64050 federal register /vol. 62, no. 232/wednesday ... federal register/vol. 62, no. 232/wednesday,...

64050 Federal Register / Vol. 62, No. 232 / Wednesday, December 3, 1997 / Notices

OFFICE OF PERSONNELMANAGEMENT

Science and Technology ReinventionLaboratory Personnel DemonstrationProject at the Naval Sea SystemsCommand Warfare Centers

AGENCY: Office of PersonnelManagement.ACTION: Notice of approval ofDemonstration Project final plan.

SUMMARY: The National DefenseAuthorization Act of fiscal year 1995(P.L. 103–337) authorizes the Secretaryof Defense, with Office of PersonnelManagement (OPM) approval, toconduct a Personnel DemonstrationProject at Department of Defense (DoD)laboratories designated as Science andTechnology Reinvention Laboratories.The legislation requires that mostrequirements of Section 4703 of Title 5shall apply to the DemonstrationProject. Section 4703 requires OPM topublish the project plan in the FederalRegister.DATES: This Demonstration Project maybe implemented by the Warfare Centersbeginning on March 3, 1998.FOR FURTHER INFORMATION CONTACT:Warfare Centers: Shirley Scott, Deputy

Demonstration Project Manager,NSWCDD, HR Department, 17320Dahlgren Road, Dahlgren, VA 22448,540–653–4623.

OPM: Fidelma A. Donahue, U.S. Officeof Personnel Management, 1900 E.Street, NW, Room 7460, Washington,DC 20415, 202–606–1138.

SUPPLEMENTARY INFORMATION:

1. Background

Since 1966, at least 19 studies ofDepartment of Defense (DoD)laboratories have been conducted onlaboratory quality and personnel.Almost all of these studies haverecommended improvements in civilianpersonnel policy, organization, andmanagement. The Warfare Centers’Personnel Demonstration Projectinvolves a simplified classificationsystem for GS employees, performancedevelopment and incentive pay systems,a streamlined reduction-in-force system,and a simplified examining andappointment process.

2. Overview

Twenty-three letters were receivedand one individual commented on theFederal Register notice at the PublicHearing. These comments broughtseveral new perspectives to theattention of those responsible forimplementing, overseeing, and

evaluating the project. The commentshighlighted instances ofmiscommunication andmisunderstanding with the presentsystem as well as the projectinterventions. Further, they underscoredthe importance of providing training toemployees and supervisors on theDemonstration Project. The substance ofall comments received has beenconveyed to the Warfare Centers’Executive Group and the CommandingOfficers and Executive Directors of theseven Warfare Center Divisions in theevent that local policies, processes andtraining sessions may benefit from suchperspectives. A summary of allcomments received, along withaccompanied responses, is providedbelow.

(A). General Management IssuesComments: Several comments

expressed concern over a DemonstrationProject which provides additionalflexibility to supervisors and suggestedthat these flexibilities will allow for orpromote abuses and compromises of themerit system. With the feeling thatmany supervisors currently do notproperly execute supervisoryresponsibilities or utilize the authorityand tools provided under the currentsystem, these employees fear a newsystem that gives supervisors additionalflexibility over their career and pay.Several comments mentioned that nochecks or oversight seem apparent andthat management accountability islacking under the Project.

Response: The Warfare Centersacknowledge that the PersonnelDemonstration Project providesincreased authority and responsibility tosupervisors, particularly in those areasimpacting employees’ pay. The Office ofPersonnel Management’s (OPM’s)experience with other PersonnelDemonstration Projects, including the‘‘China Lake’’ Project, does not supportthe assumption that increasedsupervisory discretion and authorityleads to merit system abuses. However,the Warfare Centers are sensitive to theconcerns expressed by many of thecomments and are committed to holdingsupervisors accountable for the properuse of increased authorities andflexibilities. To assist supervisors incarrying out their new responsibilities,the Demonstration Project currentlyrequires that supervisors be trained onthe new system and receive feedbackfrom a number of sources, includingemployees, on their supervisory skillsand leadership behaviors. Aggregatedata from the feedback process will bemade available to the top managementof the Warfare Center Divisions and will

be used to monitor and identify furthersupervisory development and trainingneeds. Additionally, extensiveindependent evaluations of thePersonnel Demonstration Project will beconducted by OPM’s PersonnelResources and Development Center(PRDC) over the first five years of theproject. The results of these evaluationswill provide the Warfare Centers withinformation as to whether specificprovisions of the project need to bemodified, continued as is, or curtailed.

(B). Career Path and Broad BandsComments received on this aspect of

the Personnel Demonstration Projectwere related to several subtopics.

(1) Assignment of Occupations to CareerPaths

Comments: Several comments weresubmitted raising concern about theidentification of occupations to careerpaths. These comments expressed abelief that such segmentation of theworkforce is counterproductive to ateaming environment and may lead to aform of career path or series-baseddiscriminatory actions. For the mostpart, these comments were specificallyrelated to the assignment of GS–346,Logistician positions, to theAdministrative/Technical (NT) CareerPath.

Response: The Career Paths selectedfor the Warfare Centers’ PersonnelDemonstration Project are substantiallysimilar to those used in the ‘‘ChinaLake’’ Personnel Demonstration Projectwith a few modifications made tofurther streamline the classification andcompensation processes. The WarfareCenters’ Personnel DemonstrationProject groups positions by occupationsunder one of three Career Paths—Scientific/Engineering (ND);Administrative/Technical (NT); andGeneral Support (NG). Each career pathcovers occupations similarly treated inregard to type of work, typical careerprogression, and qualificationrequirements. Using these criteria,positions designated as Logistician, GS–346 series, are assigned to theAdministrative/Technical (NT) CareerPath.

(2) Band Levels and Salary RangesComments: Two individuals

expressed concern that the proposedbroad banding structure reduces thenumber of formal promotion events,removes the social distinctions betweenproject leaders and workers, and resultsin a loss of status currently associatedwith the General Schedule grade level.Another individual offered an opinionthat a system which includes seventeen

64051Federal Register / Vol. 62, No. 232 / Wednesday, December 3, 1997 / Notices

broad bands is contrary to the statedobjective of making ‘‘the distinctionsbetween levels easier to discern andmore meaningful.’’ Others perceive thatthe proposed broad banding systemserves to unfairly discriminate againstwomen and minorities in that thesegroups of employees are predominatelyassigned to the Administrative andTechnical (NT) and General Support(NG) Career Paths whose fullperformance levels are lower than thatassigned to the Scientific andEngineering (ND) Career Path.Comments also questioned the use of asalary overlap between the broad bandsand raised concern over the reallocationof pay upon conversion for specialsalary rate employees.

Response: The Warfare Centersrecognize there may be a concern overthe perceived loss of status andfrequency of promotions that result froma broad banding system. Broad bandingsystems, by their very nature, serve toreduce the number of formal promotionevents and to remove some of thedistinctions among positions commonto the General Schedule classificationsystem. Results of the ‘‘China Lake’’project did not indicate that this was acontinuing concern of the workforceduring the life of the project. The keyobjectives of the Warfare Centers’ BroadBanded Classification System are tosimplify the current classificationsystem, reduce distinctions betweenlevels of work, and provide managersgreater flexibility to make assignmentsas work needs warrant.

The grouping of General Schedulegrades into broad bands under each ofthe three career paths was based on thetypical career progressions and fullperformance level of positions under thecurrent General Schedule system. Inaddition, the salary progression of eachcareer path is reflective of typical salaryprogression present in the non-Federalsector. It was not based on non-meritfactors such as race, sex, gender, age, ornational origin. Experience of the‘‘China Lake’’ Project, used as a modelfor the Warfare Centers’ PersonnelDemonstration Project, did not supportthe concerns. To assist the WarfareCenters in monitoring this importantissue, data on band level, salary, andworkforce demographics, supplementedby perceptual data, are included in theplanned evaluation strategy. Evaluationresults will alert the Warfare Centers ofany unintended outcomes of the broadbanded classification system and willserve as the basis for decisions tomodify, continue as currently stated, orto curtail the Demonstration Project.

The salary range of each broad band,with the exception of Band I of each

career path and ND VI, has beenextended to cover the salary range of thenext lower General Schedule grade. Theextended salary range serves to replicatethe overlap found in the current GeneralSchedule system and was included tofacilitate assignment and pay settingflexibilities and to control costs thatwould otherwise occur uponpromotions. The pay special salary rateemployees receive under the currentsystem is in many cases encompassedwithin the salary range of the broadbanding system. The special provisionsfor reallocating the pay of special salaryrate employees were included in theproject to avoid payment of anunintended windfall.

(3) Lack of Salary Progression for GS–13Scientists and Engineers

Comment: Several comments werereceived on the lack of salaryprogression for those individuals whowill convert into the PersonnelDemonstration Project at the top end ofthe recognized full performance level, inparticular Scientists and Engineers atthe GS–13 level. One individualsuggested a modification to the Projectto have a salary range extending beyondstep 10 of the GS–13 grade level.

Response: This issue results from highgrade controls that impact on all of theScience and Technology ReinventionLaboratory Personnel DemonstrationProjects. Any negative impact under theDemonstration Project will be no greaterthan that under the current GeneralSchedule system.

(C). Performance Appraisal andPerformance Development System

Comment: Concern was expressedover the proposed change to a two level(pass/fail) rating system stating thatsuch a system would de-motivateemployees. Others expressed concernabout the lack of specificity in therequirements for setting andcommunicating performanceexpectations, i.e., timing, format,documentation requirements.Additionally, comments were made thatthe non-adverse reduction to a lowerband level would be perceived byemployees as an adverse action.

Response: Since the initialdevelopment of the PersonnelDemonstration Project, the Office ofPersonnel Management has modified itsregulations governing PerformanceAppraisal Systems granting agencies theoption of adopting a two level ratingsystem. The planned evaluation of thisDemonstration Project will assist inproviding data on the merits of a pass/fail system.

The current performance appraisalsystem prescribes documentation ofperformance standards and elements,includes a requirement for periodic(mid-year) performance discussions,and establishes the format for specifieddocumentation requirements. Yet, asacknowledged by the comments, manyperceive the current system as notworking despite these requirements.The Warfare Centers believe it isessential that employees fullyunderstand performance expectationsand will focus significant training forsupervisors to that end. This trainingwill cover setting and communicatingperformance expectations, providingfeedback, and communicating thelinkage between performanceexpectations and the incentive payprocess. Furthermore, the Divisions willdetermine documentation requirementswhich meet their specific organizationalneeds, values, and cultures.

The reduction in band level may betaken only after an employee has beenplaced on and failed a PerformancePlan. Safeguards have been provided inthe Demonstration Project to ensure thedecision to use the non-adverseassignment to a lower band is welldocumented, used appropriately, andallow employees avenues of redress.

(D). Incentive Pay SystemComment: A number of comments

raised concern over the subjectivenature of the incentive pay criterialeaving the employee’s salaryprogression largely at the discretion ofthe supervisor. Additionally, severalviewed the criteria as being outside thecontrol of the employee and bearinglittle relationship to the employee’sactual performance. Several raisedconcern on management’s ability toadjust the size of the incentive pay fundin an attempt to maintain or lower laborrates or delay the need for a reduction-in-force. Also one comment expressedconcern that the incentive payout wouldbe limited to granting bonus pay in lieuof salary increases, thus negativelyimpacting the employee’s retirementpay.

Response: The Warfare Centersrecognize that employee perceptions ofthe success of the overall PersonnelDemonstration Project will largely begoverned by their perceptions of thehow well the Warfare Centers managethe incentive pay system. A keyflexibility to the Demonstration Projectis to provide the Divisions the authorityto manage an incentive pay systemwhich best meets their needs in termsof culture, values, and financialsituations. The specific criteria andprocess for incentive pay decisions as


well as the size of the incentive payfund are some of the many aspects ofthe Project which have been delegatedto the Warfare Centers Division and willnot be defined at the Warfare Centerlevel. The project provides forsupervisory training which will stressthe importance of establishing,interpreting, and communicatingincentive pay criteria to help employeesunderstand what is expected in order toreceive incentive pay. Additionally, inexercising these authorities, eachWarfare Center Division will beprepared to communicate the criteria,process, and decisions on the use of theincentive pay fund to its workforce.

(E). Reduction-in-ForceComment: Two comments included a

concern that the revised Reduction-In-Force system would providemanagement the ability to targetindividuals and stated a belief that thistargeting would be in violation ofveterans’ preference rights or lawsprecluding discrimination based on age.Additional comments raised concernabout the impact of the revisedcompetitive area definition. This is seenas limiting placement considerationsand as a major threat to job security.

Response: In developing thePersonnel Demonstration Project, theWarfare Centers adopted as one of theguiding principles the preservation ofveterans’ preference laws. Extensivereview of the project interventions wasconducted to ensure that no aspect ofveterans’ preference entitlement hasbeen adversely impacted. Additionally,simulated reduction-in-force scenarioswere conducted to ensure that at aminimum the proposed changes did notadversely impact on veterans, women,minorities and other protected groupswhen compared with the currentreduction-in-force system. ThePersonnel Demonstration Project,including the revised reduction-in-forcechanges, may be implemented withinlocal bargaining units only through thecollective bargaining process. In theevent that full agreement is not reachedprior to the need to conduct a reduction-in-force, the competitive area wasredefined to ensure that DemonstrationProject participants and non-Demonstration Project participants donot compete unfairly for placementconsiderations.

(F). Miscellaneous CommentsAdditional comments received on the

Project Proposal requested that theproject remove the ceiling on overtimerates. One comment perceived aninconsistency in the assignment of‘‘non-professional technicians’’ to the

Administrative/Technical (NT) careerpath and the exemption from overtimeprovisions based on professionalcriteria. Another commentcommunicated refusal to waive anyportion of rights conveyed to citizens bythe U.S. Constitution.

Response: The PersonnelDemonstration Project covers thoseinterventions which the Warfare Centersbelieve to be fundamentally critical tosuccessful mission execution andorganizational excellence and was notintended to address all problemsassociated with the current GeneralSchedule system. Together theinterventions proposed provide theWarfare Centers with the ability toobtain, develop, incentivize, and retainhigh performers while being responsiveto business considerations and overallworkforce costs. The project does notmodify the overtime provisions and thedefinitions of exemption criteria underthe Fair Labor Standards Act covered byTitle 5, CFR Part 551. ThisDemonstration Project has beendeveloped under the authority grantedto agencies in Section 4703 of Title 5.Individual permission is not needed toimplement the Project. There is noauthority nor intent to waive individualconstitutional rights.

3. Demonstration Project Clarifications

To clarify how classification appealsare to be processed under the personneldemonstration project, additionallanguage was incorporated into sectionIII.B.1. In addition, minor editorial andtechnical clarifications were made toimprove the final version of thepersonnel demonstration project.Office of Personnel Management.Janice R. Lachance,Director.

Table of Contents

I. Executive SummaryII. Introduction

A. PurposeB. Problems With Present SystemC. Changes Required/Expected BenefitsD. Participating Organizations/MissionE. Participating EmployeesF. Employee/Labor Participation

III. MethodologyA. Project DesignB. Personnel System Changes1. Classification/Pay2. Performance Development System3. Incentive Pay System4. Reduction-In-Force (RIF)5. Competitive Examining/Distinguished

Scholastic AppointmentsC. Project ImplementationD. Entry Into/Exit From The ProjectE. Project Duration

IV. Evaluation PlanV. Waivers of Law/Regulation

VI. CostVII. Project Oversight/Management

I. Executive SummaryThe Naval Surface Warfare Center and

the Naval Undersea Warfare Center,designated as Science and TechnologyReinvention Laboratories, wish toconduct a Personnel DemonstrationProject similar in nature to that of the1980 Demonstration Project approvedfor the Naval Weapons Center, ChinaLake, and Naval Ocean Systems Center,San Diego. The Warfare Centers’ projectincludes the following key projectcomponents: A Broad BandingClassification and Pay System for‘‘white collar’’ employees; aPerformance Development System; anIncentive Pay System; a new Reduction-in-Force (RIF) system; and aCompetitive Examining andAppointment System. The WarfareCenters’ project addresses anorganization which is substantiallylarger (over 23,000 employees), hasgreater diversity of mission thanprevious projects, and has extensiveunion involvement at all major sites. Inaddition, the project plan has beendeveloped with on-going involvement ofthe various unions represented in theWarfare Centers.

II. Introduction

A PurposeThe overall goal of the Demonstration

Project is to implement a HumanResource Management System thatfacilitates mission execution andorganization excellence and responds totoday’s dynamic environment ofdownsizing, restructuring and closuresby obtaining, developing, utilizing,incentivizing and retaining highperforming employees; and adjustingworkforce levels to meet program andorganizational needs. The system to bedemonstrated has the flexibilities toaccommodate and support wide-rangingactivity missions, strategies andcultures. It is responsive to businessconsiderations and permits a highdegree of control over workforce costs.Clearly, it is more streamlined andunderstandable for those who will useit as well as those affected by it. Mostimportantly, it is focused not just on theneeds of the organization, but also onthe needs of the people who are theorganization.

These objectives reflect the Federaland DoD goals of creating a governmentthat works better and costs less, and aflexible system that can reduce,restructure or renew to meet diversemission needs, expand or contract aworkforce quickly, respond to workloadexigencies, and contribute to quality


products, people and workplaces. Theobjectives also align with the Federaland DoD values and guiding principlesof empowering employees to get results,maximum flexibility tempered withaccountability, innovation andcontinuous improvement, caring forpeople during downsizing, and vitalpartnerships and teaming with all thestakeholders in the process.

B. Problems With Present System

The Warfare Centers find the currentFederal Personnel System to becumbersome, confusing, and unable toprovide the flexibility necessary torespond to the current mandates ofdownsizing, restructuring, and possibleclosure while trying to maintain a highlevel of mission excellence. The presentsystem—a patchwork of laws,regulations, and policies—often inhibitsrather than supports the goals ofdeveloping, recognizing, and retainingthe employees needed to realign theorganization with its changing fiscal andproduction requirements.

The current Civil Service GeneralSchedule (GS) system has 15 gradeswith 10 levels each and involveslengthy, narrative, individual positiondescriptions, which have to be classifiedby complex, OPM-mandated positionclassification standards. Because thesestandards have to meet the needs of theentire federal government, they are oftennot relevant to the needs of the WarfareCenters and are frequently obsolete.Distinctions between levels are often notmeaningful. Currently, standards do notprovide for a clear progression beyondthe full performance level, especially forscience/engineering occupations wherecareer progression through technical aswell as managerial career paths isimportant.

In addition, there are limitedmechanisms for dealing with anemployee who has been promoted out ofhis/her level of expertise or who, aftera successful career, has been unable togain the skills required of a new workenvironment. In most cases, the onlypossible action may be a reduction ingrade. Under the current system ademotion to a lower grade is consideredan adverse action even if there is no lossin pay. Under the proposal, a reductionin band level without a loss in pay willnot be considered an adverse action.

Performance Management systemsrequire additional emphasis oncontinuous, career-long development ina work environment characterized by an

ever increasing rate of change. Sincepast performance and/or longevity arethe factors on which pay raises arecurrently assessed, there is often nopositive correlation betweencompensation and performancecontributions nor value to theorganization. These limited criteria donot take into account the future needsof the organization nor other culturallyrelevant criteria which an organizationmay wish to use as incentives.

The present Reduction in Force (RIF)process is highly complicated andrelatively unresponsive to requirementsfor rapid work force restructuring andretention of employees with missionappropriate skills. RIF is confused by anaugmented service credit forperformance that is based in aperformance appraisal system fraughtwith contention. Round I addscomplexity, confusion, and uncertainty.Cost savings expected from RIF aredrastically reduced by the inordinateadministrative costs of the process andthe likelihood that the employeeultimately separated will be at a lowergrade than the originally targetedposition. Additionally there is theexpense of retained grade and retainedpay. Current RIF procedures impactnegatively on morale because of thehigh number of people affected andfrequent misunderstandings of acomplicated system that leaves affectedemployees wondering why they havebeen ‘‘targeted.’’

And finally, the complexity of thecurrent examining system creates delaysin hiring. Line managers find thecomplexity limiting as they attempt toaccomplish timely recruitment ofneeded skills. To compete with theprivate sector for the best talentavailable, they need a process which isstreamlined, easy to administer, andallows for timely job offers.

C. Changes Required/Expected Benefits

The proposed Demonstration Projectresponds to problems in theclassification system with a BroadBanding Classification system for GSemployees; to problems in the currentperformance management system with aPerformance Development andIncentive Pay System; to the problemsof the existing RIF procedures with astreamlined RIF system; and toproblems of complicated hiring andexamining procedures with a simplifiedexamining and appointment process.

D. Participating Organizations/Mission

Both the Naval Surface WarfareCenter and the Naval Undersea WarfareCenter will participate in the project.The Warfare Centers are comprised of atotal of seven Divisions with 14 majorsites nationwide. The sites are diversein employment profiles and size andhave bargaining unit populationsranging from a small percentage to morethan half of the workforce. Theseorganizations operate throughout thefull spectrum of research, development,test and evaluation, engineering andfleet support.

The Warfare Centers are DefenseBusiness Operations Fund (DBOF)activities. Under DBOF, the cost ofoperating is paid by billing customersfor work performed. The WarfareCenters seek to maximize managementflexibility to control expenditures sincethe continued economic viability of aDBOF activity depends in large measureon remaining cost competitive withother organizations.

E. Participating Employees

This Demonstration Project willinvolve civilian personnel at all WarfareCenter sites. There are 14 major sites(over 200 civilian personnel) and manysmaller sites. Currently 23,697 civiliansare employed as shown in Figure 1. Theintent of the plan is to cover all civilianappropriated fund employees at all siteswith the exception of the members ofthe Senior Executive Service. While theDemonstration Project, and its fivecomponents, cover all General Schedule(GS) employees, the Federal WageSystem (FWS) employees are includedonly for purposes of changes in thePerformance Development, Reduction-In-Force and Competitive Examiningsystems. Likewise, Senior Level (SL)and Scientific and Technical (ST)employees are covered only under theIncentive Pay, PerformanceDevelopment and Reduction-In-Forcesystems. The Demonstration Project maybe implemented incrementallythroughout the Warfare Centers. TheDemonstration Project will beimplemented in bargaining units whenthose units so request and a negotiatedagreement is reached. Approximatelyfifty percent of the workforce isrepresented by unions.

BILLING CODE 6325–01–M


BILLING CODE 6325–01–C

F. Employee/Labor Participation

One of the keys to developing aproject plan sensitive to the multiplicityof management and employee needs hasbeen the involvement of a SteeringCommittee composed of representativesfrom the Warfare Center Divisions andsix national unions having bargainingunits at the Warfare Center sites. TheAmerican Federation of GovernmentEmployees (AFGE), Metal TradesCouncil (MTC), InternationalAssociation of Machinists (IAM),National Association of GovernmentEmployees (NAGE), the NationalFederation of Federal Employees (NFFE)and Fraternal Order of Police (FOP)represent more than half of the morethan 25,000 employees in a variety ofoccupational groups at Warfare Centersites across the United States. AppendixA further describes the employee/unionparticipation in this effort. The SteeringCommittee developed a project plancapable of meeting the seeminglydiffering, sometimes conflicting, goals ofmanagement and the unions. TheSteering Committee substantially alteredthe original concept to address thoseneeds in order to provide a viableimplementation framework capable ofmeeting the wide variety of cultures andneeds across the Warfare Centerspectrum. The Steering Committee isalso working to foster the establishmentof partnerships within the WarfareCenters.

The Steering Committee agreed to thefollowing language with respect to theimplementation of the DemonstrationProject in the Warfare Center bargainingunits. ‘‘Essential to the success of theDemonstration Project within a

collective bargaining unit is the explicitchoice of the parties to freely enter intothe project with mutual agreement onall provisions associated with theproject. To that end, either party willhave the option NOT to enter the projectup to the point where both parties signa collective bargaining agreementcovering the Demonstration Project and,if required, that agreement is ratifiedand approved. Further the parties mayinclude in the contract provisions forevaluating, modifying and leaving theproject during the life of the contract.’’Any disputes or impasses that arise inconnection with the negotiation on theimplementation of the DemonstrationProject will be subject to mediation butnot binding impasse procedures. Forany bargaining subsequent to adoptionof the Demonstration Project, the partiesshall use impasse procedures defined in5 U.S.C. 7119 unless alternative impasseprocedures have been negotiated. In theevent Executive Order 12871 is nolonger in effect, the parties within theDemonstration Project will continue tonegotiate issues covered by 5 U.S.C.7106(b)(1) to the extent those issuesimpact on the provisions of theDemonstration Project. Withinbargaining units, violations ofprovisions of the Demonstration Projectmay be covered by the negotiatedgrievance procedure.

This Demonstration Project wasdeveloped with management and unioninput through a collaborative process;however, it was agreed that unionparticipation did not necessarilyconstitute full and completeendorsement of all details of the project.The Project will be implemented inbargaining units only after there is full

agreement through the collectivebargaining process.

While understanding that eachbargaining unit will make its ownchoice about participating in theDemonstration Project, the SteeringCommittee has endeavored to create aproject plan to fulfill the mutualinterests of management and employeeswhile supporting the long term objectiveof vital, competitive Warfare Centerscapable of developing and deliveringthe best possible technology to theircustomers.

III. Methodology

A. Project Design

An overarching objective in theproject design has been thedevelopment of a personnel system thatprovides a maximum opportunity forlocal ‘‘tailoring’’ to meet the variety ofrequirements of organizations engagedin missions ranging from theoreticalresearch into submarine vulnerabilityand survivability to the storage oftorpedoes. While the Divisions seek torecruit and retain world class engineersand scientists in order to remain viableas laboratories, they must also meet thedevelopment and motivational needs ofan extraordinarily diverse workforce;i.e., employees ranging from small armsrepairers in Crane, Indiana to programanalysts in Newport, Rhode Island. Inorder to accomplish that end, the goalis to begin the process of delegatingdecision making to the people whoknow the most about what they needand how to get their workaccomplished: the Divisions and sites.

While much of the DemonstrationProject will be applied uniformly, thereare decisions which will be delegated to


the Divisions and activities so that theneeds and cultures of thoseorganizations may be taken intoaccount. Decisions at the local level willbe made through the collectivebargaining process.

B. Personnel System Changes

1. Classification/Pay

A fundamental element of the systemis a simplified white collar classificationand pay component. The proposedbroad banding scheme reduces thefifteen GS grade levels and the Senior

Level (SL) and Scientific & Technical(ST) pay levels, into five to six broadpay bands. (See Figure 2) GSoccupations are further broken downinto three separate career paths:Scientific and Engineering (ND),Administrative and Technical (NT), andGeneral Support (NG).

The OPM-developed classificationstandards are replaced by a smallnumber of one-page, generic benchmarkstandards developed within theDemonstration Project. These standardsalso serve as the core of the positiondescription and replace lengthy

individually tailored positiondescriptions. These generic leveldescriptions encompass multiple seriesand provide maximum flexibility for theorganization to assign individualsconsistent with the needs of theorganization, established level or rankthat the individual has achieved, andthe individual’s qualifications. Careerprogression between levels will occurby promotion, and pay progressionwithin levels will occur throughincentive pay.



The Warfare Centers’ long experiencewith industrial funding will ensure theirability to control costs, an essentialrequirement in today’s environment.

a. Career Paths. The Warfare Centersrequest exemption from the current GSclassification system and substitutecareer paths and band levels. Thedesignated career paths are: Scientificand Engineering (ND), Administrativeand Technical (NT), and Generalsupport (NG). Like the China Lakesystem, the GS classification serieswould be retained. More detaileddescriptions of the career paths and theclassification series for each path areprovided below. The breakdown ofoccupational series to career pathsreflects only those occupations whichcurrently exist within the two WarfareCenters. Additional series may be addedas a result of changes in missionrequirements or OPM recognizedoccupations. These additional series

will be placed in the appropriate careerpath consistent with the establishedcareer path definitions.

SCIENTIFIC AND ENGINEERING:Professional engineering positions andscientific positions in the physical,biological, mathematical, and computersciences; and student positions fortraining in these disciplines. Series andtitles included in the path are: 0401,General Biological Science Series; 0403,Microbiology Series; 0408, EcologySeries; 0440, Genetics Series; 0460,Forestry Series; 0471, Agronomy Series;0499, Biological Science StudentTrainee Series; 0801, GeneralEngineering Series; 0803, SafetyEngineering Series; 0804, FireProtection Engineering Series; 0806,Materials Engineering Series; 0807,Landscape Architecture Series; 0808,Architecture Series; 0810, CivilEngineering Series; 0819,Environmental Engineering Series;0830, Mechanical Engineering Series;

0840, Nuclear Engineering Series; 0850,Electrical Engineering Series; 0854,Computer Engineering Series; 0855,Electronics Engineering Series; 0861,Aerospace Engineering Series; 0871,Naval Architecture Series; 0892,Ceramic Engineering Series; 0893,Chemical Engineering Series; 0894,Welding Engineering Series; 0896,Industrial Engineering Series; 0899,Engineering and Architecture StudentTrainee Series; 1301, General PhysicalScience Series; 1306, Health PhysicsSeries; 1310, Physics Series; 1313,Geophysics Series; 1320, ChemistrySeries; 1321, Metallurgy Series; 1330,Astronomy and Space Science Series;1350, Geology Series; 1360,Oceanography Series; 1372, GeodesySeries; 1386, Photographic TechnologySeries; 1399, Physical Science StudentTrainee Series; 1515, OperationsResearch Series; 1520, MathematicsSeries; 1529, Mathematical StatisticianSeries; 1530, Statistician Series; 1550,


Computer Science Series; 1599,Mathematics and Statistics StudentTrainee Series.

ADMINISTRATIVE ANDTECHNICAL: Professional or specialistpositions in such administrative,technical and managerial fields asfinance, procurement, human resources,computer, legal, librarianship, publicinformation, safety, social sciences, andprogram management and analysis;nonprofessional technician positionsthat support scientific and engineeringactivities through the application ofvarious skills and techniques inelectrical, mechanical, physical science,biology, mathematics, and computerfields; and student positions for trainingin these disciplines. Series and titlesincluded in this path are: 0018, Safetyand Occupational Health ManagementSeries; 0020, Community PlanningSeries; 0028, Environmental ProtectionSpecialist Series; 0080, SecurityAdministration Series; 0099, GeneralStudent Trainee Series; 0101, SocialScience Series; 0110, Economist Series;0132, Intelligence Series; 0170, HistorySeries; 0180, Psychology Series; 0185,Social Work Series; 0187, SocialServices Series; 0188, RecreationSpecialist Series; 0201, PersonnelManagement Series; 0205, MilitaryPersonnel Management Series; 0212,Personnel Staffing Series; 0221, PositionClassification Series; 0230, EmployeeRelations Series; 0233, Labor RelationsSeries; 0235, Employee DevelopmentSeries; 0260, Equal EmploymentOpportunity Series; 0299, PersonnelManagement Student Trainee Series;0301, Miscellaneous Administrationand Program Series; 0334, ComputerSpecialist Series; 0340, ProgramManagement Series; 0341,Administrative Officer Series; 0342,Support Services Administration Series;0343, Management and ProgramAnalysis Series; 0346, LogisticsManagement Series; 0391,Telecommunications Series; 0399,Administration and Office SupportStudent Trainee Series; 0501, FinancialAdministration and Program Series;0505, Financial Management Series;0510, Accounting Series; 0560, BudgetAnalysis Series; 0599, FinancialManagement Student Trainee Series;0602, Medical Officer Series; 0610,Nurse Series; 0690, Industrial HygieneSeries; 0802, Engineering TechnicianSeries; 0809, Construction ControlSeries; 0818, Engineering DraftingSeries; 0856, Electronics TechnicianSeries; 0895, Industrial EngineeringTechnician Series; 0899, Engineeringand Architecture Student TraineeSeries; 0905, General Attorney Series;

0950, Paralegal Specialist Series; 0962,Contact representative; 1001, GeneralArts and Information Series; 1010,Exhibits Specialist Series; 1015,Museum Curator Series; 1016, MuseumSpecialist and Technician Series; 1020,Illustrating Series; 1035, Public AffairsSeries; 1060, Photography Series; 1071,Audiovisual Production Series; 1082,Writing and Editing Series; 1083,Technical Writing and Editing Series;1084, Visual Information Series; 1101,General Business and Industry Series;1102, Contracting Series; 1103,Industrial Property Management Series;1104, Property Disposal Series; 1150,Industrial Specialist Series; 1152,Production Control Series; 1173,Housing Management Series; 1176,Building Management Series; 1199,Business and Industry Student TraineeSeries; 1222, Patent Attorney Series;1311, Physical Science TechnicianSeries; 1410, Librarian Series; 1412,Technical Information Services Series;1420, Archivist Series; 1521,Mathematics Technician Series; 1601,General Facilities and EquipmentSeries; 1640, Facility ManagementSeries; 1654, Printing ManagementSeries; 1670, Equipment SpecialistSeries; 1701, General Education andTraining Series; 1710, Educational andVocational Training Series; 1712,Training Instruction Series; 1810,General Investigating Series; 1811,Criminal Investigating Series; 1910,Quality Assurance Series; 2001, GeneralSupply Series; 2003, Supply ProgramManagement Series; 2010, InventoryManagement Series; 2030, DistributionFacilities and Storage ManagementSeries; 2032, Packaging Series; 2050,Supply Cataloging Series; 2101,Transportation Specialist Series; 2130,Traffic Management Series; 2150,Transportation Operations Series; 2181,Aircraft Operations Series.

GENERAL SUPPORT: Assistant andclerical positions providing support insuch fields as budget, finance, supply,human resources; positions providingsupport through application of typing,clerical, or secretarial knowledge andskills; positions providing specializedfacilities support such as guards, policeofficers and firefighters; and studentpositions for training in thesedisciplines. This path includes thefollowing series and titles: 0019, SafetyTechnician Series; 0029, EnvironmentalProtection Assistant Series; 0081, FireProtection and Prevention Series; 0083,Police Series; 0085, Security guardSeries; 0086, Security Clerical andAssistance Series; 0134, Intelligence Aidand Clerk Series; 0186, Social ServicesAid and Assistant Series; 0189,

Recreation Aid and Assistant Series;0203, Personnel Clerical and AssistanceSeries; 0204, Military Personnel Clericaland Technician Series; 0303,Miscellaneous Clerk and AssistantSeries; 0304, Information ReceptionistSeries; 0305, Mail and File Series; 0318,Secretary Series; 0322, Clerk-TypistSeries; 0326, Office Automation Clericaland Assistance Series; 0332, ComputerOperation Series; 0335, Computer Clerkand Assistant Series; 0344, ManagementClerical and Assistance Series; 0350,Equipment Operator Series; 0351,Printing Clerical Series; 0356, DataTranscriber Series; 0361, EqualOpportunity Assistance Series; 0382,Telephone Operating Series; 0390,Telecommunications Processing Series;0392, General Communications Series;0394, Communications Clerical Series;0399, Administration and OfficeSupport Student Trainee Series; 0462,Forestry Technician Series; 0503,Financial Clerical and Assistance Series;0525, Accounting Technician Series;0530, Cash Processing Series; 0540,Voucher Examining Series; 0544,Civilian Pay Series; 0561, BudgetClerical and Assistance Series; 0640,Health Technician; 0647, DiagnosticRadiologic Technologist Series; 0675Medical Records Technician Series;0679, Medical Clerk Series; 0698,Environmental Health TechnicianSeries; 0945, Clerk of Court Series; 0986,Legal Clerical and Assistance Series;1087, Editorial Assistance Series; 1105,Purchasing Series; 1106, ProcurementClerical and Technician Series; 1107,Property Disposal Clerical andTechnician Series; 1411, LibraryTechnician Series; 1531, StatisticalAssistant; 1702, Education and TrainingTechnician Series; 2005, SupplyClerical and Technician Series; 2091Sales Store Clerical Series; 2102,Transportation Clerk and AssistantSeries; 2131, Freight Rate Series; 2135,Transportation Loss and Damage ClaimsExamining Series; 2151, DispatchingSeries.

b. Broad Bands and Levels ofResponsibility. A fundamental purposeof broad banding is to make thedistinctions between levels easier todiscern and more meaningful. In thatregard, the 15 GS grade levels arereduced to no more than six band levels,each representing a defined level ofwork. Within each career path, bandstypically include the followingcategories of positions: student traineeand/or entry level, developmental, fullperformance level, and expert and/orsupervisor/manager.

With fewer band levels than GSgrades, the level of responsibilityreflected in each band typically


encompasses the responsibilities of twoor more GS grade levels. For example,the responsibilities of a band levelcovering work at the full performancelevel may represent a synthesis of GS–11 and GS–12 responsibilities. For theNT career path, the responsibilitiesassociated with the top two bands donot precisely align with equivalent GSlevels. Some GS–14 levelresponsibilities band best with GS–13while others band best with GS–15.

Although Band VI of the ND careerpath covers SL and ST positions, thisdoes not represent a requested change inthe basis for classification or allocationof billets for these positions. Theauthority to allocate new billets, classifypositions and set initial pay forassignment to SL and ST positionswithin the Warfare Centers will beretained at the Assistant Secretary of theNavy (Manpower and Reserve Affairs)level. (Accordingly, classificationappeal procedures for such positions arenot affected by the provisions of thisdemonstration project.) The intent ofincluding these positions in the NDcareer path was two fold: (1) toemphasize the dual career progressionfor scientists and engineers innonsupervisory and nonmanagerialcareer paths; and (2) to include SL andST employees in all other aspects of theDemonstration Project, i.e., performancedevelopment, incentive pay andreduction-in-force systems. Consistentwith our goal of developing,recognizing, and retaining employeesneeded to meet our changingorganizational needs, the DemonstrationProject seeks the authority to manage itsSL and ST workforce under the sameperformance development and incentivesystem as other employees. Thisincludes the authority at the Divisionlevel to adjust the pay of SL and STemployees up to Level IV of theExecutive Schedule. Incentive paydecisions will be made against criteriarelevant to the needs of the organizationincluding the criticality and difficulty ofthe position, critical skills, and currentsalary level of the employees.

c. Simplified Classification Process. Alimited number of Warfare Center one-page generic, level descriptors that alsoserve as the core of preclassifiedposition descriptions will be createdwithin the Demonstration Project. Thosedescriptions may be further tailoredwith an addendum to provideinformation on Fair Labor Standards Act(FLSA) coverage, selective placementfactors, specialized knowledge/skills/abilities, etc. Within the DemonstrationProject, the term ‘‘classification of a

position’’ for positions covered by broadbanding is defined as the placement ofa position in its appropriate career path,occupational series, and band levelbased on the application of standards(referred to as level descriptions orbenchmark standards) established at theWarfare Center level. Line managerswill be meaningfully involved in theclassification process to make it morerelevant to their organization’s needs.

d. Classification Appeals.(Classification appeal procedures for SLand ST employees placed in Band VI ofthe ND career path remain as currentlyprovided for and are not affected by theappeal procedures described in thisdemonstration project.) An employeemay appeal the career path, series, orbroad band level of his or her positionat any time. When doing so, theemployee must formally raise the areasof concern to the supervisor in theimmediate chain of command. If anemployee is not satisfied with thesupervisor response, he or she may thenappeal to the DOD appellate level viathe employee’s chain of command andthe Warfare Centers’ DemonstrationProject Office. Only after DOD hasrendered a decision under theprovisions of this demonstration project,may an employee file an appeal with theOffice of Personnel Management.Appellate decisions from OPM are finaland binding on all administrative,certifying, payroll, disbursing, andaccounting officials of the Government.Time periods for case processing underTitle 5 apply.

An employee may not appeal thedemonstration project classificationcriteria, the accuracy of the leveldescriptor, or the pay setting criteria;the assignment of occupational series toa career path; the title of a position; thepropriety of a salary schedule; ormatters grievable under anadministrative or negotiated grievanceprocedure or an alternative disputeresolution procedure. The evaluation ofa classification appeal under thisdemonstration project is based upon thedemonstration project classificationcriteria. Case files will be forwarded foradjudication through the servicinghuman resources organization and willinclude copies of the employee’s leveldescriptor, the addendum, and a copy ofthe Warfare Centers’ classificationcriteria along with other documents orinformation required by the Office ofPersonnel Management.

e. Simplified Assignment Process.Today’s environment of downsizing andworkforce transition mandates that theorganization has maximum flexibility to

assign individuals. Broad banding canbe used to address these needs. As aresult of the assignment to a particularlevel descriptor, the organization willhave maximum flexibility to assign anemployee within broad descriptorsconsistent with the needs of theorganization, and the individual’squalifications and rank or level.Subsequent assignments to projects,tasks, or functions anywhere within theorganization requiring the same leveland area of expertise, and qualificationswould not constitute an assignmentoutside the scope or coverage of thecurrently level descriptor. Suchassignments within the coverage of thegeneric descriptors are accomplished asrealignments and do not constitute aposition change. For instance, atechnical expert can be assigned to anyproject, task, or function requiringsimilar technical expertise. Likewise, amanager could be assigned to manageany similar function or organizationconsistent with that individual’squalifications. This flexibility allows abroader latitude in assignments andfurther streamlines the administrativeprocess and system.

f. Broad Bands and Salary Ranges.The basis for the Demonstration Projectpay system is each band level having abasic salary range that exactlycorresponds to salaries of three or moreGS grade levels. This continued linkagewith the GS system will result inadjustments to the salary ranges throughfuture general and locality pay increasesunder the General Schedule System. Tomore closely replicate the salary overlapfound in the current GS system, there isa one grade extended salary overlapwith each lower band for bands II andabove. (See Figure 3) The one exceptionis the band for ST and SL positions (NDVI). The pay range for these positionswill be 120% of the minimum rate ofbasic pay for GS–15 up to Level IV ofthe Executive Schedule. The purpose ofthe salary overlap is twofold. First, it isto provide pay setting flexibilities andcost containment opportunities inpromotions. This reduces the instancesof nondiscretionary promotion payincreases of greater than 6% that mayotherwise be required to advance pay tothe lower end of the next higher bandlevel. The second purpose is to facilitatean assignment back to the next lowerlevel without loss in pay whenappropriate.




g. Locality Pay and Special SalaryRates. For each band level., the basicannual rate of pay will be adjusted toreflect the appropriate locality paypercentage. The maximum locality ratefor each band level will be referred toas a ‘‘locality pay point.’’ When thespecial salary rates authorized under theGS system exceed the locality pay point,the top of the applicable band will beextended to the maximum special salaryrate authorized for that series andgeographic location. Placement withinthis special rate extension will berestricted to employees in an occupationand location covered by that specialrate. An employee will be considered aspecial rate employee only if his/herbasic pay falls within the extension, i.e.,the basic pay exceeds the locality paypoint. Consistent with the intent oflocality pay, special salary rateemployees, as defined above, will not beeligible for locality pay adjustments.When the locality pay point overtakesthe employee’s rate of basic pay throughgeneral or locality pay increases, theemployee will no longer be considereda special salary rate employee. In thisinstance, the employee’s total adjustedbasic pay will be increased to the newlocality pay point. The employee’s newadjusted salary will then be reallocatedinto a new basic pay and a locality payadjustment rate. Pay retentionprovisions and adverse actionprocedures will not apply to thereallocation of the employee’s salary as

the employee’s total adjusted salary willremain the same.

h. Pay Administration. The followingdefinitions and policies will apply tothe movement of employees within theDemonstration Project from one careerpath or band level to another, orplacement in a Demonstration ProjectCareer Path from the GS, FWS, or otherpersonnel systems:

ADVANCED IN-HIRE RATE: Uponinitial appointment, the individual’spay may be set anywhere within theband level consistent with the specialqualifications of the individual and theunique requirements of the position.These special qualifications may be inthe form of education, training,experience, or any combination thereofthat is pertinent to the position in whichthe employee is being placed.

Geographic Movement Within theDemonstration Project: An employeecovered by broad banding who moves toa new duty station in a differentgeographic area and continues to be anemployee covered by the Warfare CenterDemonstration Project will have his/herpay in the new area computed asexplained below. In all cases, thegeographic movement is processedbefore any other simultaneous payaction (e.g., promotion, reassignment,downgrade, change in series, etc.)effective on the same day.

1. Regular Range Employees. Anemployee paid at a rate below thelocality pay point for his or her bandlevel will receive no change in his orher rate of basic pay upon geographic

movement. The employee’s locality payadjustment will be recomputed usingthe newly applicable locality paypercentage, which may result in ahigher or lower locality pay adjustmentand, thus, a higher or lower adjustedrate (locality rate or special rate, asapplicable). Exception: For employeeswho would be eligible for a special rateunder the GS system and who are in theregular range of a band with a specialrate extension, the new adjusted salaryfollowing a geographic move may not beless than the old adjusted salarymultiplied by the factor derived bydividing the new adjusted bandmaximum by the old adjusted bandmaximum.

2. Special Rate Extension Employees.For an employee being paid at a rate ina special rate extension, the newadjusted salary following a geographicmove is equal to the old adjusted salarymultiplied by the factor derived bydividing the new adjusted bandmaximum by the old adjusted bandmaximum; however the new adjustedrate may not be less than the applicablelocality pay point in the new area.

3. Pay Protection Provision. A specialpay protection provision applies toemployees who (a) were entitled to aspecial rate immediately beforeconversion into the Demonstrationproject, (b) continue to meet the GSspecial rate eligibility conditions, and(c) are paid at a rate that equals orexceeds the dollar amount of the pre-conversion special rate. For theseemployees, the new adjusted rate


following a geographic move may not beless than the dollar amount of theemployee’s pre-conversion special rate.Adverse action and pay retentionprovisions of Title 5, United StatesCode, will not apply to any reduction inbasic pay due solely to the operation ofthe above rules.

PROMOTION: Within theDemonstration Project Broad Bandingsystem a promotion will be defined asthe movement of an employee from alower to a higher band level in the samecareer path, or from one career path toanother wherein the band in the newcareer path has a higher maximumsalary than the band from which theemployee is moving.

After the implementation of theDemonstration Project, for an employeemoving from the GS, a promotion willbe defined as placement in a band levelwhich incorporates a GS grade levelwhich is higher than the employee’scurrent grade.

For an employee moving from theFWS, a promotion will be defined asplacement in the Demonstration Projectin a band level where the representativerate of the highest GS grade covered(i.e., step 04 adjusted rate of the highestGS grade) is higher than therepresentative rate of the employee’scurrent FWS grade (i.e., step 02).

Promotions will follow basic federalmerit promotion policy that provides forcompetitive and non-competitivepromotions. Except for promotions fromthe FWS to positions covered by theDemonstration Project broad bandingsystem, an employee will normallyreceive an increase of six percent uponpromotion unless a higher increase isnecessary to raise the employee’s salaryto the minimum salary of the new band.The employee’s total adjusted pay (basicpay and locality pay; if any) will beused in determining the amount of thepromotion increase and in setting theemployee’s adjusted pay in the higherband. Decisions not to increase pay orfor increases of other than six percent orto the minimum level of the band mustbe approved at the Division level, unlessotherwise delegated to lower levels. Inno situation may an employee’s salaryupon promotion be established lowerthan the minimum salary range of thenew band.

Factors to be used to help determinethe amount of the increase may include,but are not limited to, the employee’sdirectly related experience which maybe of immediate use in the newposition; the employee’s current pay;

and the relationship to salaries of othersimilarly qualified employees.

REASSIGNMENT: For movementwithin the Demonstration Project BroadBanding system, a reassignment will bemovement to a position covered by thesame band level, or from one career pathto another when the salary range of thenew band level and the employee’scurrent band level remains the same.

For an employee moving from the GS,a reassignment will be defined asplacement in the Demonstration Projectin a band level where the highest GSgrade covered is the same as theemployee’s current GS grade.

For an employee moving from theFWS, a reassignment will be defined asplacement in the Demonstration Projectin a band level where the representativerate of the highest GS grade covered(i.e., step 04 adjusted rate of the highestGS grade included in that broad band)is the same as the representative rate ofthe employee’s current FWS grade.

DEMOTION OR CHANGE TO LOWERBAND LEVEL: For movement within theDemonstration Project Broad Bandingsystem, a demotion will be defined asthe movement of an employee from ahigher band to a lower band within thesame career path, or from one careerpath to another where the band in thenew career path has a lower maximumsalary than the band from which theemployee is moving.

For an employee moving from the GS,a demotion will be defined as placementin the Demonstration Project in a bandlevel where the highest GS gradecovered is lower than the employee’scurrent GS grade.

For employees moving from the FWS,a demotion will be defined as placementin the Demonstration Project in a bandlevel where the representative rate ofthe highest GS grade covered (i.e., step04 adjusted rate of the highest gradeincluded in that pay band) is lower thanthe representative rate of the employee’scurrent FWS grade.

SALARY ADJUSTMENT: A salaryadjustment is defined as an increase inan employee’s base pay (by other thanthe incentive pay process) within theemployee’s current band level to anamount which does not exceed the topof the band. The salary adjustment maybe used to adjust the pay of individualswho have acquired a level of educationthat would otherwise make theemployee qualified for an appointmentat a higher level and would be used inlieu of a new appointment. For example,

this authority may be used to adjust thepay of graduate level CooperativeEducation (COOP) students oremployees who have obtained anadvanced degree, e.g., Ph.D.

OTHER: Current provisions forHighest Previous Rate, Pay Retention(except as otherwise noted), SpecialRecruitment and Relocation Bonuses,Retention Allowances and AcceleratedPromotions will continue. The use ofOPM’s Operating Manual for‘‘Qualification Standards For GeneralSchedule Positions’’ will continue withminor modifications; ‘‘Band’’ will besubstituted for ‘‘Grade’’ whereappropriate and the time in graderequirement will be eliminated.

2. Performance Development System

The philosophical base of thisDemonstration Project is that employeesare valued and trusted and are theorganization’s most critical assets.Accordingly, the primary objectives ofthe Demonstration Project are to:develop employees to meet the changingneeds of the organization; to helpemployees achieve their career goals; toimprove performance in currentpositions; to retain high performers, andto improve communication withcustomers, colleagues, managers andemployees. The system focuses oncontinuous performance improvementand minimizes administrativerequirements. On-going dialoguebetween the employee and supervisor isfundamental to this development focus,and Performance DevelopmentResources are provided as part of thesystem to facilitate this dialogue andassist with diagnosis of performanceissues. The emphasis on continuedimprovement is carried over into theprocess for addressing performanceproblems. The proposed systemsubstitutes an early intervention whichfocuses immediately on a formalperformance plan designed to supportthe employee’s success. Adetermination of unacceptableperformance is made only if theemployee does not meet therequirements for acceptableperformance detailed in that plan. Thefollowing paragraphs describe the keycomponents of the PerformanceDevelopment System. Figure 4 depictsthe relationship of these componentsand their linkage with the Incentive PaySystem.




a. Performance DevelopmentResources (PDR). At the heart of theperformance development system is theconcept of providing organizationalresources to support the developmentprocess. While the design of theseresources will be delegated to eachDivision, they will typically consist of apool of people, including unionrepresentatives, who act as a supportsystem to identify or help provide forthe needs of employees and managers inthe development process. Currentlimitations regarding union involvementin discussions concerning assigning anddirecting employees will not prevent theparties within the Demonstration Projectfrom developing appropriate proceduresfor the Performance DevelopmentResources.

The PDR will be available to facilitatecommunications around expectationsand needs, and help supervisors andemployees seek agreement throughoutall aspects of the performancedevelopment process. Shouldperformance problems arise, the PDRwill be particularly useful in diagnosingissues impacting performance (e.g.,employee skills, attitudes andmotivation, clarity of job expectations,systemic issues, access to informationand resources, relationships with co-workers and supervisor, etc.) andidentifying options for addressing theseissues (e.g., development opportunities,

tools or equipment to support improvedperformance, reassignment of theemployee to a position that bettermatches his/her capabilities andinterests, etc.) They will also makereferrals to others who may be helpful,and identify systemic or organizationwide issues which may be affectingperformance.

Supervisors are expected to utilize thePDR for assistance in preventing andalleviating performance problems.Employees may also use the PDR toassist them in correcting self-identifiedperformance problems, in developmentplanning to enhance their careeropportunities consistent with the needsof the organization, and to facilitatecommunication and feedback with theirsupervisors, etc.

b. Two Level Rating System. Thesystem employs a two level ratingsystem: ‘‘acceptable’’ and‘‘unacceptable’’ performance.‘‘Acceptable’’ performance is defined as‘‘performance that fulfills therequirements for which the positionexists.’’ An employee’s performancemay not be determined ‘‘unacceptable’’unless the employee has been placed onand failed a performance plan.Employee performance ratings will bedocumented annually.

c. Establishing PerformanceExpectations. Clear, mutuallyunderstood performance expectationsthat are linked to organizational goals,

strategies and values are fundamental tosuccessful individual and organizationalperformance. The outcome of thiscomponent of the PerformanceDevelopment System is clearcommunication of the products and/orservices to be delivered by theemployee(s), and the success criteriaagainst which those outputs will beassessed. Documentation of outputs andsuccess criteria is expected whennecessary to facilitate mutualunderstanding of performanceexpectations.

The most effective means of creatinga common understanding is through aprocess in which the supervisor andemployee(s) discuss requirements andestablish performance goals andexpectations. Employees andsupervisors are expected to activelyparticipate in these discussions to seekclarity regarding expectations andidentify potential obstacles to meetinggoals. In addition, employees shouldexplain (to the extent possible) whatthey need from their supervisor tosupport goal accomplishment. Thetiming of these goal setting discussionswill vary based on the nature of workperformed, but will occur at leastannually. More frequent, task specific,discussions of expectations may bemore appropriate in some organizations.In cases where work is accomplished bya team, team discussions regarding goalsand expectations may be appropriate,


however expectations for individualcontributions to the team goals shouldalways be clearly specified. Either thesupervisor, the employee, or the unionmay enlist the assistance of thePerformance Development Resources tofacilitate effective dialogue with regardto these issues.

Documentation of performanceexpectations is a helpful mechanism forensuring clarity of understanding andproviding a focus for later discussionson progress and developmental needs.As a minimum, formal documentationof expectations is required when anemployee begins a new or substantiallydifferent job. Documentation in othersituations is based on the needs anddesires of the employee and supervisor,and may rely on other existingdocumentation (e.g., project plans,process documentation, customerrequirements, etc.) No prescribed formatis required for such documentation; theemployee and supervisor areencouraged to seek agreement on whatform of documentation will meet theirneeds and who will be responsible forproducing it. The assistance of thePerformance Development Resourcesmay be enlisted by either party tosupport their efforts to reach agreement.In bargaining units, documentationprocedures will be subject to bargaining.Current limitations regarding unioninvolvement in decisions concerningassigning and directing employees willnot prevent the parties within theDemonstration Project from developingappropriate procedures for documentingperformance discussions.

d. On-going Performance Dialogue. Tofacilitate performance development,employees and supervisors will engagein on-going dialogue. Ideally thisdialogue will occur as part of normalday-to-day interactions for the purposeof ensuring a common understanding ofexpectations, reviewing whetherexpectations are being met, providingsupport in identifying resources orsolving problems, providing coachingon complex or sensitive issues,providing information to increase theunderstanding of the project context,and keeping the supervisor informed ofprogress. In addition to this on-goinginteraction, however, it is expected thatperiodically a more formal dialogue willoccur focused on reviewing progress,discussing customer feedback, exploringprocess improvements that couldremove obstacles to effectiveperformance, and identifyingdevelopmental needs to supportcontinual improvement and careergrowth. The employee and supervisorshould seek agreement on the frequencyand form for both the formal and

informal dialogues to ensure they willmeet their needs. Either the supervisor,the employee or the union may callupon the Performance DevelopmentResources to facilitate communicationsor conflict resolution around theseissues. In cases where work isaccomplished by a team, team meetingsmay be an appropriate forum for someof this interaction, however teamdiscussions do not eliminate the needfor the supervisor to have some form ofindividual dialogue with eachemployee.

The expected outcomes from this on-going dialogue component are plans tosupport the continuous improvement ofindividual and organizationalperformance. Documentation of thesediscussions and resulting plans isencouraged to the extent that itcontributes to clarity of understandingand facilitates later review of progresson continuous improvement efforts. Thenature and content of suchdocumentation is based on the needsand desires of the employee andsupervisor. No prescribed format isrequired for such documentation; theemployee and supervisor areencouraged to seek agreement on whatform of documentation will meet theirneeds and who will be responsible forproducing it. The assistance of thePerformance Development Resourcesmay be enlisted by either party tosupport their efforts to reach agreement.

In bargaining units, these proceduresare subject to bargaining. Currentlimitations regarding union involvementin decisions concerning assigning anddirecting employees will not prevent theparties within the Demonstration Projectfrom developing appropriate proceduresfor ongoing performance dialogues andfor documenting performancediscussions.

e. Feedback from Multiple Sources.The primary purpose of feedback in thePerformance Development System is toprovide employees with informationregarding how well their performance ismeeting customer requirements in orderto help the employees continuallyimprove their performance. The outputsexpected from this component are dataand customer feedback which enablereview of performance against successcriteria. These data provide input to thereview and continuous performanceimprovement planning discussed as partof the on-going dialogue component.

The responsibility for employeedevelopment and continuousimprovement is jointly held between thesupervisor and employee. They areexpected to work together to identifyinternal and external customers and todefine and implement a process by

which the employee can regularlyreceive feedback. A variety ofmechanisms may be appropriate, suchas customer surveys, process measureswhich track customer requirements, andiscussions with customers. Supervisorsare expected to facilitate this processand work with employees to interpretthe feedback and establish improvementgoals. Performance DevelopmentResources may be helpful during thisprocess. Their assistance may berequested by the supervisor, theemployee or the union. Currentlimitations regarding union involvementin decisions concerning assigning anddirecting employees will not prevent theparties within the Demonstration Projectfrom developing appropriatemechanisms and procedures forobtaining feedback from multiplesources.

Managers and supervisors are alsoexpected to obtain feedback from theircustomers, including their employees,and to use that feedback as a basis forestablishing both personal andorganizational performancedevelopment goals. The use of ananonymous instrument is appropriatefor providing feedback to supervisorsand managers on the impact of theirbehavior. The use of these instrumentswill help focus attention on desiredleadership behaviors, structure thefeedback in a constructive manner, andoffset the power imbalance that oftenprevents supervisors from getting usefulfeedback from their employees. Whennecessary, supervisors and managersmay choose to use the PerformanceDevelopment Resources to help supporttheir own developmental needs.

f. Performance Plan. When anemployee has continued performancedifficulties, the organization willprovide a formal Performance Plan tosupport the supervisor and employee inresolving Performance Plan to supportthe supervisor and employee inresolving the performance problems.Use of the Performance DevelopmentResources will be an integral part of thiseffort. Supervisors are expected to callon the Resources for assistance inpreventing or alleviating performanceproblems before the need for formalaction arises. When there is anindication that performance is notconsistently meeting customerrequirements, supervisors are expectedto call on the Resources to analyze thecauses of the difficulty and develop anapproach for resolving it. Developmentof a formal Performance Plan isindicated if and when it is determinedthat the employee’s performance (vs.system performance) is a contributor tothe problem informal intervention has


not been successful in correcting theproblem. Use of the PerformanceDevelopment Resources is expectedthroughout the period of thePerformance Plan in an attempt tofacilitate a solution to the problem. ThePerformance Plan must be written, andwill clearly document organizationalexpectations for successful jobperformance, specify accountability,identify developmental resources tocorrect any skill deficiencies, define thetime frame of the performance plan,specify organizational support that willbe provided and how performanceresults will be monitored. In addition,the Plan will clearly specify thepotential consequences if performanceis not acceptable. Periodic discussionsbetween the supervisor and employeemust occur during the time frame of thePerformance Plan to review progress;these discussions must be documented.Current limitations regarding unioninvolvement in decisions concerningassigning, directing, removing orreducing in grade employees will notprevent the parties within theDemonstration Project from developingappropriate procedures anddocumentation in connection withPerformance Plans. (NOTE: Nothing inthis subsection will preclude actionunder Title 5, United States Code,Chapter 75, when appropriate.)

g. Accountability for Performance. Anemployee will be given a rating of‘‘unacceptable’’ only if and when theemployee is unable to successfullycomplete the Performance Plan. Whenan employee’s performance is rated as‘‘unacceptable,’’ one of four actions willbe taken: (1) removal from the FederalService, (2) placement in a lower bandlevel with a corresponding reduction inpay (demotion), (3) reduction in paywhile remaining in the same band level,or (4) placement in a lower band levelwith no reduction in pay (demotion).

For the third category of action, theamount of reduction in pay will be upto, but may not exceed, the maximumamount of incentive pay (see below) thatthe employee could be eligible toreceive during the current payoutperiod, i.e., up to the equivalent of 4continuing pay points as of the mostrecent payout cycle. Following the payreduction, the objection is to restoreperformance and may commensuratewith it. A formal Development Plan willbe established to maximize theopportunity for success in theassignment by clearly identifyingperformance expectations and defininga plan to achieve them within anappropriate time frame, not to exceed 12months. The activity’s PerformanceDevelopment Resources will be utilized

throughout this process. If and whenperformance improves during the periodin which the employee is otherwiseineligible for incentive pay, some or allof the reduced pay may be restored.Such restoration is not retroactive and isseparate and apart from incentive pay.

For the fourth category of action, theemployee may be moved to the nextlower band level provided no loss inpay results and the employee’s pay doesnot exceed the top of the lower banklevel. Within the Demonstration Project,this would not be considered an adverseaction and would not be appealablethrough a statutory appeals processexcept for preference eligibleemployees. Employees will be providedwith a written notice of the decision andpreference eligibles will be notified oftheir right to appeal the action to theMerit Systems Protection Board. Currentlimitations regarding union involvementin decisions concerning reducingemployees in grade will not prevent theparties within the Demonstration Projectfrom developing procedures for the non-adverse reduction in band level. Thedecision to reduce an employee to alower band level with no reduction inpay will be subject to review underexisting grievance or alternative disputeresolution procedures.

3. Incentive Pay System

The Incentive Pay System provides amechanism for encouraging andrewarding performance contributionsand other outcomes resulting from thecontinuous improvement focus of theperformance development system.

INCENTIVE PAY FOR EMPLOYEESCOVERED BY BROAD BANDING:Supervisors will conduct an annualreview of each employee’s salary anddecide how total compensation shouldbe adjusted to reflect the employee’sperformance contribution to theorganization. The adjustment may bemade as a continuing increase to basepay and/or as a one-time cash bonus toadjust total compensation. Thephilosophical foundation for incentivepay is described below:

Principles of Incentive Pay

Background: One of the outcomes of paybanding is an expanded range of payprogression opportunities for employees.This is accomplished through ‘‘incentivepay.’’ Incentive pay is awarded to peoplebased on the value of their performancecontributions to the organization. With thiscomes the necessity to insure that paydecisions are consistent with the needs andvalues of the organization. At the same time,they must be seen as fair and equitable.While the Demonstration Project providesdiscretion for Warfare Center Divisions tosubstantially define the criteria and process

for managing incentive pay, it is appropriatethat there be general Project-wide principlesthat provide a policy framework for divisiondecisions. The following are those principles.

PRINCIPLE: ‘‘The organization succeedsthrough the collective contributions ofpeople in all occupations.’’

The Warfare Centers perform criticalmissions for the Navy in support of nationaldefense. These missions require thecollective efforts of all their people. Whilecertain positions and occupations are highlyvisible, it is the whole organization as a teampulling in the same direction and towards thesame goals that enables the Centers to excel.In that regard, no occupational groups are tobe effectively excluded from opportunitiesfor incentive pay and other forms ofrecognition. Rather, there is an expectationthat incentive pay generally will bedistributed proportionally to the variouscareer paths. Further, all people who aremaking positive performance contributionsas demonstrated by acceptable performancewill share in incentive pay. Amounts andtime intervals will be set by Divisions/sites.

PRINCIPLE: ‘‘Pay should be commensuratewith value of performance to theorganization.’’

In general, an individual’s total pay (basepay, plus any incentive pay) should becommensurate with the value of theperformance contributions to theorganization. Contributions may be based onpast and/or potential performance consistentwith criteria defined by the Warfare CenterDivisions. In that regard, there should berelative pay equity between people whosecontributions to the organization are of equalvalue. Consistent with this principle, as thevalue of a person’s contribution increases,compensation should likewise increase. Itfollows that as an individual’s compensationincreases, there is a corresponding increasein expected performance contributions.

Typically, when a person is hired, orpromoted to a higher band level, and pay isat or near the lower end of that band, thereare expected successive increases in paytoward the mid range of that band. This paygrowth is reflective of a learning curve uponentering a new position, and thecorresponding increasing value to theorganization. Pay progression through themid range occurs with progressively higherlevels of performance contributions. Beyondthat, extraordinary contributions areexpected for pay to increase through theupper levels of the band.

a. Eligibility. All employees who aremaking positive performancecontributions as demonstrated byacceptable performance will share inincentive pay with the amounts andtime intervals set by the Divisions andsites. Employees receiving anunacceptable rating since the lastincentive payout are ineligible for thenext incentive pay consideration.

b. Incentive Pay Pool. Payments underthe Incentive Pay System are made fromthe incentive pay pool. Within theincentive pay pool, there are separate


funds for continuing pay increases andbonus payments. The incentive pay poolis not used to fund promotions betweenpay bands. It is also not used to fundgeneral pay increases, special rateincreases, or locality pay increases;rather, employees will continue toreceive any such increases (asapplicable under the Plan) consistentwith other employees outside thedemonstration project.

The incentive pay pool will beoperated within the parameters of theoverall finance system governing theWarfare Centers. As a Defense BusinessOperating Fund (DBOF) activity, theWarfare Centers are 100 percentindustrially funded and operate as ‘‘not-for-profit’’ competitors within theDepartment of Defense. Under DBOF,the Centers are reimbursed for theirwork by their customers throughbillings based on stabilized rates. Theassistant Secretary of the Navy forFinancial Management and Comptrolleroversees the establishment of thesestabilized rates through reviews ofBiannual Financial Management Budgetsubmissions, which are highly visible atall Command levels. This fundingprocess imposes a discipline incontrolling costs (including salaryexpenditures for the Warfare Centersthat is not present under appropriatedfunded organizations.

The size of the continuing pay fundis based on appropriate factors,including the following:

a. Historical spending for within-grade increases, quality step increases,and in-level career promotions (withdynamic adjustments to account forchanges in law or in staffing factors e.g.,average starting salaries and thedistribution of employees among jobcategories and band levels);

b. Labor market conditions and theneed to recruit and retain a skilledworkforce to meet the business needs ofthe organization; and

c. The fiscal condition of theorganization.Given the implications of base payincreases on long-term pay and benefitcosts, the amount of the continuing payfund will be derived after a cost analysiswith documentation of the mission-driven rationale for the amount. Anydecision to substantially reduce theamount of funds devoted to continuingpay increases would typically occuronly in lieu of more drastic cost cuttingmeasures (e.g., RIF or furlough). As partof the evaluation of the project, averagesalary (base pay) will be tracked overtime using two comparison groups: (1)The original two Navy Demonstrationlabs in China Lake and San Diego, and

(2) a comparison group constructedusing OPM’s Central Personnel DataFile.

The size of the bonus pay fund willbe based on appropriate factors,including the following:

a. Historical spending for performanceawards, special act awards, and awardsfor beneficial suggestions;

b. The organization’s fiscal conditionand financial strategies; and

c. Employee retention rates.The decision process for defining the

size of the incentive pay pool and thetwo funds within that pool will beestablished at the Division/site level.The design of the decision process,insofar as it affects bargaining unitemployees, will be subject to collectivebargaining.

d. Delegated Criteria Setting. Thecriteria and process for incentive paywill be substantially defined at theDivision/site level. The incentive paydecision may be based on somecombination of past, present and futureperformance. Examples of criteria mayinclude criticality of skills, difficulty ofposition, criticality of position,individual or team contributions,suggestions for improving system ororganization processes, length and/orquality of experience, current totalcompensation, etc. The criteria andprocess for incentive pay distributionfor bargaining unit employees aresubject to collective bargaining. Currentlimitations regarding union involvementin decisions concerning assigning anddirecting employees will not prevent theparties from developing the criteria andprocess for incentive pay decisions.(Note: The movement of an employeewithin a band based on the execution ofan incentive pay decision is not a‘‘classification’’ action.)

e. Pay Points. The payout process willutilize a point system to distributeincentive pay increases. A maximum offour (4) points will be available, thuseach employee performing in anacceptable manner will be eligible toreceive 0, 1, 2, 3 or 4 pay points in theform of continuing pay, bonus pay orsome combination.

FOR FWS EMPLOYEES, cash awardscontinue to be available under theexisting Incentive Awards system basedon performance and special acts.

f. Communication andDocumentation. It is important thatemployees understand what is expectedin order to receive a pay increase.Supervisors will interpret organizationalcriteria for their employees to clarifyhow it applies to their work and haveperiodic assessment discussions withemployees to prevent surprise decisionsat the time of payout. These assessment

discussions should normally be heldseparately from performancedevelopment dialogues. Supervisors andemployees are encouraged to seekagreement on their documentationneeds. In addition, supervisors areexpected to document their payoutrecommendation decisions and todiscuss their decision rationale withemployees. In bargaining units,documentation procedures will besubject to bargaining. Currentlimitations regarding union involvementin decisions concerning assigning anddirecting employees will not prevent theparties from developing documentationprocedures for the communication anddocumentation of incentive paydiscussions and decisions.

g. Reconsideration of Incentive PayDecisions. Employees will have theopportunity for a reconsideration ofincentive pay decisions. While thespecific purpose of the reconsiderationis to address employee concerns aboutsuch decisions, the process is alsointended to facilitate communicationand understanding between employeesand supervisors/managers concerningperformance contributions and theirimpact on pay decisions. In addition,the process seeks to identify possiblesystemic problems that need to beaddressed. In that regard,reconsideration is considered a positiveand integral component of an effectiveincentive pay system by providing amechanism to support continuousimprovement. Accordingly, employeeswill not be discouraged from requestingreconsideration. Neither will they besubjected to reprisal or stigma. Thespecific process for reconsideration willbe defined at the Division/site level.Current limitations regarding unioninvolvement in decisions concerningassigning and directing employees willnot prevent the parties from developingprocedures for the reconsideration ofincentive pay decisions. That processwill include, but will not necessarily belimited to, the following characteristics:It should be administrativelystreamlined; provide expeditedresolution; maintain appropriateconfidentiality; be fair and impartial;address assertions of harmful errorinvolving issues of process andprocedure; and ensure that managementpayout decisions reflect reasonablenessin judgment in evaluating applicablecriteria.

h. Guidance on Managing IncentivePay. Each Division is expected todevelop policies and criteria to guidethe implementation of the incentive paysystem which are consistent with theirmission, strategies and organizationalvalues, and supportive of the Naval Sea


Systems Command and Warfare Centerstrategic plans. Some Divisions may relyon individual management judgmentbased on general guidance, while otherDivisions may define a more mechanicalprocess based on highly objectivecriteria. Additional guidance may beprovided by major organizationalcomponents (e.g., departments ordirectorates) to tailor or interpret thecommand-level criteria for their specificmission and strategies. Each majororganizational component will haveauthority to manage the incentive payallocation derived from the salaries ofemployees in that component.Departments/Directorates may furtherdelegate authority to mange a proratedportion of the fund to the next lowerechelon. Supervisors and managerswithin the unit will be assessing thenature of each employee’s contribution,consistent with the organization’s policyand criteria as reflected in the writtenguidance. They will then makerecommendations to a second levelreviewer regarding the number of paypoints to be awarded to each employee(i.e., 0 to 4 points) and the nature ofincentive pay (i.e., continuing pay and/or bonus pay). Decisions regardingapproval/disapproval ofrecommendations will be made at theorganizational level to which authorityhas been delegated to manage the paypool; typically this will be the second orthird level reviewer. In cases wherework is accomplished by a team, theteam members may be involved informulating the recommendation fordistribution of incentive pay.

4. Reduction-In-Force (RIF)Flexible and responsive alternatives

are needed to restructure anorganization in a short period of time.The current RIF system is complicated,costly, and relatively unresponsive tothe needs of the organization.

The proposed RIF system will have asingle round of competition to replacethe current ‘‘two round’’ process. Oncethe position to be abolished has beenidentified, the incumbent of thatposition may ‘‘displace’’ anotheremployee when the incumbent has ahigher retention standing and is fullyqualified for the position occupied bythe employee with a lower standing.Retention standing is based on tenure,veterans’ preference, length of service,and performance. However, there willbe no augmented service credit based onperformance ratings. An employee ratedas unacceptable during the 12 monthperiod preceding the effective date of aRIF may only displace an employeerated unacceptable during that sameperiod. The same ‘‘undue disruption’’

standard currently utilized will serve asthe criteria to determine if an employeeis fully qualified. The displacedindividual may similarly displace otheremployees. If/when there is no positionin which an employee can be placed bythis process or assigned to a vacantposition, that employee will beseparated.

Displacement is limited to one broadband level below the employee’s presentlevel. A preference eligible employeewith a compensable service connecteddisability of 30 percent or mre maydisplace up to two broad band levels (orthe equivalent of five General Schedulegrades) below the employee’s presentlevel. Employees not covered by broadbanding (FWS), may ‘‘displace’’ up tothree grades/intervals (five grades/intervals for preference eligibles with aservice connected disability of 30percent or more).

The new system will eliminateretained grade but will preserve retainedpay.

All positions included in theDemonstration Project within an activityat a specific geographic location will beconsidered a separate competitive area.

5. Competitive Examining andDistinguished Scholastic Appointments

The Warfare Center needs a processwhich will allow for the rapid filling ofvacancies, is less labor intensive, and isresponsive to our needs. Restructuringthe examining process and providing anauthority to appoint candidates meetingdistinguished scholastic achievementswill help achieve these goals. When aDivision implements the DemonstrationProject for some portion of theirworkforce, this component may beavailable for all occupations. This willeliminate the imposition of multipleexamining and appointment systems onthe public and will strengthenefficiencies gained under theDemonstration Project. To furtherminimize resource requirements and thecomplexities inherent in administeringtwo different sets of examining andhiring processes, this component mayalso be applied to GS and FWSpositions in activities for which theWarfare Center Divisions providehuman resource services.

a. Delegated Examining Authority.The Warfare Centers propose todemonstrate a streamlined examiningprocess for both permanent and non-permanent positions. This authority willbe further delegated to the Divisionlevel. This authority will apply to allpositions with exception of positions inthe Senior Executive Service, to SeniorLevel (ST/SL) positions, to theExecutive Assignment System or

positions of Administrative Law Judge.This authority will include thecoordination of recruitment and publicnotices, the administration of theexamining process, the administrationof veterans’ preference, the certificationof candidates, and selection andappointment consistent with meritprinciples.

b. Description of Examining Process:The primary change in the examiningprocess to be demonstrated is thegrouping of eligible candidates intothree Quality Groups using numericalscores and the elimination ofconsideration according to the ‘‘rule ofthree’’.

For each candidate, minimumqualifications will be determined usingOPM’s Operating Manual for‘‘Qualification Standards For GeneralSchedule Positions’’/‘‘Job QualificationSystems For Trades and LaborOccupations (Handbook X–118C)’’including any selective placementfactors identified for the position.Candidates who meet basic (minimum)qualifications will be further evaluatedbased on knowledge, skills and abilitieswhich are directly linked to theposition(s) to be filled. Based on thisassessment, candidates will receive anumerical score of 70, 80, or 90. Nointermediate scores will be grantedexcept for those eligibles who areentitled to veterans’ preference.Preference eligibles meeting basic(minimum) qualifications will receivean additional 5 or 10 points (dependingon their preference eligibility) which isadded to the minimum scores identifiedabove. Candidates will be placed in oneof three quality groups based on theirnumerical score, including any veterans’preference points: Basically Qualified(score of 70 and above), HighlyQualified (score of 80 and above), orSuperior (score of 90 and above). Thenames of preference eligibles shall beentered ahead of others having the samenumerical rating.

For scientific/engineering andprofessional positions at the equivalentof GS–9 and above, candidates will bereferred by quality groups in the orderof the numerical ratings, including anyveterans’ preference points. For all otherpositions, i.e., other than scientific/engineering and professional positionsat the equivalent of GS–9 and above,preference eligibles with a compensableservice-connected disability of 10percent or more who meet basic(minimum) eligibility will be listed atthe top of the highest group certified.

In selecting the top candidate,selecting officials should be providedwith a reasonable number of qualifiedcandidates from which to choose. All


candidates in the highest group will becertified. If there is an insufficientnumber of candidates in the highestgroup, candidates in the next lowergroup may be certified in rank order.When two or more groups are certified,candidates will be identified by qualitygroup (i.e., Superior, Highly Qualified,Basically Qualified) in the order of theirnumerical scores. In making selections,to pass over any preference eligible(s) toselect a nonpreference eligible requiresapproval under current pass over orobjection procedures.

c. Distinguished ScholasticAchievement Appointment: The WarfareCenters further propose to establish aDistinguished Scholastic AchievementAppointment using an alternativeexamining process which provides theauthority to appoint undergraduates andgraduates through the doctoral level toprofessional positions at the equivalentof GS–7 through GS–11, and GS–12positions involved in research.

At the undergraduate level,candidates may be appointed topositions at a pay level no greater thanthe equivalent of GS–7 step 10 providedthey meet the minimum standards forthe position as published in OPM’soperating manual, QualificationStandards for General SchedulePositions, plus any selective factorsstated in the vacancy announcement;the occupation has a positive educationrequirement; and, the candidate has acumulative grade point average of 3.5 orbetter (on a 4.0 scale) in those coursesin those fields of study that are specifiedin the Qualifications Standards for theoccupational series. Appointments mayalso be made at the equivalent of GS–9 through GS–12 on the basis ofgraduate education and/or experiencefor those candidates with a grade pointaverage of 3.5 or better (on a 4.0 scale)for graduate level courses in the field ofstudy required for the occupation.

Veterans’ preference procedures willapply when selecting candidates underthis authority. Preference eligibles whomeet the above criteria will beconsidered ahead of nonpreferenceeligibles. In making selections, to passover any preference eligible(s) to selecta nonpreference eligible requiresapproval under current objectionprocedures. Priority must also be givento displaced employees as may bespecified in OPM and Department ofDefense regulations.

Distinguished ScholasticAchievement Appointments will enablethe Warfare Centers to respond quicklyto hiring needs with eminently qualifiedcandidates possessing distinguishedscholastic achievements.

C. Project ImplementationWhile many of the basic elements of

each component of the project will beimplemented uniformly at all sitesthrough policies established at theWarfare Center level, a number ofpolicies, procedures, or processes willbe delegated to the Division and/or sitelevels. This permits the system to beoperationally defined, within a WarfareCenter directed framework, to fit theculture and needs of the localorganizations. In bargaining units, theproject will be implemented only afterthere is full agreement through thecollective bargaining process.

D. Entry Into/Exit From the Project

1. Initial Conversion of CurrentWorkforce

For the most part, current GS/GMemployees will be convertedautomatically from their current gradesto the appropriate career paths and bandlevels. However, the Warfare Centersconsider it essential to the success of theproject that employees, upon enteringthe project, feel that they are not losinga pay entitlement accrued under the GSsystem. Accordingly, the currentemployees of the Warfare Centers willbe ‘‘made whole’’ through a one year‘‘buy-in’’ period. On the day ofconversion, employees typically willreceive base pay increases for proratedstep increase equivalents. Employees atthe 10th step or receiving a retained rateare not eligible for the increase. Further,during the first 12 months followingconversion, employees will receive payincreases for non-competitivepromotion equivalents when the gradelevel of the promotion is encompassedwithin the same band, the employee’sperformance warrants the promotionand promotions would have otherwiseoccurred during that period. Employeeswho receive an in-level promotion at thetime of conversion will not receive aprorated step increase equivalent.

Additionally, in many cases,employees who are today covered by alocal or national special salary rate willno longer be considered a special rateemployee under the DemonstrationProject and will thus gain eligibility forfull locality pay. To control conversioncosts and to avoid a salary increasewindfall for these employees, theadjusted salaries of these employeeswill not change. Rather, the employeeswill receive a new basic pay ratecomputed by dividing their adjustedbasic pay by the locality pay factor fortheir area. A full locality adjustmentwill then be added to the new basic payrate. Adverse action and pay retentionprovisions will not apply to the

conversion process as there will be nochange in total salary.

2. New and Transfer EmployeesNew hires, including employees

transferring from other Federalactivities, will be converted into theDemonstration Project in the career pathand at the level and pay consistent withthe duties and responsibilities of theposition and individual qualifications.

3. Exit From the Demonstration ProjectEmployees who leave the

Demonstration Project broad bandingsystem to accept federal employment inthe traditional Civil Service system willhave their pay set by the gainingactivity. To assist activities in settingpay and in determining whether suchplacement constitutes a promotion,reassignment, or change to lower grade,the employee’s band and salary levelwill be converted to a General Scheduleequivalent grade prior to leaving theDemonstration Project in the followingmanner:

Employees who exit theDemonstration Project will betentatively converted to a GS grade mostcomparable to the employee’s currentDemonstration Project level and salary.In instances where the current salary isin the area between two overlapping GSgrades within the same level, theconverted grade is either (1) the higherof the two overlapping GS grades if thecurrent salary meets or exceeds Step 4of the higher GS grade, or (2) the lowerof the overlapping grades if the currentsalary is less than Step 4 of the higherGS grade. In those instances where thecurrent salary falls below theestablished GS salary range for thelowest GS grade covered by theDemonstration Project band level, theconverted grade is the lowest GS gradelevel in that band. In those situationswhere an employee has not beenpromoted or placed in a lower pay bandwhile covered by the DemonstrationProject, the employee will be convertedat a level which is no lower than the GSgrade held immediately prior to enteringthe Demo project. This converted GSgrade is the GS equivalent grade and isnot necessarily the grade the employeewill have upon transfer or reassignmentoutside the Demonstration Project. If theemployee is receiving a retained rateunder the Demonstration Project, theemployee’s GS-equivalent grade is thehighest grade encompassed in his or herbank level. The Warfare Center willcoordinate with OPM to describe aprocedure for determining the GS-equivalency pay rate for an employeeretaining a rate under the DemonstrationProject.


An employee’s pay within theconverted GS grade is set by convertingthe Demonstration project adjusted rateof pay to a rate on the highest applicableadjusted rate range for the converted GSgrade (including locality rates andspecial rates, as applicable). Forexample, if the highest applicableadjusted rate range under the GS paysystem for a particular employee is aspecial rate range, the adjusted projectrate (locality rate or special rate) isconverted to the lowest special rate inthat range that equals or exceeds theproject rate; from this converted specialrate, the employee’s unadjusted GS rateand locality rate would be derived. Thispay conversion is done beforeprocessing any geographic movement orother pay-related action coinciding withthe employee’s conversion out of theDemonstration project.

When an employee transfers toanother activity, the employee’s ratingof record will be transferred. When thegaining activity uses other than a twolevel performance system, the employeemay be provided a supplementaryperformance assessment using thegaining organizations appraisal criteria.If the employee requests such anappraisal, the employee will beresponsible for providing the criteria tothe supervisor for completion. Gainingorganizations are not bound to use thissupplementary performance appraisal inany formal actions.

Service under the DemonstrationProject is creditable for within-gradeincrease purposes upon conversion backto the GS system. Incentive Payincreases (including a zero increase)under the Demonstration Project areequivalent increases for the purpose ofdetermining the commencement of awithin-grade increase waiting periodunder 5 CFR 531.405(b).

E. Project DurationThe initial implementation period for

the Project will be five years. At thattime, the entire Demonstration projectwill be reexamined to determinewhether to continue, modify orterminate the Project.

IV. Evaluation PlanChapter 47 (Title 5 U.S.C.) requires

that an evaluation system beimplemented to measure theeffectiveness of the proposed personnelmanagement interventions. Anevaluation plan for the entire laboratoryDemonstration program covering 24DOD labs was developed by a jointOPM/DOD Evaluation Committee. AComprehensive evaluation plan wassubmitted to the Office of DefenseResearch & Engineering in 1995 and

subsequently approved. (Proposed Planfor Evaluation of the Department ofDefense S&T Laboratory DemonstrationProgram, Office of Merit SystemsOversight & Effectiveness, June 1995).The overall evaluation effort will becoordinated and conducted by OPM’sPersonnel Resources and DevelopmentCenter (PRDC). The primary focus of theevaluation is to determine whether thewaivers granted result in a moreeffective personnel system than thecurrent as well as an assessment of thecosts associated with the new system.

The present personnel system with itsmany rigid rules and regulations isgenerally perceived as an impediment tomission accomplishment. TheDemonstration Project is intended toremove some of those barriers andtherefore, is expected to contribute toimproved organizational performance.While it is not possible to prove a directcausal link between intermediate andultimate outcomes (improved personnelsystem performance and improvedorganizational effectiveness), such alinkage is hypothesized and data will becollected and tracked for both types ofoutcome variables.

An intervention impact model(Appendix B) will be used to measurethe effectiveness of the variouspersonnel system changes orinterventions. Additional measures willbe developed as new interventions areintroduced or existing interventionsmodified consistent with expectedeffects. Measures may also be deletedwhen appropriate. Activity specificmeasures may also be developed toaccommodate specific needs or interestswhich are locally unique.

The evaluation model for theDemonstration Project identifieselements critical to an evaluation of theeffectiveness of the interventions. Theoverall evaluation approach will alsoinclude consideration of contactvariables that are likely to have animpact on project outcomes: e.g., HRMregionalization, downsizing, cross-service integration, and the general stateof the economy. However, the mainfocus of the evaluation will be onintermediate outcomes, i.e., the resultsof specific personnel system changeswhich are expected to improve humanresources management. The ultimateoutcomes are defined as improvedorganizational effectiveness, missionaccomplishment and customersatisfaction.

Data from a variety of differentsources will be used in the evaluation.Information from existing managementinformation systems supplemented withperceptual data will be used to assessvariables related to effectiveness.

Multiple methods provide more thanone perspective on how theDemonstration project is working.Information gathered through onemethod will be used to validateinformation gathered through another.Confidence in the findings will increaseas they are substantiated by the differentcollection methods. The following typesof data will be collected as part of theevaluation: (1) workforce data; (2)personnel office data; (3) employeeattitudes and feedback using surveys,structured interviews and focus groups;(4) local activity histories; and, (5) coremeasures of laboratory effectiveness.

V. Waivers of Law and Regulation

A. Waivers to Title 5, United StatesCode

Chapter 33, Section 3317(a):Competitive service, certification fromregister (in so far as ‘‘rule of three’’ iseliminated under the Demonstrationproject).

Chapter 33, Section 3318(a): In so faras ‘‘rule of three’’ is eliminated underthe Demonstration Project. Veteranspreference provisions remainunchanged.

Chapter 43, Section 4301: Definitions.Chapter 43, Section 4302:

Establishment of performance appraisalsystems.

Chapter 43, Section 4303: Modified tothe extent that an employee may beremoved, reduced in band level with areduction in pay, reduced in paywithout a reduction in band level orreduced in band level without areduction in pay based on unacceptableperformance. For employees who arereduced in band level without areduction in pay, Sections 4303(b) and4303(e) (2) and (3) do not apply.

Chapter 43, Section 4303(b)(1)(A)(ii):Requirement for critical elements.

Chapter 51, Section 5101–5111:Purpose, definitions, basis,classification of positions, review,authority—To the extent that whitecollar employees will be covered bybroad banding. Pay categorydetermination criteria for Federal WageSystem positions remain unchanged.

Chapter 53, Section 5303; 5302 (1),(8), and (9); Section 5303; and Section5304: Pay Comparability System. (Tothe extent necessary to allowDemonstration project employeescovered by broad banding to be treatedas General Schedule employees and toallow basic rates of pay under theDemonstration project to be treated asscheduled rates of basic pay.) (Thiswaiver does not apply to Federal WageSystem (FWS) employees. This waiverdoes not apply to SL/ST employees who


continue to be covered by theseprovisions, as appropriate.)

Section 404 of the Federal EmployeesPay Comparability Act of 1990 (P.L.101–509): Special Pay Adjustments forLaw Enforcement Officers in SelectedCities. (To the extent necessary to allowlaw enforcement officers under theDemonstration project to be treated aslaw enforcement officers under theGeneral Schedule.)

Chapter 53, Section 5305: Special PayAuthority.

Chapter 53, Section 5331–5336:General Schedule Pay Rates.

Chapter 53, Section 5362: GradeRetention.

Chapter 53, Section 5363: PayRetention. (Only to the extent necessaryto (1) replace ‘‘grade’’ with ‘‘bandlevel’’; (2) allow Demonstration Projectemployees to be treated as GeneralSchedule employees; (3) provide thatpay retention does not apply toconversions from General Schedulespecial rates to Demonstration projectpay and reallocations of Demonstrationproject pay rates within special rateextensions to locality adjusted pay ratesdue to promotions or general or localitypay increases, as long as the employee’stotal rate of pay is not reduced; and (4)provide that pay retention does notapply to reductions in basic pay duesolely to the operation of the pay settingrules for geographic movement withinthe Demonstration Project.) (This waiverdoes not apply to FWS employees whocontinue to be covered by theseprovisions, as appropriate. This waiverdoes not apply to SL/ST employeesunless they move to a GS equivalentposition under conditions that triggerentitlement to pay retention.)

Chapter 53, Section 5371: Health CarePositions. (Only to the extent necessaryto allow Demonstration projectemployees to hold positions subject tochapter 51 of title 5. (This waiver doesnot apply to FWS employees.)

Chapter 55, Section 5545(d):Hazardous Duty Differential. (Only tothe extent necessary to allowDemonstration project employeescovered by broad banding to be treatedas General Schedule employees.) (Thiswaiver does not apply to FWS and SL/ST employees.)

Cgapter 57, Sections 5753, 5754, and5755: Recruitment; Relocation Bonuses;Retention Allowances; SupervisoryDifferentials: (Only to the extentnecessary to allow employees andpositions under the Demonstrationproject covered by broad banding to betreated as employees and positionsunder the General Schedule.) (Thiswaiver does not apply to FWSemployees. This waiver does not apply

to SL/ST employees who continue to becovered by these provisions, asappropriate.)

Chapter 59, Section 5941: Allowancesbased on living costs and conditions ofenvironment; employees stationedoutside continental United States orAlaska (Only to the extent necessary toprovide that COLA’s paid to employeesunder the Demonstration project arepaid in accordance with regulationsprescribed by the President (asdelegated to OPM).

Chapter 71, Section 7106(a)(2): In sofar as provision on assigning anddirecting, documenting performancediscussions, Performance DevelopmentResources, Performance Plans, criteriaand process for incentive pay, andcommunication and documentationrequirements for incentive pay andreconsideration of incentive paydecisions; and, in so far as provision onreducing employees in grade mayprevent the parties from negotiatingprocedures for non-adverse assignmentof employees to a lower pay band.

Chapter 71, Section 7119(b)(1): In sofar as provision for either party torequest impasse proceedings would becontrary to provisions of theDemonstration project.

Chapter 75, Section 7512(3); To theextent necessary to (1) replace ‘‘grade’’with ‘‘band level’’; and, (2) excludereductions in band level notaccompanied by a reduction in paytaken under Chapter 43.

Chapter 75, Section 7512(4): AdverseAction. (Only to the extent necessary toprovide that adverse action provisionsdo not apply to—(1) conversions fromGeneral Schedule special rates toDemonstration project pay andreallocations of Demonstration projectpay rates within special rate extensionsto locality adjusted pay rates due topromotions of general or locality payincreases, as long as the employee’stotal rate of pay is not reduced; and (2)reductions in basic pay due solely to theoperations of the pay setting rules forgeographic movement within theDemonstration project.)

B. Waivers to Title 5, Code of FederalRegulations

Part 300, Sections 300.601 through.605: Time in grade restrictions areeliminated in the Demonstration project.

Part 332, Section 332.401(b): Only tothe extent that for non-professional ornon-scientific positions equivalent toGS–9 and above, preference eligibleswith a compensable service-connecteddisability of 10 percent or more whomeet basic (minimum) qualificationrequirements will be entered at the top

of the highest group certified withoutthe need for further assessment.

Part 332, Section 332.402: ‘‘Rule ofthree’’ will not be used in theDemonstration project.

Part 332, Section 332.404: Order ofselection is not limited to highest threeeligibles.

Part 351, Section 351.402(b):Competitive area to the extent that theDemonstration project will be a separatecompetitive area within the activity.

Part 351, Sections 351.403 (a) and (b):Competitive levels to the extent thatthere is no requirement for theestablishment of competitive levels inthe Demonstration project.

Part 351, Section 351.404 (a) and (b):Retention register to the extent that therequirement to establish separateretention registers by competitive levelis eliminated.

Part 351, Section 351.501(a)(3): Fororder of retention, delete ‘‘as augmentedby credit for performance’’ underSection 351.504.

Part 351, Section 351.504: Credit forperformance to the extent that theDemonstration project eliminatesservice credit for performance.

Part 351, Section 351.601 through.608: References to competitive levelsare eliminated.

Part 351, Section 351.701 (b) and (c)Assignment rights (bump and retreat):To the extent that the distinctionbetween bump and retreat is eliminatedand the placement of ‘‘white collar’’Demonstration Project employees isrestricted to no more than one broadband level below the employee’s currentlevel, except that for a preferenceeligible with a compensable serviceconnected disability of 30 percent ormore, the limit is two broad band levels(or the equivalent of five GeneralSchedule grades) below the employee’spresent level.

Part 430, Subpart B: Performanceappraisal for General Schedule,Prevailing Rate and certain otheremployees: Employees under theDemonstration project will not besubject to the requirements of thissubpart.

Part 432: Modified to the extent thatan employee may be removed, reducedin band level with a reduction in pay,reduced in pay without a reduction inband level and reduced in band levelwithout a reduction in pay based onunacceptable performance. Alsomodified to delete referenced to criticalelement. For employees who arereduced in band level without areduction in pay, Sections 432.105 and432.106(a) do not apply, except thatsuch sections continue to apply topreference eligible employees.


Part 432, Section 432.104 and .105:Proposing and Taking Action Based onUnacceptable Performance: In so far asreferences to ‘‘critical elements’’ aredeleted and adding that the employeemay be ‘‘reduced in grade or pay orremoved’’ if performance does notimprove to acceptable levels after areasonable opportunity. In addition,requirements waived to the extent thata reduction in band level is taken basedon skill utilization criteria when there isno reduction in pay.

Part 511, Section 511.201: Coverage ofand exclusions from the GeneralSchedule (To the extent that WhiteCollar positions are covered by broadbanding. Pay category determinationcriteria for Federal Wage Systempositions remain unchanged)

Part 511, Section 511.601:Classification appeals—modified to theextent that white collar positionsestablished under this demonstrationproject, although specifically excludedfrom Title 5, are covered by theclassification appeal process outlined inthis section, as amended below.

Part 511, Section 511.603(a): Right toappeal—substitute ‘‘band’’ for grade.

Part 511, Section 511.607(b): NonAppealable Issues—add to the list ofissues which are neither appealable norreviewable, ‘‘the assignment of seriesunder this demonstration project toappropriate career paths.’’

Part 530, Subpart C: Special SalaryRates.

Part 531, Subparts B, D, and E:Determining The Rate of Basic Pay,Within-Grade Increases, and QualityStep Increases. (Except that theprovisions relating to highest previousrate under Parts 531.202 and 531.203are waived only to the extent necessaryto work in a broad banding system.)

Part 531, Subpart C and F: SpecialPay Adjustments for Law EnforcementOfficers and Locality-BasedComparability Payments. (Only to theextent necessary to allow DemonstrationProject employees covered by broadbanding to be treated as GeneralSchedule employees and to allow basicrates of pay under the Demonstrationproject to be treated as scheduledannual rates of pay.) (This waiver doesnot apply to FWS employees. Thiswaiver does not apply to SL/STemployees who continue to be coveredby these provisions, as appropriate.)

Part 536: All provisions pertaining tograde retention.

Part 536, Section 536.104: PayRetention. (Only to the extent necessaryto (1) Replace ‘‘grade’’ with ‘‘bandlevel’’; (2) allow Demonstration Projectemployees to be treated as GeneralSchedule employees; (3) provide that

pay retention does not apply to—conversions from General Schedulespecial rates to Demonstration projectpay and reallocations of Demonstrationproject pay rates within special rateextensions to locality adjusted pay ratesdue to promotions or general or localitypay increases, as long as the employee’stotal rate of pay is not reduced; and (4)provide that pay retention does notapply to reductions in basic pay duesolely to the operation of the pay settingrules for geographic movement withinthe Demonstration Project.) (This waiverdoes not apply to FWS employees whocontinue to be covered by theseprovisions, as appropriate. This waiverdoes not apply to SL/ST employeesunless they move to a GS equivalentposition under conditions that triggerentitlement to pay retention.)

Part 550, Section 550.703: SeverancePay. (Modify the definition of‘‘reasonable offer’’ by replacing ‘‘twograde or pay levels’’ with ‘‘one bandlevel’’ and ‘‘grade or pay level’’ with‘‘band level.’’). (This waiver does notapply to FWS employees.)

Part 550, Section 550.902, definitionof ‘‘employee’’: Hazardous Duty Pay.(Only to the extent necessary to treatDemonstration project employeescovered by broad banding as GeneralSchedule employees.) (This waiver doesnot apply to FWS and SL/STemployees.)

Part 575, Subparts A, B, C, and D:Recruitment Bonuses, RelocationBonuses, Retention Allowances, andSupervisory Differentials. (Only to theextent necessary to allow employeesand positions under the Demonstrationproject covered by broad banding to betreated as employees and positionsunder the General Schedule.) (Thiswaiver does not apply to FWSemployees. This waiver does not applyto SL/ST employees who continue to becovered by these provisions, asappropriate.)

Part 591, Subpart B: Cost-of-LivingAllowances and Post Differential-Nonforeign Areas. (To the extentnecessary to allow Demonstrationproject employees covered by broadbanding to be treated as employeesunder the General Schedule.) (Thiswaiver does not apply to FWSemployees. This waiver does not applyto SL/ST employees who continue to becovered by these provisions, asappropriate.)

Part 752: Section 752.401(a)(3): To theextent necessary to (1) Replace ‘‘grade’’with ‘‘band level’’; and (2) excludereductions in band level notaccompanied by a reduction in paytaken under Chapter 43.

Part 752: Section 752.401(a)(4):Adverse Action. (Only to the extentnecessary to provide that adverse actionprovisions do not apply to—(1)conversions from General Schedulespecial rates to Demonstration projectpay and reallocations of Demonstrationproject pay rates within special rateextensions to locality adjusted pay ratesdue to promotions or general or localitypay increases, as long as the employee’stotal rate of pay is not reduced; and (2)reductions in basic pay due solely to theoperation of the pay setting rules forgeographic movement within theDemonstration Project.

VI. CostThe goal of this Demonstration Project

is the implementation of a system inwhich payroll costs and resourceutilization can be controlled consistentwith the organization’s larger fiscalstrategies. This is especially critical inour industrially funded (DBOF)environment. The continued economicviability of the DBOF activities dependsin large measure on controllingexpenditures and remaining costcompetitive with other organizations.This Demonstration Project proposes asystem of pay incentives and processesthat are flexible and can operate inharmony with the organization’soperational needs and the financialneeds of the larger organization. Thecosts of project implementation will beborne by the Divisions/sites.

Costs associated with thedevelopment of the DemonstrationProject include software automation,training and project evaluation. Allfunding will be provided through theWarfare Centers budget. Training costswill be approximately $192K perthousand employees. The timing of theexpenditure will be site specific anddependent upon the implementationschedules. Because automationrequirements will be minimized as aresult of system similarities to existingNavy Demonstration Projects, costs areestimated at $100K for the first twoyears of project implementation.Evaluation costs are estimated atapproximately $60K per year.

VII. Project Oversight and ManagementProject oversight and management

will be carried out by the WarfareCenters’ Executive Group, composed ofthe Commanders and TechnicalDirectors of the two Warfare Centers.They will be assisted by theDemonstration Project ManagementOffice and the Steering Committee. (SeeFigure 5)

The Steering Committee, chaired by asenior executive or senior Navy officer


appointed by the Executive Group, iscomprised of a senior member of eachDivision of the Warfare Centers, and amember from the American Federationof Government Employees, Metal TradesCouncil, International Association ofMachinists, National Association ofGovernment Employees, National

Federation of Federal Employees, andFraternal Order of Police. This groupserves as an advisory body to theExecutive Group which makes finaldecisions on the Demonstration Projectproposal and implementation. The roleof the Steering Committee is to aggregateand analyze incoming data from formal

and informal evaluations and makerecommendations. It may also includefacilitating information sharing,mediating impasses, and promotion ofpartnership roles.



Appendix A—Employee/UnionInvolvement Methodology

From the inception of the Naval SeaSystems Command Warfare Centers’Personnel Demonstration Project,employee involvement in crafting theProject Proposal was viewed as essentialto producing a plan that considered theneeds of all parties. National unionrepresentatives participated as membersof the steering Committee whichdeveloped the Personnel DemonstrationProject Proposal and will be overseeingits implementation. While the processthat produced the Project Proposal wasa collaborative one, union participationdid not necessarily constitute full andcomplete endorsement of all details ofthe Proposal.

At the Warfare Centers’ variousDivisions and sites, employees andunions are involved through a variety ofcommunications strategies. Within theDivisions, communications teamscomposed of a cross section of theworkforce have been formed for thepurpose of disseminating informationabout the project as well as a focal pointfor employee questions. Further,Divisions are establishing groups orcommittees to help guide theimplementation of the Projectthroughout the organization. This modelof broad participation is envisioned tocontinue throughout the life of theDemonstration Project.

Unions Represented

Dahlgren, VA: American Federation ofGovernment Employees

White Oak, MD: American Federation ofGovernment Employees; Metal TradesCouncil

Panama City, FL: National Federation ofFederal Employees

Crane, IN: American Federation ofGovernment Employees; FraternalOrder of Police

Louisville, KY: InternationalAssociation of Machinists &Aerospace Workers

Carderock, MD: Metal Trades Council;Federal Firefighters AssociationPattern Maker Association

Annapolis, MD: National Federation ofFederal Employees

Philadelphia, PA: Metal Trades Council;Fraternal Order of Police,International Association ofFirefighters

Ft. Lauderdale, FL: AmericanFederation of Government Employees


Port Hueneme, CA: NationalAssociation of GovernmentEmployees; Federal Union ofScientists and Engineers

Indian Head, MD: American Federationof Government Employees;

International Association ofFirefighters; International Associationof Machinists and Aerospace Workers

McAlester, OK: American Federation ofGovernment Employees

Keyport, WA: Metal Trades Council

Newport, RI: National Association ofGovernment Employees; FederalUnion of Scientists and Engineers

New London, CT: National Associationof Government Employees

Appendix B—Project Evaluation and Oversight

Intervention Impact Model—DOD Lab Demonstration Program

Intervention and expected effects Measures Data sources

1. COMPENSATIONa. Broad banding:

Increased organizational flexibility ............................ Perceived flexibility .......................................................... Attitude survey.Reduced administrative workload, paperwork reduc-

tion.Actual perceived time savings ......................................... Personnel office data, PME

results, attitude survey.Advanced in-hire rates .............................................. Starting salaries of banded v. non-banded employees ... Workforce data.Slower pay progression at entry levels—increased

pay potential.Progression of new hires over time by band, career

path—mean salaries by band, career path, demo-graphics.

Workforce data.

Increased satisfaction with advancement ................. Employee perceptions of advancement .......................... Attitude survey.Increased pay satisfaction ......................................... Pay satisfaction, internal/external equity ......................... Attitude survey.Improved recruitment ................................................ Offer/acceptance ratios ....................................................

Percent declinations ........................................................Personnel office data.

No change in high grade (GS–14) distribution ......... Number/percentage of high grade salaries pre/postbanding.

Workforce data.

b. Conversion buy-in: Employee acceptance ................... Employee perceptions of equity, fairness ....................... Attitude survey.Cost as a percent of payroll ............................................ Workforce data.

2. PERFORMANCE MANAGEMENTa. Cash awards/bonuses:

Reward/motivate performance .................................. Perceived motivational power .......................................... Attitude survey.To support fair and appropriate distribution of

awards.Amount and number of awards by career path, demo-

graphics.Workforce data.

Perceived fairness of awards .......................................... Attitude survey.Satisfaction with monetary awards .................................. Attitude survey.

b. Performance/contribution based pay progresson:Increased pay-performance link ................................ Perceived pay-performance link ......................................

Perceived fairness of ratingsAttitude survey.Attitude survey.

Improved performance feedback .............................. Satisfaction with ratings ................................................... Attitude survey.Employee trust in supervisors ......................................... Attitude surveyAdequacy of performance feedback ................................ Attitude survey.

Decreased turnover of high performers .................... Turnover by performance rating category ....................... Workforce data.Increased turnover of low performers:

Differential pay progression of high/low per-formers.

Pay progression by performance rating category, careerpath.

Workforce data.

Alignment of organizational and individual per-formance expectations and results.

Linkage of performance expectations to strategic plans/goals.

Performance expectationsPerceived involvement

Performance expectations,strategic plans.

Attitude survey/focusgroups.

Increased employee involvement in perform-ance planning and assessment.

Performance management procedures ........................... Attitude survey/focusgroups.

Personnel regulations.c. New appraisal process:

Reduced administrative burden ................................ Employee and supervisor perception of revised proce-dures.

Attitude survey.

Improved communication .......................................... Perceived fairness of process ......................................... Focus group.d. Performance development:

Better communication of performance expectations Feedback and coaching procedures used ......................Time, funds spent on training by demographics

Focus groups.Personnel office data.

Improved satisfaction and quality of workforce ......... Organizational commitment .............................................Perceived workforce quality

Training records.Attitude surveys.Attitude survey.

3. ‘‘WHITE COLLAR’’ CLASSIFICATIONa. Improved classification systems with generic stand-

ards:Reduction in amount of time and paperwork spent

on classification.Time savings ....................................................................Reduction of paperwork/number of personnel actions

(classification/promotion)

Personnel office data.

Ease of use ............................................................... Managers’ perceptions of time savings, ease of use, im-proved ability to recruit.

Attitude survey.

Improved recruitment of employee with appropriateskills.

Perceived quality of recruits ............................................GPA’s of new hires, education levels

Focus groups/interviews.Personnel office date.


Intervention and expected effects Measures Data sources

b. Classification authority delegated to managers:Increased supervisory authority/accountability ......... Perceived authority .......................................................... Attitude survey.Decreased conflict between management and per-

sonnel staff.Number of classification disputes/appeals pre/post ........ Personnel records.

Management satisfaction with service provided by per-sonnel office.

Attitude survey.

No negative impact on internal pay equity ............... Internal pay equity ........................................................... Attitude survey.c. Dual career ladder:

Increased flexibility to assign employees .................. Assignment flexibility .......................................................Sup/non-sup ratios ...........................................................

Focus groups, surveys.Workforce data.

Improved internal mobility ......................................... Perceived internal mobility ............................................... Attitude survey.Increased pay equity ................................................. Perceived pay equity ....................................................... Attitude survey.Flatter organization .................................................... Supervisory/non-supervisory ratios ................................. Workforce data.Improved quality of supervisory staff ........................ Employee perceptions of quality of supervisors .............. Attitude survey.

4. STAFFING/RECRUITMENTCompetitive examining and categorical grouping:

Improved hiring process ............................................ Management satisfaction with hiring process, time tohire, perceived quality of new hires.

Attitude survey.

Increased quality of hires .......................................... GPA’s of new hires, education levels .............................. Personnel office data (fromissue of Form 52 to refer-ral of candidates).

Increased timeliness .................................................. Time to fill positions ......................................................... Attitude survey.No negative impact on fairness of process, open-

ness to competition.Candidate/employee satisfaction.

5. RIFModified RIF:

Prevent loss of high performing employees withneeded skills.

Separated employees by demographics, performance ... Workforce data.Attitude survey/focus

groups.Contain cost and disruption ...................................... Satisfaction with RIF process .......................................... Attitude survey/focus

groups.Cost comparisons of traditional v. modified RIF .............Time to conduct RIFNumber of appeals/reinstatements

Rightsizing and document-ing systems/personnel of-fice/budget data.

6. COMBINATION OF ALL INTERVENTIONSAll:

Improved organizational effectiveness ...................... Combination of personnel measures ............................... All data sources.Improved management of R&D workforce ................ Employee/Management satisfaction ................................ Attitude survey.Improved planning ..................................................... Planning procedures ........................................................ Strategic planning docu-

ments.Improved cross functional coordination .................... Perceived effectiveness of planning procedures ............. Attitude survey.

Organizational charts.Actual/perceived coordination .......................................... Attitude survey.

Increased product success ....................................... Customer satisfaction ...................................................... Customer satisfaction sur-veys.

Cost of innovation ..................................................... Project training/development costs (staff salaries, con-tract cost).

Training hours per employee)

Demo project officerecords.

Contract documents.

7. CONTEXTa. Regionalization:

Reduced servicing ratios/cost ................................... HR servicing ratios ..........................................................average cost per employee served

Attitude survey.

No negative impact on service quality ...................... Service quality, timeliness ............................................... Workforce data.Attitude survey/focus

groups.b. GPRA: Improved organizational performance ............. Other measures to be developed .................................... As established.

[FR Doc. 97–31625 Filed 12–2–97; 8:45 am]BILLING CODE 6325–01–M

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