[Federal Register: May 2, 1997 (Volume 62, Number 85)] [Notices] [Page 24255-24278] [[Page 24255]] _______________________________________________________________________ Part IV Office of Personnel Management _______________________________________________________________________ Proposed Demonstration Project; Alternative Personnel Management System for the U.S. Department of Commerce; Notice [[Page 24256]] OFFICE OF PERSONNEL MANAGEMENT Proposed Demonstration Project; Alternative Personnel Management System for the U.S. Department of Commerce AGENCY: Office of Personnel Management. ACTION: Notice of a proposed demonstration project plan. ----------------------------------------------------------------------- SUMMARY: Title VI of the Civil Service Reform Act, now codified in 5 U.S.C. Chapter 47, authorizes the Office of Personnel Management (OPM) to conduct demonstration projects that experiment with new and different human resources management concepts to determine whether changes in human resources policy or procedures result in improved Federal human resources management. This demonstration project is designed to replicate many of the features of the National Institute of Standards and Technology (NIST) demonstration project created by Congress pursuant to the National Bureau of Standards Authorization Act for Fiscal Year 1987 (Pub. L. 99-574). This project will cover portions of five Department of Commerce organizations: (1) Office of the Secretary --Office of the Chief Financial Officer and Assistant Secretary for Administration --Office of the General Counsel (2) Technology Administration --Office of the Under Secretary --Office of Technology Policy (3) Economics and Statistics Administration --Bureau of Economic Analysis (4) National Telecommunications and Information Administration --Institute for Telecommunications Sciences (5) National Oceanic and Atmospheric Administration --Portions of the Office of Oceanic and Atmospheric Research --Portions of the National Environmental Satellite, Data, and Information Service --Portions of the National Marine Fisheries Service. DATES: To be considered, written comments must be submitted on or before July 10, 1997. Public hearings have been scheduled as follows: 1. Monday, June 9, 1997, 2:00 p.m., in Washington, DC. 2. Monday, June 16, 1997, 10:00 a.m., in Boulder, Colorado. 3. Tuesday, June 17, 1997, 10:00 a.m., in Portland, Oregon. 4. Wednesday, June 18, 1997, 10:00 a.m., in Juneau, Alaska. 5. Thursday, June 26, 1997, 10:00 a.m., in Asheville, North Carolina. At the time of the hearings, interested persons or organizations may present their written or oral comments on the proposed demonstration project. The hearings will be informal. However, anyone wishing to testify should contact the person listed under FOR FURTHER INFORMATION CONTACT, and state the hearing location, so that OPM can plan the hearings and provide sufficient time for all interested persons and organizations to be heard. Priority will be given to those on the schedule, with others speaking in any remaining available time. Each speaker's presentation will be limited to ten minutes. Written comments may be submitted to supplement oral testimony during the public comment period. ADDRESSES: Comments may be mailed to Judith B. White, U.S. Office of Personnel Management, 1900 E Street, NW., Room 7460, Washington, DC 20415; public hearings will be held at the following locations: 1. Washington--Herbert C. Hoover Building Auditorium, 14th & C Streets, NW., Washington, DC 20230; 2. Boulder--Research Laboratory Building #3, 3100 Marine Street, Room 620, Boulder, Colorado; 3. Portland--Portland Convention Center, 300 Northeast Multnomah Street, Portland, Oregon 97233; 4. Juneau--709 West 9th Street, Room 45C, Juneau, Alaska 99802; and 5. Asheville--Veech-Bailey Federal Complex, 151 Patton Avenue, Room 5000, Asheville, North Carolina 28801. FOR FURTHER INFORMATION CONTACT: (1) On the proposed demonstration project: Darlene F. Haywood at the U.S. Department of Commerce, 1400 Constitution Avenue, NW., Room 5004. Washington, DC 20230, 202-482- 3620; (2) On the proposed demonstration project and public hearings: Judith B. White, U.S. Office of Personnel Management, 1900 E Street, NW., Room 7460, Washington, DC 20415, 202-606-1526. SUPPLEMENTARY INFORMATION: The goals of this demonstration project are to improve workforce performance and promote mission accomplishment by improving the quality of new hires, motivating supervisors and employees, retaining good performers, making line managers more responsible and accountable for human resources management, and improving the effectiveness and efficiency of human resources systems. James B. King, Director. Table of Contents I. Executive Summary II. Introduction A. Purpose B. Problems with the Present System C. Changes Required/Expected Benefits D. Participating Organizations E. Participating Employees F. Labor Participation G. Project Design/Methodology III. Personnel System Changes A. Position Classification B. Staffing C. Reduction-in-Force D. Pay Administration E. Performance Evaluation and Rewards IV. Conversion or Movement from a Project Position to a General Schedule Position A. Grade-Setting Provisions B. Pay-Setting Provisions V. Budget Discipline A. Reprogramming Costs B. Base Cost Assessment C. Funding Pools for Performance Pay Increases and Bonuses D. Budget Monitoring VI. Project Evaluation VII. Project Management VIII. Training A. Manager and Supervisor Training B. Employee Training C. Support Staff Training IX. Experimentation and Revision X. Authorities and Waiver of Laws and Regulations Required I. Executive Summary This project was designed by the Department of Commerce (DoC) with participation and review by the Office of Personnel Management (OPM). The demonstration project will pursue several key objectives of the National Performance Review: to simplify the current classification system for greater flexibility in classifying work and paying employees; to establish a performance management and rewards system for improving individual and organizational performance; and to improve recruiting and examining to attract highly qualified candidates and get new hires aboard faster. The duration of the project will be 5 years, except that the project may be extended by OPM if further testing and evaluation are warranted. The proposed project will test whether the interventions of the NIST project can be successful in other environments. Other reasons for testing the NIST interventions in the Department are: (1) all of the diverse operating units in the proposed coverage are within the same Department, the U.S. Department of Commerce, which is also the parent [[Page 24257]] agency of NIST; (2) several of the operating units in the proposed coverage have served for eight years as comparison sites for the NIST project; and (3) during the implementation and operation of the NIST project, DoC and NIST staff worked closely with the U.S. Department of Agriculture's National Finance Center (NFC), which provides personnel and payroll computing and database services to all of DoC including NIST and the units proposed for the new project. II. Introduction A. Purpose The purpose of the proposed project is to strengthen the contribution of human resources management in helping to achieve the missions of specific operating units of the Department of Commerce. The project conducted by NIST successfully demonstrated that certain innovative changes could improve human resources management in the NIST environment. The proposed project will test whether these same innovations will produce similarly successful results in other environments. B. Problems With the Present System The Department of Commerce encourages, serves, and promotes the Nation's international trade, economic growth, and technological advancement. Within this framework, and in the interest of promoting the national interest through the encouragement of the competitive free enterprise system, the Department provides a wide variety of programs, some of which are included in the proposed coverage of the project. The current system has three major impediments to a manager's ability to effectively manage human resources and shape the workforce: hiring restrictions and an overly complex job classification system, coupled with poor tools for rewarding and motivating employees and a system that does not assist managers in removing poor performers, build stagnation in the workforce and waste valuable time. C. Changes Required/Expected Benefits The innovations of the project and their objectives are: 1. Classification Career paths will replace occupational groups, broad bands will replace grades, and Departmental broad-band standards will replace OPM classification standards. The classification system will be automated and classification authority will be delegated to line managers. These changes are intended to simplify and speed up the classification process, make the process more serviceable and understandable, improve the effectiveness of classification decision- making and accountability, and facilitate pay for performance. Broad bands provide larger classification targets that can be defined by shorter, simpler, and more understandable classification standards. This simpler system will be easier to automate, will require fewer resources to operate, and will facilitate delegation to line managers. By providing broader and more flexible pay ranges for setting entry pay, broad banding will provide hiring officials with an important tool for attracting high-quality candidates and thus contribute to the objective of increasing the quality of new hires. By providing more flexible pay setting based on performance, broad banding will give managers the ability to increase the pay of good performers to higher and more competitive levels, thus improving the retention of good performers. At the same time, the potential for higher pay increases for good performance, supported by the broader pay ranges of broad banding, will contribute to the objective of improving organizational and individual performance. 2. Staffing Staffing methods will include two that were implemented in the NIST Demonstration Project and which are now available to all agencies through examining authority delegated by OPM. For the sake of simplification and to parallel the NIST Demonstration Project, they are retained with the same titles under the Department of Commerce Demonstration Project: Direct Examination and Agency Based Staffing. In addition, there will be placements under Merit Assignment and various noncompetitive appointing authorities. OPM registers will not be used, but positions in occupations covered by the Luevano Consent Decree (Administrative Careers with America or successor programs) will be filled using OPM guidance. Other supplemental staffing tools will include such elements as paid advertising, flexible entry salaries, probation, local authority for recruiting and retention payments, and more flexible pay increases associated with promotion. These changes are intended to attract high-quality candidates, speed up the recruiting and examining process, increase the effectiveness of the probationary review process, and increase the retention of good performers. Agency-based staffing, supported by paid advertising, will allow hiring officials to focus on more relevant recruiting sources. Direct examination will allow managers to hire individuals with shortage skills as they find them, get them on board faster, and avoid the loss of good candidates who may grow impatient with a long hiring process, thus contributing to the objectives of increased quality of new hires and better fit between position requirements and candidate skills. The three-year probationary period will help ensure that scientists and engineers who are retained beyond probation are capable of carrying out the full cycle of research and development (R&D) work, thus contributing to the objectives of high-quality hires and a high- performing workforce. Local authority for recruiting and retention payments will provide extra incentives for hiring and retaining individuals with shortage skills, thus contributing to the objectives of increasing the quality of new hires, improving the fit between position requirements and individual qualifications, and improving the retention of good performers. 3. Pay The most important change in pay administration is the introduction of pay for performance, which will govern individual pay progression within bands. Funds currently applied to within-grade increases, quality step increases, and promotions from one grade to a higher grade when both grades are now in the same band, will be used instead to grant performance-based pay increases within bands. The amount of the basic pay and locality pay increases approved by Congress and the President, however, will continue to be applied to pay schedules and to the salaries of employees with acceptable performance. Other pay tools are supervisory pay differentials, flexible pay setting for new hires, and more flexible pay setting upon promotion. Pay for performance promotes fairness through the peer ranking process and provides a motivational tool and a retention tool. As a motivational tool, the promise of higher pay increases for good performance encourages high achievement. As a retention tool, pay for performance allows the organization to quickly move the salaries of good performers to levels that are more competitive in the labor market. Supervisory pay differentials provide a performance incentive for supervisors, addressing the objective of improved individual and organizational [[Page 24258]] performance. Supervisory pay differentials also address the objective of improving retention by raising the pay of high-performing supervisors to more competitive levels. Flexible pay setting for new hires is a recruiting tool that gives hiring officials greater flexibility to offer more competitive salaries to high-quality candidates, addressing the objective of improving the quality of new hires. The greater flexibility in setting pay upon promotion gives managers another retention tool to help retain top performers. 4. Performance Appraisal The new system replaces the current five-level rating system with a two-level rating system, using Unsatisfactory and Eligible labels. (Unsatisfactory is equivalent to Unacceptable, as used in Part 430 of Title 5, Code of Federal Regulations.) The most important feature of the proposed performance appraisal system is that it is based on the application of a weighted 100-point scoring system linked to pay for performance. As in the current system, each employee has an individual performance plan composed of several performance elements (all of which are critical elements) that are measured with the 100-point scoring system in conjunction with the application of benchmark performance standards. Based on the resulting total scores, supervisors rank employees by performance within peer groups and grant performance pay increases according to the ranking. Bonuses are granted at the discretion of the supervisor and are not tied to the rating. Highly ranked employees within a peer group receive relatively high pay increases and lower ranked employees receive relatively lower pay increases. The performance appraisal process is intended to (1) promote good performance; (2) encourage a continuing dialogue between supervisors and employees on organizational objectives, supervisory expectations, employee performance, employee needs for assistance and guidance, and employee development; and (3) provide a basis for performance-related decisions in employee development, pay, rewards, assignment, promotion, and retention. The system will more effectively communicate to employees how they are performing in relation to their peers, the rewards of good performance, and the consequences of poor performance. Performance-based pay increases give an operating unit the ability to raise the pay of good performers more rapidly, thus improving retention of good performers. The potential for higher pay increases for good performance will encourage achievement and promote the objective of improved individual and organizational performance. 5. Performance Bonuses In accordance with 5 CFR Part 451, at the end of the annual performance period, Rating Officials, with the approval of Pay Pool Managers, will have the opportunity to reward employee performance with bonuses up to $10,000. Bonuses address two objectives. First, rewarding achievement will make high achievers more likely to remain, thus improving retention of the best performers. Second, the potential for bonuses for achievement will encourage improved individual performance. 6. More Efficient Systems The Department will improve the efficiency of human resource systems by streamlining procedures, reducing paperwork, and automating processes wherever possible. 7. Line Management Authority The operating units will delegate greater authority and accountability to line managers. This delegation is intended to improve the effectiveness of human resources management by strengthening the role of line managers as the human resources managers of their units. The project will be managed by the Departmental Personnel Management Board (DPMB), chaired by the Deputy Director of NIST, now the DoC Acting Chief Financial Officer/Assistant Secretary for Administration. Each major operating unit will have its own Operational Personnel Management Board (OPMB) to oversee local operations. (See the section on Project Management.) D. Participating Organizations The Department of Commerce encourages, serves, and promotes the Nation's international trade, economic growth, and technological advancement. Within this framework, and in the interests of promoting the national interest through the encouragement of the competitive free enterprise system, the Department provides a wide variety of programs, some of which are included in the proposed coverage: OFFICE OF THE CHIEF FINANCIAL OFFICER AND ASSISTANT SECRETARY FOR ADMINISTRATION (CFO/ASA), OFFICE OF THE SECRETARY The Office of the CFO/ASA is responsible for Departmental policy and operations dealing with financial management, budget, organizational planning and development, telecommunications, information policy and planning, civil rights, human resources management, facilities and property management, transportation, security, and acquisition. This coverage provides an application of project systems to positions dealing with administrative policy setting for a large and diverse Federal executive agency, an arena never before addressed by broad banding principles. It also covers the DoC Office of Human Resources Management (OHRM), which will provide HRM expertise for the proposed project. The DoC Director of Human Resources Management will be a member of the Departmental Personnel Management Board and will provide staff resources for the project. All units of the Office of the CFO/ASA are located at the DoC headquarters building in Washington, D.C. The work of the organization is reflected in the following key occupations: Computer Specialist; Management Analyst; General Administration; Budget Analyst; Personnel Management Specialist; Accountant; Contracts Specialist; General Business Specialist; and Security Officer. OFFICE OF THE GENERAL COUNSEL (OGC), OFFICE OF THE SECRETARY The OGC is responsible for providing legal services for the Department. It prepares or examines for legal form and effect all orders, rules, and regulations issued by the Department and all legal instruments entered into by the Department. It appears on behalf of the Department before tribunals and courts. It prepares or reviews all legislative proposals. This coverage provides an application of project systems to positions dealing with legal services for a large and diverse Federal executive agency, an arena never before addressed by broad banding principles. All units of the OGC are located in DoC headquarters in the Washington metropolitan area. The key occupations are Attorney, Paralegal Specialist, and Intelligence Operations Specialist. OFFICE OF THE UNDER SECRETARY, TECHNOLOGY ADMINISTRATION (TA) The Technology Administration, which oversees NIST and the National Technical Information Service (NTIS), was established by Congress in 1988 as the premier technology agency working with U.S. industry in improving competitiveness and increasing the impact of technology on economic [[Page 24259]] growth. The TA coverage would include only the Office of the Under Secretary for Technology Administration and the Office of Technology Policy. This coverage would be an opportunity to apply broad banding principles to a policy, planning, and development environment dealing with issues vital to the future of the U.S. economy as it is affected by technology. All TA offices in the proposed coverage are located at the DoC headquarters building in Washington, D.C. The key occupations are: General Administration; Management Analyst; and General Business Specialist. BUREAU OF ECONOMIC ANALYSIS (BEA), ECONOMICS AND STATISTICS ADMINISTRATION BEA is responsible for providing a current picture of the U.S. economy through the preparation, development, and interpretation of the national income and product accounts showing the gross domestic product, business and other components of the national wealth accounts, industrial market interrelationships traced by the input-output accounts, and other accounts showing such economic indicators as personal income, foreign investment, and balance of payments. The bureau also develops surveys and other tools for analyzing and forecasting economic developments. This coverage provides a test of the NIST system in an environment that uses economists and accountants as analysts, reporters, and forecasters. BEA is located at 1441 L Street, NW., Washington, DC. The economic analysis work of the organization is reflected in the following key occupations: Economist; Accountant; Financial Administrator; Computer Specialist; Statistician; and Statistical Assistant. INSTITUTE FOR TELECOMMUNICATION SCIENCES (ITS), NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION ITS is a major component of the National Telecommunications and Information Administration (NTIA). ITS is the principal Federal telecommunications research and engineering laboratory. The Institute conducts telecommunications research in support of NTIA's responsibilities in advising the President on telecommunications and information policy; developing U.S. plans and policies in international forums; and developing policy for Federal use of the radio frequency spectrum. This application will test how well the NIST interventions work in an R&D environment quite different from the NIST environment. ITS is located in Boulder, Colorado. The ITS R&D work is carried out primarily by Electronics Engineers, with help from Mathematicians. The remaining units are subunits of the National Oceanic and Atmospheric Administration (NOAA): OFFICE OF OCEANIC AND ATMOSPHERIC RESEARCH (OAR) OAR is the primary research and development unit of NOAA. OAR provides the science and technology to support improvements in NOAA services and address current and future problems. OAR conducts research programs in coastal, marine, atmospheric, and space sciences through its own laboratories and offices, as well as through networks of university-based programs. The work consists of research, modeling, and environmental observations relating to weather, climate, and environmental resources. The laboratory component of OAR is the Environmental Research Laboratories (ERL). ERL includes research laboratories in space environment, aeronomy, environmental technology, weather forecast systems, climate monitoring and diagnostics, severe storms, air resources, oceanography, and geophysical fluid dynamics. This diversity provides a rich new R&D environment for the testing of broad banding principles. OAR and ERL headquarters are located in Silver Spring, Maryland. All ERL laboratories will be included in the project, except the Great Lakes Environmental Research Laboratory (Ann Arbor, MI), the Geophysical Fluid Dynamics Laboratory (Princeton, NJ), and the Pacific Marine Environmental Laboratory (Seattle, WA). The project laboratories are: Aeronomy Lab--Boulder, CO Atlantic Oceanographic and Meteorology Lab--Miami, FL Air Resources Lab--Silver Spring, MD Climate Diagnostic Center--Boulder, CO Climate Monitoring and Diagnostics Lab--Boulder, CO Environmental Technology Lab--Boulder, CO Forecast Systems Lab--Boulder, CO Geophysical Fluid Dynamics Lab--Princeton, NJ National Severe Storms Lab--Norman, OK Pacific Marine Environmental Lab--Seattle, WA Space Environmental Lab--Boulder, CO The dominant occupation within OAR is Meteorologist. Other key occupations are Physical Scientist, Physicist, Electronics Engineer, Computer Specialist, Electronics Technician, Physical Science Technician, and Mathematician. NATIONAL ENVIRONMENTAL SATELLITE, DATA, AND INFORMATION SERVICE (NESDIS) NESDIS operates NOAA's satellites and ground facilities; collects, processes, and distributes remotely sensed data; conducts studies, plans new systems, and carries out the engineering required to develop and implement new or modified satellite systems; carries out research and development on satellite products and services; provides ocean data management and services to researchers and other users; and acquires, stores, and disseminates worldwide data related to solid earth geophysics, solar-terrestrial physics, and marine geology and geophysics. NESDIS provides both a technical operations environment and a new R&D environment for testing the NIST interventions. NESDIS headquarters and most of its offices are located in Suitland, Maryland. Ground stations are located at Wallops Island, Virginia, and Fairbanks, Alaska. The National Climatic Data Center is located in Asheville, North Carolina. All of NESDIS will be included in the project, except for the Wallops Island ground station. The key occupations within NESDIS are Physical Scientist, Meteorologist, Computer Specialist, Oceanographer, Physical Science Technician, Meteorological Technician, Electronics Engineer, Engineering Technician, Geophysicist, and Mathematician. NATIONAL MARINE FISHERIES SERVICE (NMFS) The mission of the National Marine Fisheries Service is the stewardship of living marine resources for the benefit of the Nation through their science-based conservation and management and promotion of the health of their environment. NMFS supports domestic and international conservation and management of living marine resources. The goals of NMFS are to rebuild and maintain sustainable fisheries, to promote the recovery of protected species, and to protect and maintain the health of coastal marine habitats. NMFS brings in a variety of work in the biological sciences never before addressed by broad banding principles. In addition to the headquarters office in Silver Spring, Maryland, there are five regions, each of which consists of a Regional Office and a Fisheries Science Center. The regional offices are located in the following areas: Northeast (Gloucester, Massachusetts); Southeast [[Page 24260]] (St. Petersburg, Florida); Northwest (Seattle, Washington); Southwest (Long Beach, California); and Alaska (Juneau). All the above units of NMFS would be included in the project except for the following: in Headquarters, the Office of Enforcement and the Inspection Services Division; and in the regions, the Fisheries Science Centers located in Woods Hole, Massachusetts; Miami, Florida; Seattle, Washington; La Jolla, California; and the Alaska Center located in Seattle, Washington. NMFS is supported mainly by occupations in the biological sciences: Fish Biologist, Biologist, Microbiologist, and Biology Technician. Other important occupations are Chemist, Oceanographer, Wildlife Biologist, Computer Specialist, and General Business Specialist. E. Participating Employees The project covers all positions that would otherwise be in the General Schedule (GS) system. Wage Grade positions are not included. Table 1 shows the total number of employees in each operating unit to be covered by the project. Table 2 lists the occupational series in which current positions are classified and shows the number of employees in each series. The OPM occupational series will be retained. The series are listed under the career path in which they will be placed. (See Position Classification for definitions of the four career paths.) Table 3 shows the number of covered employees in each series, by General Schedule grade. Table 1.--Number of Covered Employees by Unit ------------------------------------------------------------------------ Operating unit Number ------------------------------------------------------------------------ CFO/ASA, OS................................................... 433 OGC, OS....................................................... 177 TA............................................................ 38 BEA, ESA...................................................... 411 ITS, NTIA..................................................... 86 NOAA.......................................................... 2093 OAR......................................................... (689) NESDIS...................................................... (705) NMFS........................................................ (699) --------- Total................................................... 3238 ------------------------------------------------------------------------ Table 2.--Occupational Series, by Career Path ------------------------------------------------------------------------ Series Title Number ------------------------------------------------------------------------ Scientific and Engineering (ZP) Career Path ------------------------------------------------------------------------ 101... Social Scientist...................................... 1 110... Economist............................................. 244 150... Geographer*........................................... 1 184... Sociologist*.......................................... 1 190... Anthropologist*....................................... 1 334... Computer Specialist................................... 316 401... Biologist............................................. 58 403... Microbiologist........................................ 3 408... Ecologist*............................................ 9 480... Fish Administrator*................................... 46 482... Fish Biologist*....................................... 165 486... Wildlife Biologist*................................... 2 499... Biological Science Student............................ 1 690... Industrial Hygienist.................................. 1 701... Veterinary Medical Officer*........................... 1 801... General Engineer...................................... 3 810... Civil Engineer........................................ 5 830... Mechanical Engineer................................... 4 850... Electrical Engineer................................... 1 854... Computer Engineer..................................... 2 855... Electronics Engineer.................................. 101 861... Aerospace Engineer.................................... 1 1301.. General Physical Scientist............................ 194 1310.. Physicist............................................. 75 1313.. Geophysicist*......................................... 9 1315.. Hydrologist*.......................................... 4 1320.. Chemist............................................... 26 1330.. Astronomer............................................ 8 1340.. Meteorologist*........................................ 235 1350.. Geologist............................................. 2 1360.. Oceanographer......................................... 77 1382.. Food Technologist*.................................... 2 1399.. Physical Science Student.............................. 3 1515.. Operations Research Analyst........................... 1 1520.. Mathematician......................................... 27 1529.. Mathematical Statistician............................. 1 1530.. Statistician.......................................... 12 1550.. Computer Scientist.................................... 6 --------- ZPTotal................................................. 1649 ------------------------------------------------------------------------ Scientific and Engineering Technician (ZT) Career Path ------------------------------------------------------------------------ 332... Computer Operator..................................... 12 404... Biology Technician.................................... 11 802... Engineering Technician................................ 24 856... Electronics Technician................................ 27 1311.. Physical Science Technician........................... 83 1341.. Meteorological Technician*............................ 40 1531.. Statistical Clerk/Assistant*.......................... 24 --------- ZTTotal................................................. 221 ------------------------------------------------------------------------ Administrative (ZA) Career Path ------------------------------------------------------------------------ 18.... Safety Specialist..................................... 2 80.... Security Officer...................................... 14 130... Foreign Affairs Specialist*........................... 10 131... International Relations Specialist*................... 7 132... Intelligence Operations Specialist*................... 8 201... Personnel Management Specialist....................... 23 212... Personnel Staffing Specialist*........................ 1 223... Salary and Wage Specialist*........................... 1 230... Employee Relations Specialist......................... 8 260... Equal Employment Specialist........................... 22 301... Miscellaneous Administration.......................... 107 340... Program Manager....................................... 2 341... Administrative Officer................................ 24 342... Support Services Specialist*.......................... 3 343... Management Analyst.................................... 117 391... Telecommunications Specialist......................... 12 501... Financial Administrator............................... 16 510... Accountant............................................ 66 560... Budget Analyst........................................ 49 610... Nurse*................................................ 1 696... Consumer Safety Specialist............................ 1 904... Law Clerk*............................................ 2 905... Attorney*............................................. 124 930... Appeals Officer*...................................... 2 950... Paralegal Specialist*................................. 7 1001.. General Arts and Information.......................... 3 1008.. Interior Designer*.................................... 2 1035.. Public Affairs Specialist............................. 2 1082.. Writer/Editor......................................... 16 1083.. Technical Writer/Editor............................... 5 1084.. Visual Information Specialist......................... 12 1101.. General Business Specialist........................... 71 1102.. Contracts Specialist.................................. 21 1140.. Trade Specialist...................................... 10 1165.. Loan Specialist*...................................... 10 1170.. Realty Specialist*.................................... 4 1176.. Building Management Specialist*....................... 2 1222.. Patent Attorney*...................................... 1 1410.. Librarian............................................. 18 1412.. Technical Information Specialist...................... 3 1601.. General Facilities Manager............................ 1 1654.. Printing Manager...................................... 11 1670.. Equipment Specialist.................................. 1 2010.. Inventory Manager..................................... 2 2030.. Distribution Facilities Specialist*................... 1 2101.. Transportation Specialist............................. 2 --------- ZATotal................................................. 827 ------------------------------------------------------------------------ Support (ZS) Career Path ------------------------------------------------------------------------ 29.... Environmental Protection Assistant*................... 2 86.... Security Clerk/Assistant*............................. 9 203... Personnel Clerk/Assistant............................. 10 303... Miscellaneous Clerk/Assistant......................... 96 305... Mail and File Clerk................................... 1 309... Correspondence Clerk/Assistant........................ 1 318... Secretary............................................. 236 322... Clerk-Typist.......................................... 3 326... Office Automation Clerk/Assistant..................... 47 335... Computer Clerk/Assistant.............................. 46 344... Management Clerk/Assistant............................ 8 361... Equal Opportunity Clerk/Assistant..................... 1 [[Page 24261]] 399... Student Trainee....................................... 24 503... Financial Clerk/Assistant............................. 2 525... Accounting Technician................................. 10 530... Cash Clerk/Teller*.................................... 1 544... Payroll Clerk/Technician.............................. 1 561... Budget Clerk/Assistant................................ 7 963... Legal Instruments Examiner*........................... 9 1087.. Editorial Clerk/Assistant............................. 1 1101.. Trade Information/Financial Assistant................. 6 1105.. Purchasing Agent...................................... 4 1106.. Procurement Clerk/Assistant........................... 1 1411.. Library Technician.................................... 9 2005.. Supply Clerk/Assistant................................ 5 2102.. Transportation Clerk/Assistant........................ 1 --------- ZSTotal................................................. 541 ------------------------------------------------------------------------ * These occupations were not tested by the NIST project. Table 3.--Covered Employees, by Series and Grade ---------------------------------------------------------------------------------------------------------------- Grade Series --------------------------------------------------------------------------- Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 ---------------------------------------------------------------------------------------------------------------- 18........................... 1 1 2 29........................... 1 1 2 80........................... 6 5 2 1 14 86........................... 7 1 1 9 101.......................... 1 1 110.......................... 1 23 33 81 42 39 25 244 130.......................... 2 3 4 1 10 131.......................... 3 3 1 7 132.......................... 1 1 2 2 1 1 8 150.......................... 1 1 184.......................... 1 1 190.......................... 1 1 201.......................... 1 6 8 5 3 23 203.......................... 1 7 2 10 212.......................... 1 1 223.......................... 1 1 230.......................... 2 3 3 8 260.......................... 1 2 3 11 3 2 22 301.......................... 1 15 1 22 19 17 15 17 107 303.......................... 2 3 4 21 16 28 11 11 96 305.......................... 1 1 309.......................... 1 1 318.......................... 1 26 87 58 35 27 2 236 322.......................... 1 2 3 326.......................... 1 4 1 10 21 8 2 47 332.......................... 2 1 5 4 12 334.......................... 1 10 24 47 93 90 45 6 316 335.......................... 1 3 8 8 10 8 4 3 1 46 340.......................... 1 1 2 341.......................... 3 3 5 8 4 1 24 342.......................... 1 1 1 3 343.......................... 8 6 9 13 39 31 11 117 344.......................... 2 2 2 2 8 361.......................... 1 1 391.......................... 2 1 2 4 2 1 12 399.......................... 22 2 24 401.......................... 3 9 11 17 11 4 3 58 403.......................... 1 1 1 3 404.......................... 1 1 9 11 408.......................... 3 1 1 3 1 9 480.......................... 1 10 22 13 46 482.......................... 4 10 29 59 45 15 3 165 486.......................... 1 1 2 499.......................... 1 1 501.......................... 1 1 1 8 5 16 503.......................... 2 2 510.......................... 2 2 8 20 16 15 3 66 525.......................... 1 4 4 1 10 530.......................... 1 1 544.......................... 1 1 560.......................... 5 9 6 15 8 6 49 561.......................... 3 3 1 7 610.......................... 1 1 690.......................... 1 1 696.......................... 1 1 701.......................... 1 1 801.......................... 1 2 3 802.......................... 2 1 1 1 2 17 24 810.......................... 3 2 5 830.......................... 1 1 1 1 4 850.......................... 1 1 854.......................... 1 1 2 855.......................... 2 4 11 17 36 17 14 101 856.......................... 1 1 4 2 9 9 1 27 904.......................... 2 2 905.......................... 4 13 16 38 53 124 930.......................... 1 1 2 950.......................... 5 1 1 7 963.......................... 4 4 1 9 1001......................... 1 1 1 3 1008......................... 2 2 1035......................... 2 2 1082......................... 2 10 3 1 16 1083......................... 2 1 1 1 5 [[Page 24262]] 1084......................... 2 6 3 1 12 1087......................... 1 1 1101......................... 1 3 7 16 22 9 11 5 3 77 1102......................... 2 3 4 9 3 21 1105......................... 4 4 1106......................... 1 1 1140......................... 3 6 1 10 1165......................... 7 1 2 10 1170......................... 2 1 1 4 1176......................... 1 1 2 1222......................... 1 1 1301......................... 1 4 9 30 56 56 38 194 1310......................... 2 10 18 22 23 75 1311......................... 3 4 1 1 9 3 21 3 24 6 8 83 1313......................... 1 1 2 2 2 1 9 1315......................... 2 1 1 4 1320......................... 1 2 1 5 8 5 4 26 1330......................... 1 5 1 1 8 1340......................... 1 1 3 15 64 79 48 24 235 1341......................... 1 12 10 3 9 3 2 40 1350......................... 1 1 2 1360......................... 1 9 15 26 15 11 77 1382......................... 1 1 2 1399......................... 3 3 1410......................... 1 2 10 2 2 1 18 1411......................... 1 2 2 4 9 1412......................... 1 2 3 1515......................... 1 1 1520......................... 1 3 8 10 5 27 1529......................... 1 1 1530......................... 1 1 1 4 4 1 12 1531......................... 1 2 5 2 10 3 1 24 1550......................... 1 4 1 6 1601......................... 1 1 1654......................... 1 2 3 1 3 1 11 1670......................... 1 1 2005......................... 2 1 2 5 2010......................... 1 1 2 2030......................... 1 1 2101......................... 2 2 2102......................... 1 1 ---------------------------------------------------------------------------------- Total.................. 25 5 14 35 101 164 210 70 247 15 343 612 651 464 285 3238 ---------------------------------------------------------------------------------------------------------------- Senior Executive Service and ST-3104 Positions The personnel systems for SES positions (see 5 U.S.C. 3131-3136 and 5 U.S.C. 5381-5385) will not change for the project. SES classification, staffing, compensation, performance appraisal, awards, and reduction in force will be based on standard SES methods. The personnel systems for ST-3104 positions (see 5 U.S.C. 3104 and 5376) will change only to the extent that ST-3104 positions are in the same performance appraisal, awards, and reduction-in-force systems as General Schedule positions. Classification, staffing, and compensation, however, will not change. Neither SES nor ST-3104 employees will be subject to the pro rata share payouts upon conversion to the demonstration system. Pay adjustments for their positions under the project will be carried out in accordance with existing Federal rules pertaining to SES and ST-3104 pay adjustments. General Schedule Positions All General Schedule (GS and GM) positions are incorporated in the new career path/pay band system. The step increases of the General Schedule will be replaced by the annual performance pay increases. Except as otherwise provided in the project plan, laws and regulations pertaining to GS employees (e.g., overtime pay and cost-of living allowance provisions) continue in force for all project employees in the same way as they do for GS employees. F. Labor Participation There is one bargaining unit within the Office of the Chief Financial Officer/Assistant Secretary for Administration (CFO/ASA), represented by the Graphics Communications International Union (GCIU). All other unions affected by the project are local unions of the American Federation of Government Employees (AFGE). All of the AFGE representation is within the National Oceanic and Atmospheric Administration (NOAA). The following table shows the number of project employees represented by each union local. Table 4.--Bargaining Unit Coverage ---------------------------------------------------------------------------------------------------------------- Employees Operating unit Location Union local covered ---------------------------------------------------------------------------------------------------------------- CFO/ASA.................................. Washington, DC.............. GCIU 1-C.................... 21 NESDIS................................... Camp Springs, MD............ AFGE 3680................... 118 Asheville, NC............... AFGE 146.................... 146 NMFS..................................... Silver Spring, MD........... AFGE 2703................... 169 MASC..................................... Boulder, CO................. AFGE 2186................... 84 OAR...................................... Triangle Park, NC........... AFGE 3347................... 39 ---------------------------------------------------------------------------------------------------------------- The project operating units provided numerous briefings on the project to employees and union representatives. Human resources representatives traveled to the various organizational locations to conduct three-hour information briefings. In addition, each bargaining unit covered was invited to send a representative to Boulder, Colorado at management's cost to [[Page 24263]] receive further information on the project and to interact with a panel of NIST managers and employees currently in the NIST project. The project operating units offered Impact and Implementation Bargaining to each of these unions on the conditions and provisions of the proposed project. All of the unions on the list have agreed to the project. G. Project Design/Methodology The project methodology is to introduce into selected DoC operating units certain innovations in human resources management, and to evaluate over time the effects of those innovations on the ability of the operating units to manage their human resources. The methodology includes the following steps: 1. Selection of Innovations: After review of the innovations tested at NIST, the Department has determined that all would have potential benefit in other DoC units and therefore should be included in the proposed project. These innovations, and the procedures associated with them, are described below under Position Classification, Staffing, Reduction-in-Force, Pay Administration, and Performance Evaluation and Rewards. 2. Selection Of Operating Units: The Department has selected several operating units (See Participating Organizations.) that will provide a useful test of whether the innovations successfully tested at NIST will produce similarly successful results in other environments. 3. Establishment of Goals and Objectives: The following section on Goals and Objectives describes the overall goals of the project and the objectives associated with each of the innovations. 4. Partnership: The Department has sought input on the proposal from each affected local union. (See Labor Participation.) The Department will also ensure that partnership in accordance with Executive Order 12871 continues to be an integral part of planning and implementation. 5. Baseline Evaluation: To provide a basis of comparison between employee opinions of the current system and their future opinions of the project system, each employee in the covered operating units will be asked to complete an opinion questionnaire on the current system prior to implementation of the project. To establish a baseline cost analysis, each operating unit will be required to analyze its personnel costs during fiscal years 1994, 1995, and 1996. 6. Training: The Department and the operating units will provide training to human resources staff, managers, and employees prior to implementation of the project and will provide additional training to managers on the pay-for-performance system prior to the end of the first performance cycle. (See Training.) 7. Implementation: To ensure a smooth implementation, the Department and the operating units will emphasize top management support; the development of detailed operating procedures prior to implementation; thorough training of managers and human resources office staff; step-by-step implementation planning; adequate backup systems, particularly in automated personnel and payroll systems; and sufficient operating resources. 8. Operation: The Department will exercise continual oversight, under the direction of the Departmental Personnel Management Board (See Project Management.) to ensure that project authorities and procedures are administered correctly. 9. Evaluation: The Department will arrange for an annual evaluation of the project under an OPM-approved evaluation plan. (See Project Evaluation.) The evaluation will be designed to determine whether the innovations are achieving the goals and objectives described in the following section and are operating within acceptable cost limits (See Budget Discipline.) III. Personnel System Changes A. POSITION CLASSIFICATION 1. Introduction Career paths will replace occupational groups, broad bands will replace grades, and Departmental broad-band standards will replace OPM classification standards. The classification system will be automated, and classification authority will be delegated to line managers. These changes are intended to simplify and speed up the classification process, make the process more serviceable and understandable, improve the effectiveness of classification decision- making and accountability, and facilitate pay for performance. Broad bands provide larger classification targets that can be defined by shorter, simpler, and more understandable classification standards. This simpler system will be easier to automate, will require fewer resources to operate, and will facilitate delegation to line managers. By providing broader and more flexible pay ranges for setting entry pay, broad banding will provide hiring officials with an important tool for attracting high-quality candidates and thus will contribute to the objectives of increasing the quality of new hires and improving workforce performance. By providing more flexible pay setting based on performance, broad banding will give managers the ability to increase the pay of good performers to higher and more competitive levels, thus improving the retention of good performers. At the same time, the promise of higher pay increases for good performance, supported by the broader pay ranges of broad banding, will contribute to the objective of improving organizational and individual performance. 2. Career Paths A career path aggregates comparable occupations that have parallel career patterns and are suitable for similar treatment in staffing, classification, pay, and other personnel functions. There are four career paths: (a) Scientific and Engineering (ZP): research, policy, staff, and managerial positions in science, engineering, computing, and mathematics. (b) Scientific and Engineering Technician (ZT): science and engineering support positions. (c) Administrative (ZA): specialist positions in such fields as finance, procurement, human resources management, public information, technical information, accounting, and management analysis. (d) Support (ZS): clerical, assistant, secretarial, police, and other support positions not fitting the definition of any of the other career paths. 3. Bands Each career path is divided into five bands, which replace GS grades. The maximum rate of a band is step 10 of the highest GS grade in the band including locality rates in the 48 contiguous States and the District of Columbia. When a special rate for one or more of the occupations in the band is higher than the applicable locality rate, the Departmental Personnel Management Board will have the option of using the maximum applicable special rate to set the maximum rate of the band. For each regular band, there is a corresponding supervisory band for employees who receive supervisory pay differentials. The supervisory band has the same minimum rate as the nonsupervisory band, but has a maximum rate 6 percent higher than the maximum rate of the nonsupervisory band. Positions in the [[Page 24264]] supervisory band include positions that involve formal supervisory duties that occupy at least 25 percent of the incumbent's time and other positions approved by the DPMB on a case-by-case basis. The following chart shows the four project career paths, the bands in each career path, and the relationship between bands and General Schedule grades. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN02MY97.048 BILLING CODE 6325-01-C 4. Occupational Series The General Schedule occupational series will be retained. New occupational series may be added or deleted in response to programmatic needs. New or revised series may also be established. 5. Classification Standards Each classification standard will describe each band in two factors: (1) general duties and responsibilities and (2) knowledge, skills, and abilities. These two factors complement each other at each band in a career path and may not be separated in classifying a position. OPM classification standards will not be used. 6. Position Descriptions Line managers will follow an automated menu-driven process to classify positions and produce position descriptions. 7. Delegation of Classification Authority The Departmental Personnel Management Board (DPMB) will oversee the delegation of classification authority to line managers. Under authority delegated by the DPMB, the Department's human resources staff will monitor and review classification decisions made by managers to ensure consistent and uniform application of classification policies and guidelines. Under this authority, the Department's Director for Human Resources Management will establish a plan to review the accuracy of classification decisions made by line managers and make periodic reports to the DPMB. A variety of approaches will be used to conduct classification reviews, such as regularly scheduled Departmental oversight reviews as well as ad hoc reviews conducted to address specific classification issues identified through data analysis, random sampling of classification actions, project evaluation reports, etc. The Governmentwide system of approval of SES and ST-3104 positions will be maintained. 8. Classification Appeals An employee covered by the DoC Demonstration Project may appeal the career path, occupational series, or pay band of his or her position at any time. An employee wishing to formally appeal must first appeal to the Operating Unit (OU). If the employee is dissatisfied with the OU decision, he or she may appeal further to the Department level. The decision of the Department will be final. Details pertaining to the classification appeals process are found in the Project Operating Procedures. B. Staffing 1. Introduction The project operating units will use a variety of staffing methods to fill positions, including Direct Examination, Agency-Based Staffing, Merit Assignment, and various noncompetitive placements. Recruiting [[Page 24265]] and examining will be carried out directly by the operating units except for positions covered by the Luevano Consent Decree. OPM registers will not be used. These methods will be supplemented by other staffing tools, such as paid advertising, flexible entry salaries, probation, recruitment and retention payments, and more flexible pay increases associated with promotion. The Department will make necessary adjustments in response to future revisions in staffing statutes. These changes are intended to attract higher-quality candidates, speed up the recruiting and examining process, increase the effectiveness of the probationary review process, and improve the retention of good performers. Agency-based staffing, supported by paid advertising, will allow hiring officials to focus on more relevant recruiting sources. Direct examination will allow managers to hire individuals with shortage skills as they find them, get them on board faster, and avoid the loss of good candidates who may grow impatient with a long hiring process, thus contributing to the objectives of increasing the quality of new hires and improving the fit between position requirements and candidate skills. The three-year probationary period will help ensure that scientists and engineers who are retained beyond probation are capable of carrying out a full cycle of R&D work, thus contributing to the objectives of higher-quality hires and a higher-performing workforce. Local authority for recruiting and retention payments will provide extra incentives for hiring and retaining individuals with shortage skills, thus contributing to the objectives of increasing the quality of new hires, improving the fit between position requirements and individual qualifications, and improving the retention of good performers. 2. Direct Examination The project will apply two direct examination authorities: Direct Examination Critical Shortage Occupations and Direct Examination Critical Shortage Highly Qualified Candidates. These vacancies will normally be filled through direct recruiting by selecting officials, supplemented by a required search of the operating unit Applicant Supply File. Direct examination procedures are not exempt from the application of veteran preference rules. (a) Direct Examination: Critical Shortage Occupations. Direct examination procedures will be used for categories of occupations which require skills that are in short supply. All occupations for which there is a special rate under the General Schedule pay system constitute a shortage category, and all occupations at Band III and above in the ZP Career Path constitute a shortage category. Any position in these shortage categories may be filled through direct examination procedures. (b) Direct Examination: Critical Shortage Highly Qualified Candidates. Direct examination procedures will be used for additional positions for which there is a shortage of highly qualified candidates. Candidates for positions at Band I or II of the ZP Career Path who have a bachelor's degree with at least a 2.9 GPA (on a 4.0 scale) in a job- related major or a master's degree in a job-related field constitute a shortage category; candidates for positions at Band I of the ZT Career Path who have at least a 2.9 GPA in a job-related field during a minimum of at least 2 years in an accredited college, junior college, or technical institute constitute a shortage category; and candidates for positions at Band II of the ZT Career Path who have at least a 2.9 GPA in a job-related field in 4 years of college study constitute a shortage category. 3. Agency-Based Staffing Agency-based staffing procedures will be used to fill vacancies not covered by direct examination or the project operating unit Merit Assignment Plan (MAP). Vacancies filled by agency-based procedures will be advertised at a minimum through the Governmentwide automated employment information system operated by (OPM). 4. Merit Assignment Plan (MAP) MAP procedures will be used to fill positions restricted to current or former Federal employees with competitive status. These plans will be amended to include any demonstration project flexibilities. 5. Applicant Supply Files The operating units will advertise the availability of job opportunities in direct-examination occupations by continuous posting of an Applicant Supply Bulletin on the Governmentwide automated employment information system operated by OPM. The operating units will accept applications for this file on an open-continuous basis for all direct-hire authorities. Selecting officials will be able to recruit directly for applicants, but any applicants they find must compete with applicants who apply through the Applicant Supply Bulletin and other applicants whose applications are stored in the operating unit Applicant Supply File. 6. Referral Procedures for Direct Examination and Agency-Based Staffing Authorities Either direct referral or rating and ranking will be used to refer applicants for vacancies under direct examination and agency-based staffing authorities. (a) Direct referral. A qualified candidate may be referred directly without rating and ranking: (1) When there are no more than three qualified candidates and no preference eligibles; or (2) If the candidate is a preference eligible with a compensable Service-connected disability of 10 percent or more. (These preference eligibles are given absolute preference except when the position is at Band III or above in the Scientific and Engineering Career Path.) Selecting officials may choose any of these preference eligibles when more than one are referred. (b) Rating and ranking. Rating and ranking (including veteran preference and ``rule-of- three'' procedures) will be used when the list of qualified candidates contains: (1) More than three candidates; or (2) Two or more candidates including at least one preference eligible (except when direct referral of a 10-point veteran is made under 1b above). 7. Priority Placement All Department of Commerce and OPM priority placement programs will be followed. 8. Paid Advertising Paid advertising may be used as one of the first steps in recruitment without having to first try unpaid methods. 9. Private Sector Temporaries Private sector temporary help services may be used as appropriate. 10. Probationary Period Probation under the project will follow current law and regulations, except when an employee in the Scientific and Engineering (ZP) Career Path is required to serve a probationary period. The ZP probationary period will be three years, except that a supervisor may end the probationary period of a subordinate ZP employee anytime after one year. Near the end of the first year of a ZP employee's probationary period, the supervisor will be required to decide whether to (1) change the employee from probationary status to non-probationary status; (2) remove the employee; or (3) continue the employee on probation. If the employee is [[Page 24266]] continued on probation, the supervisor must select from the same options near the end of the second year of probation. If probation is continued into the third year, the supervisor must make a final decision on whether to retain or remove the employee near the end of the third and final year of probation. The purpose of the three-year probationary period for scientists and engineers only is to allow a hiring official to view the full cycle of a research assignment before making a final decision on retaining the employee. The one-year probationary period is insufficient to cover the full cycle of research and development from assignment of a research project to publication of results. For the other three career paths, the one-year probationary period is adequate. 11. Qualification Standards The qualifications required for placement within a band and within a career path will be based on the OPM Qualification Standards for General Schedule Positions, except that testing requirements will not be used and the Superior Academic Criterion will be defined as a 2.9 GPA (on a 4.0 scale). The minimum qualifications for the occupation and for the GS grade corresponding to the lowest grade in the band will apply. The DPMB may authorize new or modified qualification standards based on current practices in the scientific, engineering, and computer science fields and to reflect modern curricula in recognized degree programs. 12. Recruitment and Retention Payments The project operating units may grant recruiting and retention payments in appropriate circumstances, not to exceed $10,000 or 25 percent of basic pay, whichever is greater. Decisions on allowances will be based on market factors such as salary comparability and salary offer issues, relocation and dislocation issues, programmatic urgency, emerging technologies, turnover rates, special qualifications, and shortage categories or scarcity of positions unique to the operating unit. All scientific, engineering, and other hard-to-fill positions will be eligible. Recruitment and retention payments will not be considered part of basic pay. 13. Travel Expenses Travel and transportation expenses, advancement of funds, per diem expenses incident to travel, and/or relocation expenses may be provided to new hires in the same manner as is authorized in sections 5723, 5724, 5724a, 5724b, and 5724c of title 5, U.S. Code. Recipients must sign service agreements indicating commitment to at least 12 months of continued service. 14. Promotion A promotion is a change of an employee to (1) a higher band in the same career path, or (2) a band in another career path in combination with an increase in pay. To be eligible for promotion, an employee must have a current performance rating of Eligible. The time-in-band requirement for promotion eligibility is 52 weeks, with two exceptions: (1) an employee may be promoted from Band I to Band II in the Support Career Path without time restriction; and (2) an employee may be promoted from Band II to Band III in the Support Career Path without time restriction if the employee was not promoted from a Band I to a Band II position during the previous 52 weeks. (For pay provisions related to promotion, see Pay Administration.) C. Reduction-in-Force 1. Introduction The project operating units will follow reduction-in-force procedures contained in law and regulation, except that career path will be added to the definition of competitive areas, retention credit for performance will be based on performance ranking, and grades will be converted to bands for the purpose of interpreting reduction-in- force regulations. The objective of the link between career paths and competitive areas is to improve the fit between the skills of displaced employees and the positions they are offered through reduction-in-force procedures. The objective of the link between performance and retention standing is to continue to make performance a factor in retention during reduction-in-force. 2. Competitive Areas Each of the four career paths in each project operating unit local commuting area will be a separate competitive area--separate from the other career paths and separate from the competitive areas of other operating unit employees. 3. Link Between Performance and Retention An employee with an overall performance score in the top 10 percent of scores within a peer group (See Performance Evaluation and Rewards below.) will be credited with 10 additional years of service for retention purposes. The total credit will be based on the employee's three most recent annual performance ratings of record received during the 4-year period prior to an established cutoff date, for a potential total credit of 30 years. Career status and veteran preference will continue to have the same effect on retention standing as they now have under current regulations. No performance-related retention credit will convert to this system from any other performance appraisal system. 4. Link Between Bands and Grades OPM reduction-in-force regulations on assignment rights (5 CFR 351.701) will be applied to the project by substituting ``one band'' for ``three grades'' and ``two bands'' for ``five grades.'' D. Pay Administration 1. Introduction The most important change in pay administration is the introduction of pay for performance, which will govern individual pay progression within bands. The amount of the basic pay and locality pay increases approved by Congress and the President will continue to be applied to pay schedules and employee salaries, with the variations described below. Other pay tools are supervisory pay differentials, flexible pay setting for new hires, and more flexible pay setting upon promotion. Pay for performance promotes fairness and provides a motivational tool and a retention tool. It is fair that higher achievement should produce higher rewards. In particular, the quality work that arises from a commitment to the goals and objectives of the organization should be rewarded by higher pay increases. As a motivational tool, the promise of higher pay increases for good performance encourages high achievement. As a retention tool, pay for performance allows the organization to more quickly move the salaries of good performers to levels that are more competitive in the labor market. Supervisory pay differentials provide an extra performance incentive for supervisors, addressing the objective of improved individual and organizational performance. Supervisory pay differentials also address the objective of improving retention by raising the pay of high-performing supervisors to more competitive levels. Flexible pay setting for new hires is a recruiting tool that gives hiring officials greater flexibility to offer more competitive salaries to high-quality candidates, addressing the objective of improving the quality of new hires. The greater flexibility in setting pay upon promotion gives managers another [[Page 24267]] retention tool to help retain top performers. 2. Pay for Performance Pay for performance has three components: (a) the annual adjustment to basic pay, which includes the annual general increase and the locality pay increase; (b) annual performance pay increases; and (c) bonuses. The first component, the annual adjustment to basic pay, is set according to the subsections referring to general and locality increases. The second component, performance pay increases, is set according to the procedures under Performance Evaluation and Rewards. The third component, bonuses, is managed in accordance with the subsection on Performance Bonuses under Performance Evaluation and Rewards. 3. Placement in a Lower Band An employee whose performance rating is Unsatisfactory does not receive the annual adjustment to basic pay. Because the minimum pay rate for each band is increased each year by the amount of the annual adjustment to basic pay, it is possible that the new minimum rate of a band will exceed the basic pay of an employee in that band who does not receive the annual adjustment to basic pay due to unsatisfactory performance. When this happens, the employee is placed in the next lower band. This placement shall not be considered an adverse action under 5 U.S.C. 7512, nor shall grade (i.e., band) retention under 5 U.S.C. 5362 be applicable. 4. Supervisory Pay Differentials Appropriate supervisory and managerial pay differentials will be provided. Employees who spend at least 25 percent of their time performing supervisory duties will receive supervisory differentials. (Other employees may be approved by the DPMB on a case-by-case basis to receive the supervisory differential.) Supervisory differentials will be considered a part of basic pay. Upon conversion to the project, all eligible supervisory positions will be placed in the supervisory bands. The incumbents of these positions will be converted at their basic pay (including special rates or locality pay) at the time of conversion, except for Scientific and Engineering (ZP) supervisors, who will begin receiving the added differential upon conversion. New hires into supervisory positions after the date of conversion will have their pay set at the supervisor's discretion within the pay range of the applicable supervisory band. There will be two types of differentials. The first type will apply to supervisors in the ZP Career Path only. The amount of this type of differential will be fixed at 3 percent or 6 percent, for first and second-level (and higher) supervisors, respectively. The second type of supervisory differential will apply to all bands in all career paths where there are supervisors. Supervisors receiving this type of differential will be eligible for higher pay band ceilings which they may reach through pay for performance. The higher pay band ceilings are set in accordance with the Project Operating Procedures. The granting of a differential is not considered a promotion or a competitive action. The differential is canceled when an employee's supervisory responsibilities are discontinued. The cancellation of a supervisory differential does not constitute an adverse action, and there is no right of appeal under 5 U.S.C. Chapter 75. Pay retention under 5 U.S.C. 5363 is not applicable. Before entering a supervisory position, an employee will be required to sign a statement certifying that the employee understands that the differential will be canceled when the employee ceases to be a supervisor. 5. Pay and Compensation Ceilings The maximum rate for a band (excluding special bands established to allow for the supervisory pay differential) will be equal to the maximum rate--GS rate, locality rate, or special rate, as applicable-- payable to GS employees for the grades corresponding to the band. An employee's basic pay may not exceed the maximum rate of the employee's band (including a supervisory band), except for employees receiving retained rates of pay. An employee's rate of basic pay payable under any pay band may not exceed the rate of basic pay payable for Level IV of the Executive Schedule. An employee's aggregate monetary compensation for a calendar year may not exceed the basic rate of pay for Level I of the Executive Schedule, as required by 5 U.S.C. 5307 and (OPM) regulations in Subpart B of 5 CFR 530. 6. Locality Pay Locality pay is implemented as basic pay for all purposes except as otherwise provided in this plan. The locality adjustment will be applied to the minimum and maximum rates of each band. For bands affected by special rates, the maximum rate will be the higher of the special rate and the locality rate. A locality adjustment may be applied to an eligible employee's basic pay only to the extent that it does not cause the employee's basic pay to exceed the maximum rate of the band. 7. Special Salary Rates When appropriate, special salary rates will be used to determine employees' maximum pay rates in lieu of the normal pay band ceilings. The provisions of current regulations (5 CFR 530.303) will be followed to determine the appropriateness of special salary rates. As provided for under these regulations, special salary rates will be restricted to occupations and/or geographic locations for which there is an existing or likely difficulty in the recruitment or retention of well-qualified personnel. 8. Effect of General and Locality Pay Increases on Bands The minimum and maximum rates of each band will be increased at the time of a general pay increase under 5 U.S.C. 5303 and/or a locality pay increase under 5 U.S.C. 5304 or 5304a so that they equal the new locality-adjusted minimum and maximum rates of the grades corresponding to the band. The maximum rates of bands set according to special rates, however, may exceed this amount to the extent necessary to equal the 10th step of the appropriate special rate scale if that rate is higher. 9. Effect of General and Locality Pay Increases on Individual Pay Only employees with a current annual performance rating of record of Eligible may receive an increase in their basic pay at the time of band adjustments. This increase in basic pay will reflect any applicable general and/or locality pay increase for General Schedule employees. The increase in basic pay for eligible employees whose basic pay is at the ceiling of their band will equal the increase in the ceiling. The basic pay increase for eligible employees whose basic pay is below the ceiling of their band will be calculated by applying two factors to the employee's rate of pay. One factor is the general increase factor representing the increase in General Schedule rates under 5 U.S.C. 5303 (e.g., 1.02 if the general increase is 2 percent). The second factor is the locality pay increase factor, which is derived by dividing the newly applicable locality pay percentage factor by the formerly applicable locality pay percentage factor. (For example, if the locality payment percentage for an area increased from 4.23 percent to 5.48 percent, the locality pay increase factor [[Page 24268]] would be 1.0548 divided by 1.0423, or approximately 1.012.) Thus, the new rate of basic pay would be calculated using the following formula: [GRAPHIC] [TIFF OMITTED] TN02MY97.022 However, a basic pay increase will be applied only to the extent that it does not cause an employee's basic pay to exceed the ceiling of the applicable band. 10. Basic Pay Employees covered by the project will not have separate basic pay rates and locality pay rates, as do General Schedule employees. Project basic pay rates will be basic pay for all purposes, except as specifically provided in the demonstration project plan. 11. Pay Setting Upon Promotion The new basic pay rate upon promotion may be set at any level in the new band (If the move is to a different career path, any band in the new path would be considered a ``new band.''), except that the minimum pay increase upon promotion is 6 percent. The maximum percentages allowed upon promotion are described in the Project Operating Procedures. 12. Pay Setting for New Hires The setting of initial salaries within bands for new appointees will be flexible, particularly for hard-to-fill positions in the Scientific and Engineering Career Path. Supervisory guidance on setting pay for new hires is included in the Project Operating Procedures. 13. Conversion of Employees From the General Schedule to the Demonstration System For employees being converted from the GS pay system to the demonstration project, GS grades will translate directly to the project's career path and band structure. Employees will be converted at their current highest rate under the GS pay system (i.e., highest of locality rate or special rate or similar rate) at the time of conversion, except for supervisors in the Scientific and Engineering Career Path who qualify for a supervisory/managerial pay differential upon conversion. No one's salary will be reduced as a result of the conversion. When conversion of an employee into the project is accompanied by a geographic move, the employee's GS pay entitlements (including any locality rate or special rate) in the new area will be determined before converting the employee's pay to the demonstration project pay system. At the time of conversion, each converted employee will be given a lump-sum cash payment for the time credited to the employee toward what would have been the employee's next within-grade increase. The payment for a General Schedule employee will be computed by (1) calculating the ratio of (a) the number of days the employee will have spent in the employee's current rate through the day prior to the day of conversion, to (b) the total number of days in the employee's current waiting period for a regular within-grade increase (364, 728, or 1092 days), and (2) multiplying that ratio by the dollar value of the employee's next within-grade increase, as in effect at the time of conversion. 14. Movement of GS Employees From Other Organizations to the Demonstration System GS employees can move into the project from other organizations through transfer, reassignment, promotion, or new appointment. When the movement is by lateral transfer or lateral reassignment, the employee's GS grade will translate directly to the project's career path/band structure and the employee's rate of basic pay under the demonstration project will equal his or her current highest rate under the GS pay system (i.e., highest of locality rate or special rate or similar rate), except for the addition of a supervisory differential if the position is a supervisory position in the Scientific and Engineering Career Path. When a lateral transfer or lateral reassignment is accompanied by a geographic move, the employee's GS pay entitlements (including any locality rate or special rate) in the new area will be determined before converting the employee's pay to the demonstration project pay system. When the movement is by new appointment, promotion, reassignment with pay adjustment (through merit assignment plan competition), or transfer to ``higher grade'' (i.e., to a band higher than the band that corresponds to the employee's current GS grade, the new pay rate is set according to project pay setting flexibilities for new hires and promotions. 15. Pay Setting Upon Movement of an Employee to a Different Pay Area Employees who move (voluntarily or involuntarily) from one geographic area to another within their operating unit will have their pay adjusted to account for any change in the band maximum rates between the two areas. This adjustment ensures that the employee's relative position in the band (measured as a percentage of the band maximum rate) will be maintained upon movement. The pay rate in the new area will be derived using the following formula: [GRAPHIC] [TIFF OMITTED] TN02MY97.022 The new pay rate is calculated before any other simultaneous pay action (e.g., general pay adjustment or promotion effective on the same date). Any reduction in pay solely attributable to a movement from one pay area to a lower-paying area shall not be considered a reduction in basic pay under the adverse action provisions of 5 U.S.C. 7512(4) or under the pay retention provisions of 5 U.S.C. 5363. (The employee retains the right to grieve or file a complaint regarding a geographic reassignment if there is an allegation of a violation of nondiscrimination statutes or a prohibited personnel practice.) 16. Severance Pay (OPM) severance pay regulations (5 CFR 550.703) will be applied to the project by substituting ``one band'' for ``two grades'' and ``two grades or pay levels.'' [[Page 24269]] 17. Grade and Pay Retention Grade and pay retention will follow current law and regulations, except as allowed by specific waiver (e.g., ``career path and band'' for ``grade''). Specific waivers are listed in the section entitled Authorities and Waiver of Laws and Regulations Required. E. Performance Evaluation and Rewards 1. Introduction The most important feature of the performance evaluation system is that it is based on the application of a weighted 100-point scoring system in support of pay for performance. As in the current system, each employee has an individual performance plan composed of several performance elements. Through application of benchmark performance standards and a 100-point scoring system, supervisors rank employees by performance within peer groups and grant performance pay increases according to the ranking. Highly ranked employees within a peer group receive relatively high pay increases and lower ranked employees receive relatively lower pay increases. The performance appraisal process is intended to (1) promote good performance; (2) encourage a continuing dialogue between supervisors and employees on organizational objectives, supervisory expectations, employee performance, employee needs for assistance and guidance, and employee development; and (3) provide a basis for performance-related decisions in employee development, pay, rewards, assignment, promotion, and retention. The system will more effectively communicate to employees how they are performing in relation to their peers, the consequences of poor performance, and the rewards for good performance. Performance-based pay increases give an operating unit the ability to raise the pay of good performers more rapidly, thus improving retention of good performers. The promise of higher pay increases for good performance will encourage achievement and promote the objective of improved individual and organizational performance. 2. Coverage All employees covered by the project will be covered by the project performance evaluation and rewards system, except that the Departmental Personnel Management Board may remove from the system any position not filled by career or career conditional appointment. ST-3104 employees will have their performance evaluated under the structure of the performance evaluation system and may receive bonuses, but do not receive performance pay increases. Members of the Senior Executive Service will remain under the non-demonstration DoC SES performance appraisal, pay, and bonus system. Upon conversion to the demonstration project, any administrative action already initiated under a previous appraisal program will continue to be processed in accordance with the requirements and procedures of the program in effect when the action was initiated. 3. Performance Cycle The performance year begins October 1 and ends September 30. The stages of the performance cycle are performance planning, performance review, performance appraisal, and performance-related decisions. 4. Performance Plans Performance plans will be developed each year by supervisors with input from employees. Critical performance elements will be established for each position. (All elements are critical.) The supervisor weights each element so that the total weight of all elements is 100 points. Benchmark performance standards define the range of performance. A supervisor may add supplemental standards to a performance plan to further elaborate on the benchmark performance standards. 5. Mid-Year Review A required mid-year review addresses mid-year accomplishments, performance successes and deficiencies, and any need for performance plan modifications. Additional reviews may be held as needed. 6. Performance Appraisal Performance appraisals bring supervisors and employees together to discuss performance and accomplishments during the performance year. The appraisals lead to decisions by supervisors and Pay Pool Managers on performance scores, performance ratings, performance pay increases, and bonuses. Performance appraisal is scheduled for the final weeks of the performance year. However, at any time of the year, a supervisor may determine that an employee's performance is not satisfactory on one or more critical elements and place the employee on a Performance Improvement Plan. 7. Performance Ratings The demonstration project performance ratings are Eligible (for performance pay increase, bonus, and annual adjustment to basic pay) and Unsatisfactory. The rating Eligible covers the same performance range as the former ratings of Marginal, Fully Successful, Commendable, and Outstanding. Unsatisfactory covers the same performance range as the former ratings of Unsatisfactory and Unacceptable. An employee whose performance is unsatisfactory is placed on a performance improvement plan and given an opportunity to improve before a final rating is assigned. 8. Performance Scores Each element is evaluated individually against the benchmark performance standards and any supplemental standards. If a single element in an employee's plan is rated Unsatisfactory, the overall rating is Unsatisfactory and there is no performance score. If all elements meet at least the minimally acceptable benchmark, the overall rating is Eligible. Rating Officials score the performance of employees rated Eligible on a 100-point scale, which corresponds to the 100-point element weight scale. An individual element score may be as high as the weight of that element. The total performance score is the sum of the element scores. A perfect score on each element would produce a total score of 100 points. 9. Performance Ranking Employees are ranked, by performance score, within a peer group. A peer group may involve no more than one career path, but may be otherwise organized by any combination of organization, occupation, band, or appointment type. Rating Officials rank their own employees, then Pay Pool Managers interleave the rankings of subordinate Rating Officials to produce peer group rankings at the pay pool level. A Pay Pool Manager is a line manager who manages his or her organization's pay increase and bonus funds and has final decision authority over the performance scores, performance pay increases, and bonuses of subordinate employees. 10. Performance Pay Decisions The Performance Pay Table divides each band into three segments or intervals. Each interval is linked to a range of potential percentage pay increases beginning at zero and progressing to a maximum percentage pay increase. The maximum performance pay increase an employee may receive, therefore, depends on the interval into which the employee's salary falls. The Pay Pool Manager makes a performance pay decision for [[Page 24270]] each employee in a peer group, based on the Pay Pool Manager's ranking and the pay increase ranges in the Performance Pay Table. Within a peer group, an employee may not receive a higher proportion-of-range than a higher-ranking employee or a lower proportion-of-range than a lower- ranking employee. Proportion-of-range is the percentage of the maximum pay increase allowed for a particular interval of a pay band, i.e., a percent of a percent. For example, if the pay increase range for the pay interval is 0-12 percent, and the employee receives a 9 percent increase, that employee receives a proportion-of-range that equals 75 percent of the maximum 12 percent. 11. Performance Bonuses Bonuses are the only cash awards directly linked to the project performance appraisal system, and are awarded at the end of the performance year in conjunction with decisions on performance pay increases. A Pay Pool Manager may award a bonus to any employee with an Eligible rating. The OPMBs will determine the bonus authority to be delegated to their pay pool managers. Bonuses address two objectives. First, the ability to reward the accomplishments of good performers will make them more likely to remain, thus improving the retention of high achievers. Second, the promise of bonuses for achievement will encourage improved individual performance. 12. Action Based on Unsatisfactory Performance If, after an opportunity to improve, an employee's performance is still not satisfactory, the operating unit will give a rating of Unsatisfactory and must take action to reassign or remove the employee, or place the employee in a lower band, in accordance with performance action provisions in law and regulation. IV. Conversion or Movement From a Project Position to a General Schedule Position If a DoC Demonstration Project employee moves to a General Schedule position, the following procedures will be used to convert the employee's project pay band to an equivalent GS grade and the employee's project rate of pay to equivalent GS rates of pay. The converted GS grade and rates of pay must be determined before movement out of the project and any accompanying geographic movement, promotion, or other simultaneous action. For lateral reassignments and lateral transfers, the converted GS grade and rates of pay will become the employee's actual GS grade and rates of pay, unless immediately affected by a simultaneous geographic movement or another pay action. For non-lateral transfers, promotions, and other actions, the converted GS grade and rates of pay will be deemed to be the employee's grade and rates of pay at the time of movement out of the project and will be used in applying applicable pay setting rules (e.g., promotion rules.) A. Grade-Setting Provisions An employee in a band corresponding to a single GS grade is converted to that grade. An employee in a band corresponding to two or more grades is converted to one of those grades according to the following rules: 1. The employee's project basic rate of pay is compared with step 4 rates in the highest applicable GS rate range (including a rate range in the GS base schedule, a rate range in the applicable locality rate schedule, or a rate range in a special rate schedule for the employee's occupation). If the series is a two-grade interval series, only odd- numbered grades are considered below GS-11. 2. If the employee's pay rate equals or exceeds the applicable step 4 rate of the highest GS grade in the band, the employee is converted to that grade. 3. If the employee's pay rate is lower than the applicable step 4 rate of the highest grade, the pay rate is compared with the step 4 rate of the second highest grade in the employee's band. If the employee's pay rate equals or exceeds step 4 of the second highest grade, the employee is converted to that grade. 4. This process is repeated for each successively lower grade in the band until a grade is found in which the employee's rate of basic pay equals or exceeds the applicable step 4 rate of the grade. The employee is then converted at that grade. If the employee's rate of pay is below the step 4 rate of the lowest grade in the band, the employee is converted to the lowest grade. 5. Exceptions: (1) If the employee's pay rate exceeds the maximum rate of the grade assigned under the above-described ``step 4'' rule but fits in the rate range for the next higher applicable grade in the band (i.e., between step 1 and step 4), then the employee shall be converted to that next higher applicable grade; (2) An employee will not be converted to a lower grade than the grade held by the employee immediately preceding a conversion, lateral reassignment, or lateral transfer in the project unless since that time the employee has undergone a reduction in band; (3) In Band I of the ZP and ZA Career Paths, students without a bachelor's degree or comparable experience are converted no higher than GS-4. B. Pay-Setting Provisions An employee's pay within the converted GS grade is set by converting the project rate to GS pay rates in accordance with the following rules: 1. The pay conversion is done before any geographic movement or other pay-related action that coincides with the employee's movement out of the demonstration project. 2. An employee's project rate is converted to a rate on the highest applicable rate range for the converted GS grade (including a rate range in the GS base schedule, a rate range in the applicable locality rate schedule, or a rate range in a special rate schedule for the employee's occupation). 3. If the highest applicable rate range is a locality pay rate range, the project rate is converted to a GS locality rate of pay. If this rate falls between two steps in the locality-adjusted schedule, the rate must be set at the higher step. The converted GS rate of basic pay is the GS base rate corresponding to the converted GS locality rate (i.e., same step position). (If this employee is also covered by a special rate schedule as a GS employee, the converted special rate will be determined based on the GS step position. This underlying special rate will be basic pay for certain purposes for which the employee's higher locality rate is not basic pay.) 4. If the highest applicable rate range is a special rate range, the project rate is converted to a special rate. If this rate falls between two steps in the special rate schedule, the rate must be set at the higher step. The converted GS rate of basic pay will be the GS rate corresponding to the converted special rate (i.e., same step position). 5. Exception: If an employee's project rate exceeds the maximum rate of the highest applicable rate range upon conversion to the General Schedule, the affected employee's project rate will be converted to a retained rate under 5 U.S.C. 5363. If an employee is entitled to a special rate under the General Schedule, the project rate is converted directly to a retained rate. If an employee is only entitled to locality pay under the General Schedule, the retained rate is derived by dividing the project rate by the applicable locality pay factor (i.e., 1 plus the locality payment percentage). Thus, the locality-adjusted retained rate will equal the project rate the employee had been receiving before conversion. Since the [[Page 24271]] employee's total rate of pay is not reduced upon conversion, this change to converted rates under the General Schedule will not be considered a reduction in basic pay under 5 U.S.C. 5363 or 7512. 6. After conversion or movement out of the demonstration project, an employee's converted GS rates will be used in applying GS pay administration rules, as necessary, in lieu of using his or her demonstration project rate. Thus, for example, the converted GS rate of basic pay (or converted special rate, if applicable) will be used in applying GS rules for promotions, maximum payable rate determinations, and pay retention, as appropriate. For conversions upon termination of the project and for lateral reassignments, the converted GS rates will become the employee's GS rates immediately after movement out of the demonstration project (before processing any accompanying geographic move). V. Budget Discipline Each project operating unit will maintain compensation during the project at the level it would have reached under the current system. Current costs will be reallocated to cover project costs. To ensure appropriate carryover of costs from pre-project to project years, a base assessment will be made using three base years: Fiscal Years 1994, 1995, and 1996. Budget discipline will be required and achieved by imposing specific funding principles (described in detail in the section on Funding Pools for Performance Pay Increases and Bonuses). Finally, both longitudinal and site comparisons will be used to ensure that spending remains within acceptable limits. A. Reprogramming Costs The following actions and their costs will be eliminated by the new system: 1. Promotions from one grade to a higher grade where both grades are now in the same broad band. For example, because Band III of both the ZP and ZA career paths will cover the same pay range as current grades GS-11 and GS-12, there will be no more promotions from GS-11 to GS-12. 2. Regularly scheduled Within-Grade Step Increases and Quality Step Increases. There are no steps in the broad band system. These actions will be eliminated. 3. Cash awards related to the performance appraisal cycle (These funds will be applied to bonus pools only--not to pay pools). The cost savings from eliminating these actions will be used to finance the following new actions: --Performance-based pay increases within bands, including the ability to increase the pay of supervisors, through performance-based pay increases, to a higher level than under the current system. There is no guaranteed performance pay increase in the proposed system, however, for Eligible performance; and --Performance bonuses. B. Base Cost Assessment In order to determine whether project costs are being maintained at acceptable levels, a base assessment of pre-project costs will be needed. Costs will be computed as annual averages over three pre- project years: Fiscal Years 1994, 1995, and 1996. The costs of all personnel actions of types that are being replaced by project systems will be totaled and averaged. C. Funding Pools for Performance Pay Increases and Bonuses The results of the base cost assessment will provide a basis for: (1) setting maximum spending limits; and (2) constructing performance pay increase and bonus funding pools by organization, career path, band, and salary. Performance pay pools for project employees will be subject to the same budgetary constraints and reductions imposed on other Department funding allocations. Neither allocations nor authorizations convey funding. Therefore, managers will be required to make payout decisions tied to their individual budgets, within allocations. The following principles will be observed: 1. In terms of career paths and bands, costs will be kept for the most part where they are found in the base assessment. That is, base costs for promotions, within-grade increases, and cash awards in a particular band and career path will form the basis for project spending in the same band and career path. 2. Formulas will be devised to authorize pay increase and bonus pools up to the limits calculated from base-year spending. For each pool, the authorized spending ceiling will depend on the number of employees in the pool by career path, band, and salary. 3. No allocation will be placed in performance pay increase pools for employees who are not eligible for a performance pay increase, such as those who have insufficient time in the position to be rated and those whose salaries are at the ceilings of their bands. No money will be placed in bonus pools for employees not eligible for a bonus, such as those not eligible for a performance rating or who are not on the payroll the last day of the performance cycle. 4. The potential size of performance pay increases will be relatively high for employees whose salaries are near the minimum rate of the band and relatively low for those whose salaries are near the maximum rate of the band. This arrangement imposes a reduced rate of salary increases as an individual advances in the band, similar to the reduced rate of within-grade increases in a General Schedule grade imposed by the one-year, two-year, and three-year waiting periods. 5. There will be no guaranteed performance pay increase in the proposed system. An employee with an Eligible performance rating may, if ranked at or near the bottom of a peer group, get no performance pay increase. 6. Although Pay Pool Managers will not be allowed, under normal circumstances, to exceed their allocated pay increase and bonus pools, they will be allowed to spend less than the full amounts of their pools. 7. Funds previously used to pay cash awards will be applied to bonus pools only--not to performance pay pools. D. Budget Monitoring These procedures permit changes in operating unit expenditures which result from legislatively mandated program changes and changes in Federal pay and benefits. The operating units may offset selected salary increases with savings by reducing turnover, eliminating unnecessary overhead, and cutting other personnel costs. The operating units will measure their adherence to cost control by preparing budget estimates based on prescribed Federal budget processes and monitoring actual spending under the project against this budget estimate. Two cost comparisons will be used: 1. Longitudinal Comparisons a. Project costs will be calculated on an established schedule. b. Costs will be compared against the spending limits calculated from the base years to ensure that budget limitations are not being exceeded. c. Each year, the funding of the performance pay increase and bonus pools will be used as an opportunity to ``balance the books.'' That is, the funding of the pools will be limited to the amount that is judged to maintain budget discipline. [[Page 24272]] 2. Site Comparisons a. A number of non-project units will be selected from within the Department to serve as comparison sites. The comparison sites will be selected to reflect, as nearly as possible, the missions and workforces of the project units. b. Periodically, the rate of increase in salaries in the project units will be compared to the rate of increase in salaries in the comparison units. c. When it is found that salaries in project units are outpacing salaries in comparison units, and the differences cannot be explained by non-project variables, appropriate adjustments will be made in project funding. VI. Project Evaluation The Department will arrange for periodic evaluations of the project under an OPM-approved evaluation plan. The evaluation will be designed to determine whether the interventions are achieving the goals and objectives of the project within acceptable cost limits. (See Costs.) The following table lays out the project evaluation model, beginning with and flowing from the objectives that the project is designed to achieve. The Objective column and the Intervention column together serve as the project hypotheses; i.e., the hypotheses to be tested are that the objectives will be achieved by the interventions linked to them. Most objectives are linked to more than one intervention. Each intervention is associated with at least one expected result. The Measures column lists the means by which the actual results will be measured, and the Data Sources column shows where the data required for the measurements can be found. A hypothesis will be supported--that is, the intervention will be deemed to have achieved the objective--when actual results are found to match expected results. Table 5.--Project Evaluation Model ---------------------------------------------------------------------------------------------------------------- Objectives Interventions Expected results Measures Data sources ---------------------------------------------------------------------------------------------------------------- Increased quality of new hires; Agency-Based Hiring officials Hiring Interview improved fit between position Staffing. will be able to officials' s with hiring requirements and individual focus on more judgments of the officials. qualifications; greater relevant improvement in Focus likelihood of getting a highly recruiting the quality of groups. qualified candidate. sources and avoid new hires. HRM losing candidates Hiring office records on who grow officials' offers and impatient with judgments of acceptances. long hiring improvements in Periodic processes. the fit of employee/ qualifications of supervisor new hires. surveys. Rate of Exit acceptance of interviews. offers. Direct Examination For skill areas in Hiring Interviews with which well officials' hiring officials. qualified judgments of the Focus individuals are improvement in groups. hard to find, the quality of HRM managers will be new hires. office records on able to hire good Hiring offers and candidates as officials' acceptances. they find them, judgments of Periodic thus avoiding the improvements in employee/ loss of well the fit of supervisor qualified qualifications of surveys. individuals new hires. through delays. Rate of acceptance of offers. Broad-band Broad bands and Hiring Interview Classification flexible entry officials' s with hiring System, in salaries within judgments of the officials. conjunction with bands provide a improvement in Focus Flexible Entry more competitive the quality of groups. Salaries. range of entry new hires. HRM salaries for Hiring office records on managers to use officials' offers and in negotiating judgments of acceptances. with candidates, improvements in Periodic thus increasing the fit of employee/ the ability to qualifications of supervisor hire highly new hires. surveys. qualified Rate of candidates. acceptance of offers. More Flexible Paid Managers will be Number of HRM office Advertising. able to make selections records. greater use of resulting from paid advertising, paid advertising. thus expanding the scope of recruiting efforts or focusing the recruitment effort on specialized sources. 3-Year Greater likelihood Number of Automated Probationary that scientists scientists and history file Period for and engineers who engineers data. Scientists and are retained released during HRM Engineers. after probation probation after office records. will be capable the first year. of the full range of R&D functions. Local Authority The ability of Number of HRM for Recruitment managers to grant selections made office records. Payments. recruitment for which the Interview negotiations with payment was officials. highly qualified instrumental in Focus candidates will attracting the groups. increase candidate. competitiveness. [[Page 24273]] Increased retention of good Broad-Band Broad-banding Turnover rates Automated history performers. Classification gives an among good file data. System. operating unit performers. the ability to Turnover rates of raise the pay of low performers. good performers to higher and more competitive levels, thus improving retention of good performers. Performance-Based Performance-based Turnover rates Automated Pay Increases. pay increases among good history file give an operating performers. data. unit the ability Interview to raise the pay s with hiring of good officials. performers more Focus rapidly, thus groups. improving retention of good performers. Bonuses........... The ability to Turnover rates Automated history reward the compared to size file data. accomplishments of bonus. of good performers will make them more likely to remain. Local Authority The ability of A count of the HRM for Retention managers to grant instances in office records. Payments. retention which a retention Interview payments will payment is s with hiring improve their instrumental in officials. ability to retain retaining an Focus employees in employee who groups. critical skill would otherwise areas in a job- have left. related course of study. Supervisory Pay The ability to Turnover rates Automated history Differentials. raise the pay of among supervisors file data. high-performance in relation to supervisors to pay and higher levels performance. will make their salaries more competitive, improving retention. More Flexible Pay Flexible pay Turnover rates in Automated history Increase Upon increases upon relation to pay file data. Promotion. promotion gives and performance. an operating unit the ability to raise the pay of high-performing employees and employees in critical skill areas to higher and more competitive levels, thus improving their retention. Improved individual and Two-Level, 100- This system will Judgments of Pay Interview organizational performance. Point, Peer Group more effectively Pool Managers, s with hiring Performance communicate to Rating Officials, officials. Appraisal System. employees how and Employees. Periodic they are employee/ performing in supervisor relation to their surveys. peers, the Focus consequences of groups. poor performance, and the rewards for good performance. Pay Increases The promise of Judgments of Periodic Linked to higher pay managers, employee/ Performance. increases for supervisors, and supervisor high achievement employees. surveys. will encourage Focus improved groups. performance. Supervisory Pay The promise of Judgments of Managemen Differentials. higher pay levels higher-level t interviews. for effective managers. supervision will encourage improved supervisory performance. Bonuses Linked to The promise of Judgments of Periodic Performance. bonuses for good managers, employee/ performance will supervisors, and supervisor encourage employees. surveys. improved Focus performance. groups. Hiring By improving the Judgments of Interview Interventions quality of new managers and s with hiring (listed above). hires, the hiring supervisors. officials. interventions Focus will gradually groups. produce a higher- performing workforce. [[Page 24274]] Retention By improving the Judgments of Interview Interventions retention of good managers and s with hiring (listed above). performers, the supervisors. officials. quality of the Focus workforce will be groups. higher than it otherwise would be. More effective human resources Broad-Band The broad-band Judgments of Interview management. Classification. classification managers, s with managers. system will be supervisors, and Periodic simpler to use, employees. employee/ more supervisor understandable to surveys. managers and employees, and more accurate. Delegated Line managers Judgments of Interview Classification understand the managers and s with hiring Authority to organizational supervisors. officials. Managers. mission and the Periodic work related to employee/ the mission and supervisor are therefore surveys. better prepared Focus to classify the groups. work. Delegated Pay Line managers are Judgments of Interview Authority to in a better managers and s with hiring Managers. position to supervisors. officials. understand the Focus labor market groups. forces related to the work they manage and will therefore be more effective pay managers. More efficient human resources Automated Broad- The broad-band Judgments Interview management. Band classification of managers and s with hiring Classification system will be supervisors. officials. System. simpler, faster, Time Periodic easier to required to employee/ automate, require produce position supervisor fewer resources descriptions and surveys. to operate, and classify Focus involve fewer positions. groups. classification Number of HRM decisions. classification office records. decisions. Automated history file. ---------------------------------------------------------------------------------------------------------------- VII. Project Management The Office of Personnel Management will oversee the project under its demonstration project authority in 5 U.S.C. 4703. The DoC Departmental Personnel Management Board will manage the project at the Department level. Each major operating unit will have its own Operational Personnel Management Board to oversee local operations. The following table lists the separate responsibilities of these three bodies. [[Page 24275]] Table 6.--Project Authorities ---------------------------------------------------------------------------------------------------------------- Project authorities Arena ----------------------------------------------------------------------------- OPM DPMB OPMB ---------------------------------------------------------------------------------------------------------------- General........................... final approval establishing approval authority authority within the operating unit project for the Project Department for the guidelines within the Plan, Implementing Project Plan and Project Plan, Regulations, and any Implementing Regulations. Implementing future changes to approval Regulations, and DPMB the plan or authority within the policies. implementing Department for proposing management of regulations. changes in the Project authorities outlined Plan or Implementing below and any additional Regulations to (OPM). authorities delegated by monitoring the the DPMB. success of project delegating interventions so as to authority to managers propose appropriate mid- within the operating course corrections to unit, including the (OPM). withdrawal of authority setting project when warranted. policies within the assuring parameters of the Project adequate resources for Plan and Implementing implementing and Regulations. operating the project delegating within the operating authority to OPMBs, unit. including the withdrawal overseeing of authority when training of operating warranted. unit managers, exercising the employees, and support authority to make staff in project exceptions to normal policies and procedures. project procedures on a case-by-case basis when it believes an exception is warranted (the OPMBs will not have this authority). assuring adequate resources for designing, implementing, and operating the project. establishing a training plan to train managers, employees, and support staff in project policies and procedures. Position Classification........... approval of setting project establishing the project classification policy operating unit Classification within the Project Plan classification Interventions. and Implementing guidelines within the Regulations. Project Plan, approving Implementing automated classification Regulations, and DPMB systems and policies. classification standards. delegating approving new classification authority occupational series and to operating unit titles. managers. establishing career ladders. ensuring proper classification of positions within the operating unit. resolving issues in operating unit classifications. approving or delegating the approval of new specialty descriptors. Staffing.......................... approval of approving project establishing the project Staffing staffing policies. operating unit staffing Interventions. establishing guidelines within the policy and criteria for Project Plan, recruiting and retention Implementing payments.. Regulations, and DPMB policies. approving or delegating the approval of individual recruiting and retention payments. establishing career ladders. approving use of recruiting services. delegating and overseeing use of paid advertising. overseeing the application of the three- year probationary period. establishing operating unit practices on vacancy distribution, opening timeframes, and similar local issues. Reduction in Force................ approval of approving project establishing the project reduction-in-force operating unit reduction- reduction in force policies. in-force guidelines Interventions. within the Project Plan, Implementing Regulations, and DPMB policies. establishing procedures on operating unit competitive levels. establishing guidelines for, and overseeing, reductions in force within the operating unit. [[Page 24276]] Pay Administration................ approval of approving project establishing the project Pay pay administration and operating unit pay Administration pay-for-performance guidelines within the Interventions. policies. Project Plan, approving project Implementing pay tables. Regulations, and DPMB approving policies. performance pay increase establishing ranges. operating unit approving performance pay increase automated performance pay pools. increase systems. establishing approving operating unit formulas used to develop guidelines and performance pay increase delegating approval pools. authorities for setting pay levels for new hires and promotions. Performance Evaluation............ approval of approving project establishing the project performance evaluation operating unit Performance policies. performance evaluation Evaluation approving project- guidelines within the Interventions. wide forms for Project Plan, performance plans and Implementing appraisals and for Regulations, and DPMB recording outcomes. policies. overseeing the operating unit annual performance appraisal process, from development of plans to individual pay increases and bonuses. establishing operating unit guidelines on performance elements. delegating rating, review, and pay pool management authorities. Bonuses........................... approval of approving project establishing the project Bonus bonus policies. operating unit bonus Interventions. delegating bonus guidelines within the limits to OPMBs. Project Plan, Implementing Regulations, and DPMB policies. delegating bonus limits to pay pool managers. establishing operating unit bonus pools. Costs and Budget Discipline....... approval of approving project establishing and the project cost budget policies. overseeing operating plan. unit budget procedures. assuring operating unit budget discipline. designating pay pool managers. establishing and overseeing the use of operating unit performance pay increase and bonus pools. Project Evaluation................ approval of approving the overseeing and the project approach for selecting an assuring operating unit Evaluation Model. evaluator to carry out participation in project clearing the annual project evaluations, including annual evaluation evaluation. data collection, focus reports. assuring adequate group participation by transmitting resources for project operating unit annual evaluation evaluation. employees, and reports to Congress. approving project availability of managers policies for internal for interviews. Departmental assessments. approving objectives and procedures for internal operating unit assessments. ---------------------------------------------------------------------------------------------------------------- The DoC Chief Financial Officer/Assistant Secretary for Administration will chair the Departmental Personnel Management Board (DPMB). The DPMB members will be senior managers of the operating units in the project and the DoC Director of Human Resources Management. Each OPMB will typically be chaired by the senior manager designated to serve on the DPMB. The operating units will appoint other key managers to their boards as they think appropriate. VIII. Training The project operating units will schedule training for managers, supervisors, employees, and support staff. A. Manager and Supervisor Training The operating units will give managers and supervisors general training in the overall features of the project and specific hands-on training in the new authorities they are to exercise. Computer training facilities will be used to teach managers and supervisors how to use the automated classification system to produce position descriptions. The classification training will emphasize principles of project classification, such as the classification logic embedded in the automated classification system, career path coverage criteria, occupational series definitions and coverage, proper classification by bands in accordance with project classification standards, sound titling practices, and economic and effective position management. Managers and supervisors will also be given specific training in performance appraisal and pay-for-performance. A key part of this training will be a simulation of the performance evaluation and rewards system prior to the actual end-of-year performance evaluation. Prior to the simulation, each Rating Official and Pay Pool Manager will be trained in the automated performance pay increase system. During the simulation, rating officials and pay pool managers will carry out the appraisal, scoring, rating, and performance pay increase process just as they would at the end of a performance year, but for training purposes only. The results will not be official and will not [[Page 24277]] be communicated to employees. This training exercise was used in the first year of the NIST project and was found to be an effective approach to revealing and correcting problems and misunderstandings prior to the real end-of-year process. B. Employee Training Through general presentations, handouts, and direct training from supervisors, employees will be given an understanding of project systems and how those systems affect them. In the general presentations scheduled for everyone covered by the project, employees will be led through all project systems, from classification to pay administration to pay for performance. As each system is presented, it will be contrasted with the General Schedule system so employees can see how the system is changing and how the changes affect them. The presentations will also cover employee rights and grievance procedures. Employees will be given ample opportunity to ask questions at the presentations and will be given the names and numbers of individuals to call if they have questions later. In addition to the general presentations that will be scheduled for all employees, supervisors will be instructed to pass along more individualized information about the system in conjunction with the implementation of those systems. For example, at the time supervisors give employees their new project position descriptions, the supervisors will explain the position descriptions, the process that produced them, and the process for keeping them current. Also, at the time of the performance appraisal simulation, supervisors will explain to employees how they fit into the performance scoring and peer-group ranking process and how the process leads to decisions on performance pay increases. C. Support Staff Training There are three categories of support staff: (1) personnel specialists in the various HRM offices serving project operating units; (2) budget specialists in operating unit budget offices assigned to monitor and advise on budget discipline issues and specifically to assist in establishing performance pay increase and bonus pools; and (3) administrative officers in the operating units, who will assist in processing personnel actions, distributing local performance pay increase and bonus pools, and electronically transmitting pay pool manager decisions to the automated payroll system. Two of the HRM offices that will serve project operating units have served the NIST Demonstration Project since its implementation in 1988. These two offices will help train personnel specialists in the other HRM offices. Budget specialists in the operating units, besides receiving the general employee training, will receive advice from a NIST budget specialist and will receive further training on the distribution of performance pay increase and bonus pools during the simulation of the performance evaluation and rewards system. Administrative officers will be invited to take part in the supervisory training sessions and will also receive further training during the simulation of the performance evaluation and rewards system. IX. Experimentation and Revision Many aspects of a demonstration project are experimental. Modifications must be made from time to time as experience is gained, results are analyzed, and conclusions are reached on how the system is working. The DPMB, with DoC and OPM approval, will authorize minor modifications, such as changes in the occupational series in a career path, without further notice. Major changes, such as a change in the number of career paths, will require OPM approval and will be published in the Federal Register. X. Authorities and Waiver of Laws and Regulations Required The following waivers of law and regulation are necessary: Title 5, U.S. Code Section 3308 Competitive Service; examinations; educational requirements prohibited; exceptions Chapter 51 Classification Section 5303 Annual adjustments to pay schedules Section 5304 Locality-based comparability payments Section 5305 Special Pay Authority Subchapter III of chapter 53 General Schedule Pay Rates Subchapter VI of chapter 53 Grade and Pay Retention (Waiver is applicable only to allow the following modifications: (1) using bands in lieu of grades; (2) providing no band retention if reduction in band is caused by employee's pay being exceeded by band minimum rate; (3) providing no pay retention upon reduction in pay caused solely by geographic movement; (4) providing no pay retention upon conversion to the General Schedule as long as the employee's total rate of pay is not reduced; and (5) providing no pay retention upon cancellation of a supervisory differential.) Section 5753-5754 Recruitment and relocation bonuses; Retention allowances (except that relocation bonuses under Section 5753 continue to apply) Section 7512(3) Actions covered (Waiver is applicable only to use bands in lieu of grades and to exclude from section 7512(3) reductions in band not accompanied by a reduction in pay, due to the employee's pay being exceeded by the band minimum rate.) Section 7512 (4) Actions covered (Waiver is applicable only to allow the following modifications: (1) exclude reductions in pay that are solely due to recomputation upon geographic movement; (2) exclude conversions to GS pay that do not result in a reduction in the employee's total rate of pay; and (3) exclude reductions in pay due to the cancellation of a supervisory differential.) Title 5, Code of Federal Regulations Section 315.801 Probationary period; when required (Waived only for positions in the Scientific and Engineering Career path) Section 315.802 Length of probationary period (Waived only for positions in the Scientific and Engineering Career path) Section 351.401 Determining retention standing Section 351.402 Competitive area in RIF Section 351.403 Competitive level in RIF Section 351.504 Credit for performance Section 351.701 Assignment involving displacement Part 511 Classification under the General Schedule Part 530, Subpart C, Special salary rate schedules Part 531 Pay under the General Schedule Part 536 Grade and Pay Retention Waived only to allow the following modifications: (1) using bands in lieu of grades; (2) providing no band retention if reduction in band is caused by employee's pay being exceeded by band minimum rate; (3) providing no pay retention upon reduction in pay caused solely by geographic movement; (4) providing no pay retention upon conversion to the General Schedule as long as the employee's total rate of pay is not reduced; and (5) providing no pay retention upon cancellation of a supervisory differential. Section 550.703 Definition of reasonable offer (Waiver is applicable [[Page 24278]] only to allow substitution of (1) ``one band'' for ``two grade or pay levels'' and ``two grades'' and (2) ``band'' for ``grade.'') Part 575, Subpart A, Recruitment bonuses Part 575, Subpart C, Retention allowances Section 752.401(a)(3) Coverage, Reductions in grade (Waiver is applicable only to use bands in lieu of grades and to exclude reductions in band not accompanied by a reduction in pay due to the employee's pay being exceeded by the band minimum rate.) Section 752.401(a)(4) Coverage, Reductions in pay (Waiver is applicable only to exclude reductions in pay that are solely due to recomputation upon geographic movement; (2) exclude conversions to GS pay that do not result in a reduction in the employee's total rate of pay; and (3) exclude reductions in pay due to the cancellation of a supervisory differential.) [FR Doc. 97-11317 Filed 5-1-97; 8:45 am] BILLING CODE 6325-01-P