think that there are important lessons that can be learned from how DHS isdeveloping its new personnel system. For example, DHS has implemented an approach that includesa design team of employees from DHS, the Office of Personnel Management (OPM), and majorlabor unions. To further involve employees, DHS has conducted a series of town hall meetingsaround the country and held focus groups to further learn of employees' views and comments ...DOD ... needs to ensure that employees are involved in order to obtain their ideas and gain adequate"buy-in" for any related transformational efforts. [W]e suggest that DOD also be required to link itsperformance management system to program and performance goals and desired outcomes.... [This]helps the organization ensure that its efforts are properly aligned and reinforces the line of sightbetween individual performance and organizational success so that an individual can see how her/hisdaily responsibilities contribute to results and outcomes. In our view, it would be preferable to employ agovernmentwide approach to address certain flexibilities that have broad-based application andserious potential implications for the civil service system .... broad banding, pay for performance,reemployment, and pension offset waivers. In these situations, it may be prudent and preferable forCongress to provide such authorities on a governmentwide basis and in a manner that assures thata sufficient personnel infrastructure and appropriate safeguards are in place before an agencyimplements the new authorities. Based on our experience, while DOD's leadership hasthe intent and the ability to transform the department, the needed institutional infrastructure is notin place in a vast majority of DOD organizations.... In the absence of the right institutionalinfrastructure, granting additional human capital authorities will provide little advantage and couldactually end up doing damage if the authorities are not implemented properly by the respectivedepartment or agency. (7) The Senate Governmental Affairs Committee marked up the bill on June 17, 2003, and, onthe same day, ordered S. 1166 to be reported to the Senate, amended, on a 10 to 1 rollcall vote. During the mark-up, the committee agreed to an amendment offered by Senator JosephLieberman to clarify the intent of the bill's provisions on collective bargaining and an amendmentoffered by Senator George Voinovich to exclude 10 DOD laboratories from the NSPS. Bothamendments were agreed to by voice vote. On September 5, 2003, the committee reported S.1166 to the Senate with amendments and without a written report. Senator Collins, a conferee on the conference committee for H.R. 1588 , alongwith Senators Voinovich and Carl Levin (an H.R. 1588 conferee), among others, expressedthe hope that the provisions of S. 1166 , as amended, would be seriously considered bythe conference as an alternative to the provisions in H.R. 1588 on the NSPS. On July 14,2003, Senators Collins, Voinovich, Stevens, and Sununu wrote a letter to their Senate colleaguesexpressing their support for, and sharing their views on, the personnel provisions of S.1166. They stated that, "[a]s a template for future governmentwide civilian personnelreform, the personnel provisions in the defense bill must strike the right balance between promotinga flexible system and protecting the rights of our constituents who serve in the federal civil service"and that "[w]e believe that our proposal strikes such a balance." (8) Several provisions that werethe same or similar to S. 1166 were added to H.R. 1588 in conference. On November 7, 2003, the House agreed to the conference report ( H.Rept. 108-354 )accompanying H.R. 1588 on a 362-40, 2 present (Roll No. 617) vote. The Senateagreed to the conference report on a 95-3 (No. 447) vote on November 12, 2003. President Bushsigned H.R. 1588 into law on November 24, 2003, as P.L. 108-136 (117 Stat. 1392). This report discusses each of the provisions in Title XI of P.L. 108-136 and plans toimplement the law. (9) Fordiscussion of the background to the provisions and side-by-side comparisons of the provisions withcurrent law, see CRS General Distribution Memorandum, Department of Defense TransformationProposal (Title I, Subtitle A, Section 101) and H.R. 1588 Conference Report (Title XI,Subtitles A,B,C): A Side-by-Side Comparison , coordinated by [author name scrubbed]; CRS Report RL31924 , Civil Service Reform -- H.R. 1836, Homeland Security Act, and Current Law ,by [author name scrubbed] and [author name scrubbed]; and CRS Report RL31916 , Defense DepartmentOriginal Transformation Proposal: Compared to Existing Law , by [author name scrubbed], Gary J.Pagliano, [author name scrubbed], and [author name scrubbed]. Contributors to this report are Richard Best, Valerie Grasso, [author name scrubbed], Fred Kaiser,[author name scrubbed], Thomas Nicola, [author name scrubbed], Barbara Schwemle, [author name scrubbed], and JonShimabukuro. The timetable for implementing the NSPS has changed several times. Discussions onimplementation began in January 2004. (10) Initially, DOD planned to publish details of the new system byApril 2004, and cover 300,000 civilian DOD employees under the NSPS by October 1, 2004. Inearly February 2004, Secretary of Defense Donald Rumsfeld named then-Navy Secretary andnow-Deputy Secretary of Defense Gordon England as the DOD official responsible for negotiatingwith labor organizations on the personnel reform effort. (11) On April 14, 2004, Secretary England announced thatimplementation of the NSPS would be phased in over several years so that all employees would becovered by the NSPS by October 1, 2006.