[Federal Register: March 13, 1997 (Volume 62, Number 49)] [Notices] [Page 12005-12024] [[Page 12005]] _______________________________________________________________________ Part IV Office of Personnel Management _______________________________________________________________________ Propose Laboratory Personnel Management Demonstration Project; Department of the Army, U.S. Army Engineer Waterways Experiment Station, Vicksburg, Mississippi; Notice [[Page 12006]] ======================================================================= ----------------------------------------------------------------------- OFFICE OF PERSONNEL MANAGEMENT Proposed Laboratory Personnel Management Demonstration Project; Department of the Army, U.S. Army Engineer Waterways Experiment Station, Vicksburg, Mississippi AGENCY: Office of Personnel Management. ACTION: Notice of Intent to Implement Demonstration Project. ----------------------------------------------------------------------- SUMMARY: Title V of the Civil Service Reform Act, 5 U.S.C. 4703, authorizes the Office of Personnel Management (OPM) to conduct demonstration projects that experiment with new and different personnel management concepts to determine whether such changes in personnel policy or procedures would result in improved Federal personnel management. Public Law 103-337, October 5, 1994, permits the Department of Defense (DoD), with the approval of the OPM, to carry out personnel demonstration projects generally similar to the China Lake demonstration project at DoD Science and Technology (S&T) reinvention laboratories. The Army is proposing demonstration projects initially to cover five of its S&T reinvention laboratories: the Army Research Laboratory; the Army Missile Research, Development, and Engineering Center; the Army Aviation Research and Development Center; the Army Medical Research and Materiel Command; and the Army Engineer Waterways Experiment Station. This proposal is for the Army Engineer Waterways Experiment Station (WES). DATES: To be considered, written comments must be submitted on or before May 20, 1997; the public hearing will be scheduled as follows: Friday, May 2, 1997, at 10:00 a.m., in Vicksburg, Mississippi. At the time of the hearing, interested persons or organizations may present their written or oral comments on the proposed demonstration project. The hearing 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 mailed to Fidelma A. Donahue, U.S. Office of Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC 20415; public hearing will be held at the following location: U.S. Army Engineer Waterways Experiment Station, Building 1006, 3909 Halls Ferry Road, Vicksburg, Mississippi. FOR FURTHER INFORMATION CONTACT: (1) On proposed demonstration project: Dr. C. H. Pennington, U.S. Army Engineer Waterways Experiment Station, ATTN: CEWES-ZT-E, 3909 Halls Ferry Road, Vicksburg, Mississippi 39180- 6199, phone 601-634-3549; on proposed demonstration project and public hearings: Fidelma A. Donahue, U.S. Office of Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC 20415, phone 202-606-1138. SUPPLEMENTARY INFORMATION: Since 1966, at least 19 studies of DoD laboratories have been conducted on laboratory quality and personnel. Almost all of these studies have recommended improvements in civilian personnel policy, organization, and management. The proposed project involves simplified job classifications, pay banding, a contribution- based compensation system, streamlined hiring processes, and modified Reduction-in-Force (RIF) procedures. Office of Personnel Management James B. King, Director. Table of Contents I. Executive Summary II. Introduction A. Purpose B. Problems with the Present System C. Changes Required and Expected Benefits D. Participating Organizations E. Participating Employees F. Project Design III. Personnel System Changes A. Broadbanding B. Classification C. Pay for Performance D. Pay Setting Provisions E. Hiring and Placement Authorities F. Employee Development G. Reduction in Pay or Removal Actions H. Revised Reduction-In-Force (RIF) Procedures IV. Training A. Supervisors B. Administrative Staff C. Employees V. Conversion A. Conversion to the Demonstration Project B. Conversion from the Demonstration Project VI. Project Duration VII. Evaluation Plan VIII. Demonstration Project Costs A. Step Buy-Ins B. Development Costs IX. Required Waivers to Law and Regulations A. Waivers to Title 5, U.S. Code B. Waivers to Title 5, Code of Federal Regulations I. Executive Summary The Department of the Army (DA) proposes to establish, as a demonstration project, a Personnel Demonstration Project generally similar to the system currently in use at the Navy Personnel Demonstration Project known as ``China Lake.'' The Personnel Demonstration Project will be implemented initially at five Army Science and Technology (S&T) Reinvention Laboratory sites, and will be developed to be in-house budget neutral, based on a baseline of September 1995 in-house costs and consistent with the DA plan to downsize the DA laboratories and research and development (R&D) centers. An in-house budget is a compilation of costs of the many diverse components required to fund the day-to-day operations of a laboratory. These components generally include pay of people (labor, benefits, overtime, awards), training, travel, supplies, non-capital equipment, and other costs depending on the specific function of the activity. This project was designed by the Assistant Secretary of the Army for Research, Development and Acquisition with the support of the Assistant Secretary of the Army for Civil Works, and the participation of five Army S&T Reinvention Laboratories. Review was provided by the US Army Corps of Engineers, DA, DoD, and OPM. Phases of the project that address non-Title 5 issues began as early as 1 October 1995, with implementation of Title 5 initiatives beginning no earlier than Spring 1997. The project is built upon the concepts of linking performance to pay for all covered positions, simplifying paperwork in the processing of classification and other personnel actions, emphasizing partnerships among management, employees, and unions, and delegating classification and other authorities to line managers. II. Introduction A. Purpose The quality of DoD laboratories, their people, and products has been under intense scrutiny in recent years. This perceived deterioration of quality is due, in substantial part, to the erosion of control which line managers have over their human resources. This demonstration, in its entirety, attempts to provide managers, at the lowest practical level, the authority, control, and flexibility needed to achieve quality laboratories and quality products. The purposes of the demonstration project are to: improve the hiring process and [[Page 12007]] allow WES to compete more effectively for high-quality personnel; motivate and retain staff, through pay for performance, sabbaticals, and a more responsive personnel system; strengthen the manager's role in personnel management through increased delegation of personnel authorities; increase the efficiency of the personnel system by simplifying the classification system through broad banding and reduction of guidelines, steps, and paperwork; and create a model that could be adopted by other government agencies. This project will be under the joint sponsorship of the Assistant Secretary of the Army for Research, Development and Acquisition and the Assistant Secretary of the Army for Manpower and Reserve Affairs. The MACOM Commander of the participating Army S&T Reinvention Laboratory will execute and manage the project. Project oversight will be achieved by an executive steering committee made up of top-level executives, co-chaired by the Deputy Assistant Secretary of the Army for Research and Technology and the Deputy Assistant Secretary of the Army (Civilian Personnel Policy)/ Director, Civilian Personnel. Oversight external to the Army will be provided by DoD and OPM. B. Problems With the Present System The civilian personnel system currently in use at DoD laboratories has several major inefficiencies, which hinder management's ability to recruit and retain the best qualified personnel. Line managers have only limited flexibility to administer personnel resources, and existing personnel regulations are often in conflict with line management's ability to perform world-class research. Laboratory managers are frustrated in their attempts to hire the best and brightest engineers and scientists (E&S). The classification system requires lengthy, narrative, individual position descriptions, which have to be classified by the use of complex and often outdated position classification standards. The system causes delays in recruiting, reassigning, promoting, and removing employees. Rewarding or taking a performance based action requires inordinate paperwork and time, often discouraging managers from pursuing critical actions. Few incentives, with limited flexibility, exist in dealing with all levels of the workforce, and pay is not always commensurate with performance. The current reduction-in- force (RIF) system does not adequately recognize performance as a major criterion in RIF situations. The RIF rules are complex, and difficult to understand and administer. The RIF process disrupts operations, due to displacement of employees within their competitive levels and in the exercise of bumping and retreat rights. C. Changes Required and Expected Benefits This project is expected to demonstrate that a human resource management system tailored to the mission and need of WES will result in: increased quality in the engineering and science workforce and the laboratory products they produce; increased timeliness of key personnel processes; trended workforce data that reveals increased retention of excellent contributors and separation rates of poor contributors; and increased customer satisfaction with the laboratory and its products by customers serviced. This demonstration program builds on the successful features of demonstration projects at China Lake and the National Institute of Standards and Technology. These demonstration projects have produced impressive statistics on job satisfaction of their employees versus that for the federal workforce in general. This demonstration expects similar successes. A full range of data will be collected to evaluate the project (and is described in Section VII, Evaluation Plan). D. Participating Organization U.S. Army Engineer Waterways Experiment Station, 3909 Halls Ferry Road, Vicksburg, Mississippi 39180-6199. Employees assigned to WES work at the locations shown in Table 1. Table 1.--Duty Locations ------------------------------------------------------------------------ Total No. Location of employees ------------------------------------------------------------------------ London, England.............................................. 1 Berkeley, CA................................................. 1 Fort Collins, CA............................................. 1 Washington, DC............................................... 3 Gainesville, FL.............................................. 1 Jacksonville, FL............................................. 1 Jackson, MS.................................................. 1 Natchez, MS.................................................. 1 Vicksburg, MS................................................ 1412 New Madrid, MO............................................... 1 Duck, NC..................................................... 12 Corvallis, OR................................................ 1 Calhoun Falls, SC............................................ 3 Lewisville, TX............................................... 3 North Bonneville, WA......................................... 2 Eau Galle, WI................................................ 2 Onalaska, WI................................................. 1 ------------------------------------------------------------------------ E. Participating Employees The project will cover all General Schedule (GS) employees assigned to WES. Federal Wage System (FWS) employees, Civilian Intelligence Personnel Management (CIPMS) employees covered by Title X, and 5 U.S.C. 3105 Scientific and Technical (ST) employees will be included for employee development provisions only. The occupational series of employees included in the project are identified by occupational family in Table 2. All GS employees with appointments exceeding one year will be covered by the provisions of this project. GS employees with appointments limited to one year or less will be covered for pay banding, the performance appraisal process, and salary adjustments. Senior Executive Service (SES) employees will not be included in the project. It is the intent of WES to expand coverage of the project to all FWS employees 1 to 2 years following date of implementation. In the event of expansion to FWS employees beyond the performance appraisal provisions, full approval will be obtained from DA, DoD, and OPM. The American Federation of Government Employees (AFGE) represents approximately 550 GS and FWS employees at WES. The AFGE represents all E&S Technicians except student trainees; all General Support employees except fire protection inspectors, security guards, student trainees, and those designated as confidential employees; and all nonsupervisory FWS employees. AFGE Local 3310 has been involved with and participated in the development of the project since its inception. WES will continue to fulfill its obligation to consult or negotiate with the AFGE, as appropriate, in accordance with 5 U.S.C. 4703 (F) and 7117. The participation with the AFGE is within the spirit and intent of Executive Order 12871. F. Project Design In August 1994, a Project Manager was appointed to lead the WES reinvention effort. The Project Manager was assisted by a representative of the servicing Human Resources Management (HRM) Office. During October-November 1994, a WES concept plan was developed to map out desired areas in which to propose changes in the personnel system. The concept plan was then merged into a single Army plan for the participating Army S&T Laboratories and was submitted to the DA in December 1994. BILLING CODE 6325-01-P [[Page 12008]] [GRAPHIC] [TIFF OMITTED] TN13MR97.014 BILLING CODE 6325-01-C [[Page 12009]] WES formed four teams in January 1995 to develop specific initiatives to be undertaken in the WES demonstration project. The teams were composed of from 7 to 14 employees each and included representatives from management, engineers, scientists, technicians, clerical, administrative, wage grade, human resources, and representatives from the local union. The teams developed human resources management initiatives which were designed to: assist in hiring the best people to accomplish the mission; improve training and development of the workforce; improve and simplify the position classification process; develop a broadband system to facilitate classification and career progression; and develop a pay for performance system to recognize employee contributions to mission accomplishment. The Army's plan was reviewed concurrently by DoD and OPM in April 1996. Among their many recommendations was one for each Army lab to submit individual project plans. The second joint review by DoD and OPM of the lab plans was conducted in September 1996. The philosophy and intent of WES throughout the process of project development was the inclusion of its total workforce. As such, a pay-for-performance broadbanding system was developed for FWS employees, in partnership with representation from the bargaining unit, and was included as part of the WES plan. At the joint reviews, the DoD Civilian Personnel Management Service and OPM's Office of Classification and Office of Compensation Policy considered the broadbanding of FWS employees as outlined in the WES plan to be inappropriate. FWS employees were removed from the plan for pay-for-performance purposes only. Options for including them in a pay-for-performance system at a later date are currently being developed by WES, DA, DoD, and OPM. This plan and these initiatives are the result of many months of effort by dedicated participants at WES, U.S. Army Corps of Engineers, DA, and DoD levels. III. Personnel System Changes A. Broadbanding 1. Pay Bands Each occupational family will be composed of discrete pay bands corresponding to recognized advancement within the occupations. The pay bands will replace grades. The pay bands will not be the same for all occupational families. Each occupational family will be divided into four to six pay bands, each pay band covering the same pay range now covered by one or more grades. The minimum rate of basic pay for a band will be the minimum rate for the lower grade in the band as shown on the regular GS schedule. The maximum rate of basic pay for a pay band will be the highest regular schedule GS rate possible for positions within that occupational family and pay band. A salary overlap, similar to the current overlap between GS grades, will be maintained. Ordinarily an individual will be hired at the lowest salary in a pay band. Exceptional qualifications, specific organizational requirements, or other compelling reasons may lead to a higher entrance salary within a pay band. The proposed pay bands for the occupational families and how they relate to the current GS grades are shown in Table 3. This pay band concept has the following advantages because it: reduces the number of classification decisions required during an employee's career; simplifies the classification decision-making process and paperwork; supports delegation of classification authority to line managers; provides a broader range of performance-related pay for each pay band; and prevents the progression of low performers through a pay band by mere longevity, since job performance serves as the basis for determining pay. BILLING CODE 6325-01-P [[Page 12010]] [GRAPHIC] [TIFF OMITTED] TN13MR97.015 BILLING CODE 6325-01-C A feature is pay band VI of the Engineers and Scientists occupational family, which is an expansion of the broad banding concept used at China Lake and NIST. This pay band is designed for Senior Technical Managers and Senior Engineers/Scientists. Current OPM guidelines covering the Senior Executive Service and Scientific and Technical positions do not fully meet the needs of WES. The SES designation is appropriate for executive level managerial positions whose classification exceeds the GS-15 grade level. The primary knowledges and abilities of SES positions involve supervisory and managerial authorities. Positions classified as ST are designed for bench research scientists and engineers. OPM guidelines state that the duties and responsibilities of ST positions must not include any managerial or supervisory responsibility. WES currently has a few senior manager positions which have characteristics of both SES and ST classifications. Most of these positions are responsible for supervising other GS-15 positions, including branch chief, non-supervisory researcher engineers and scientists, and potential ST positions. The positions are classified at the GS-15 level, and one has been recognized at the SES level. WES management considers the primary requirement for the positions to be knowledge of and expertise in the specific scientific and technology areas related to the mission of the organization. The ability to manage, while important, is considered secondary. Historically, these positions have been filled by employees who possess primarily scientific/engineering credentials and who are considered experts in their field by the scientific community. While it is clear these positions warrant classification beyond the GS-15 level, attempts to classify the positions as SES have been difficult. Classification of the positions at ST is also not an option because of the supervisory responsibilities. As preeminent engineers and scientists, STs are responsible for specific research and development efforts that are continuing and long range, generally requiring the efforts of a team. STs usually serve as team leaders which means there is some responsibility for assigning work, coordinating results and redirecting efforts. It is administratively convenient for these research team leaders to also participate in performance management. The restriction of including supervisory authorities in ST jobs has forced WES to exclude any mention of the team leader responsibilities in these position descriptions for fear that they will be interpreted as characteristic of SES rather than ST positions. Consequently, WES has positions that do not conform to the strict OPM definitions of either the SES or ST. The purpose of pay band VI is to overcome the difficulties identified above by creating a category for two types of positions--the Senior Technical Manager (with full supervisory authorities) and the Senior Engineer/Scientist (less than or no supervisory authority). Current GS-15 Senior Technical Managers and Senior Engineers/Scientists will convert into the demonstration project at pay band V. After conversion the Senior Technical Manager and Senior Engineers/Scientist positions will be reviewed against established criteria to determine if they should be reclassified to pay band VI. The proposed salary range is the same as currently exists for ST positions (minimum of 120 percent [[Page 12011]] of the minimum rate of basic pay of GS-15 with a maximum of the basic rate of pay established for level IV of the Executive Schedule). Vacant positions in pay band VI will be competitively filled to ensure that selections are made from among the world's preeminent researchers and technical leaders in the specialty fields. The final component of pay band VI is the management of all pay band VI assets. Specifically, this includes authority to classify, create, abolish positions as circumstances warrant; recruit and reassign employees in this pay band; set pay and to have their performance appraised under this project's pay-for-performance system. This authority will be executed within parameters to be established at the DA level, to include controls on the numbers of pay band VI positions and recruitment/promotion criteria. The specific details regarding the control and management of pay band VI assets will be included in the demonstration's operating procedures. The laboratory wants to demonstrate increased effectiveness by gaining greater managerial control and authority, consistent with merit, affirmative action, and equal employment opportunity principles. 2. Occupational Families Positions will be grouped into occupational families according to similarities in type of work and customary requirements for formal training or credentials. The historical patterns of advancement within the occupational families will be considered. The current positions and grades at WES have been examined, and their characteristics and distribution have served as guidelines in the development of occupational families. Four occupational families will be established: (a) Engineers and Scientists. This occupational family includes all technical professional positions such as engineers (civil, hydraulic, structural, mechanical, electronic, electrical, chemical, and environmental), mathematicians, statisticians, computer scientists, outdoor recreational planners, geographers, architects, archaeologists, operations research analysts, and a variety of physical and biological scientists. Specific course work or educational degrees are required for positions in this occupational family. (b) E&S Technicians. This occupational family consists of the positions that support the various engineering and scientific activities. Employees in this occupational family are required to have training and skills in the various technical areas (civil, hydraulic, structural, geotechnical, physical, coastal, biological, chemical). (c) Administrative. This occupational family contains specialized functions in such fields as counsel, audit, finance, procurement, public information, accounting, administrative, computing, safety, and management analysis. Special training and skills in administrative fields or special degrees are required. (d) General Support. This occupational family is composed of positions requiring special skills and knowledge, such as typing or shorthand, and job-related experience. Clerical work usually involves the processing and maintenance of records. Assistant work requires knowledge of methods and procedures within a specific administrative area. Other support functions include the work of secretaries, legal clerks, guards, mail clerks, etc. 3. Fair Labor Standards Act Fair Labor Standards Act (FLSA) exemption and nonexemption determinations will be made consistent with criteria found in 5 CFR part 551. All employees are covered by the FLSA unless they meet the executive, administrative, or professional criteria for exemption. As a general rule, the FLSA status can generally be matched to the occupational families and pay bands found in Table 3. Exceptions to these guidelines include supervisors/managers who meet the definitions outlined in the OPM General Schedule Supervisory Guide. The generic position descriptions will not be the sole basis for the FLSA determination. Each position will be evaluated on a case by case basis by comparing the duties and responsibilities assigned, the classification standards for each pay band, under 5 CFR part 551 criteria. B. Classification 1. Coverage The present GS classification system has over 400 occupations (also called series), which are divided into 22 groups. The present occupational series will be maintained. New series may be added as needed to reflect new occupations in the work force when established by OPM. 2. Classification Standards The classification system will be modified to facilitate pay banding. The present classification standards will be used to create local benchmark position description/standards for each pay band, reflecting duties and responsibilities comparable to those described in present classification standards for the span of grades represented by each pay band. Present titles and series will continue to be used in order to recognize the types of work being performed and educational backgrounds and requirements of incumbents. Locally developed specialty codes and OPM functional codes will be used to facilitate titling, making qualification determinations, and assigning competitive levels to determine retention status. 3. Position Descriptions and Classification Process New standardized position descriptors will be developed to assist managers in exercising delegated position classification authority. Managers will identify the appropriate pay band and descriptor definition and proceed to finalize the position description. A cover sheet similar to the present DA Form 374 will be used to reflect their classification decision. The cover sheet used will include a provision for designating specialty codes. These specialty codes will be developed to identify the special nature of work performed and will be included on the final position descriptor. Employees will be entitled to appeal the title, series, and pay band level of their position to the DoD Field Advisory Service (FAS) and to OPM. The appeal will be adjudicated using the position classification provisions/criteria of this demonstration project. Employees may appeal either to FAS or OPM; however, if they first appeal to OPM, they may not then appeal to FAS. C. Pay for Performance The objective is to establish a pay system that will improve the ability of WES to attract and retain quality employees. The new system will be a pay-for-performance system and, when implemented, will result in a redistribution of pay resources based upon individual performance. 1. Determining Pay Increases Compensation will be allocated to employees through organizational compensation pools. The WES Director, Commander and Deputy Director, and Laboratory Directors at WES will manage their respective pools. The compensation pools will have two components: funds for performance pay increases (money previously available for within-grade increases, quality step increases, and promotions between grades that are banded under the project); and funds for General [[Page 12012]] Schedule pay increases. Performance awards (cash awards and bonuses presently allowed) and locality pay increases will continue under the project and will be excluded from the compensation pools. The compensation pools will be managed to ensure relative cost neutrality. As a result, funds will not be shifted between pools. Annual base pay increases paid from the performance pay increase component of the compensation pools will be based on eligibility as well as scores on the established standards as follows: [GRAPHIC] [TIFF OMITTED] TN13MR97.008 Where: PR=employee's annual performance-based pay raise, $ V=value of a share, percent S=number of shares earned by employee based on performance P=employee's salary prior to pay raise The number of shares earned by an employee will vary from 0 to 4 and will depend upon their performance score. A performance pay increase may not cause the employee's rate of basic pay to exceed the maximum rate of the bay band. The value of a share will be computed in a manner to ensure that the amount of money available for performance pay increases will not exceed the amount of money in a compensation pool that is available for raises. Therefore, the amount of money available annually within a pay pool for performance-based pay raises is: [GRAPHIC] [TIFF OMITTED] TN13MR97.009 Where: A=average annual historical pay raise, percent M=pay pool size, $ Pi=salary of employee i n=number of employees in compensation pool The share value (percent) is computed in a manner to ensure exact expenditure of the amount of money in the compensation pool as follows: [GRAPHIC] [TIFF OMITTED] TN13MR97.010 Where: Si=number of shares earned by employee i based upon performance ne=number of employees within compensation pool that are eligible for a performance-based pay raise A payout function that correlates number of shares earned by an employee for a performance based pay raise to average performance score will be similar to the plot shown in Figure 1. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN13MR97.016 BILLING CODE 6325-01-C The annual General Schedule pay increase will be allocated as follows: (a) The first step is setting the percentage General Schedule increase that will be given to all eligible employees. This amount will be equal to the General Schedule increase authorized for GS employees. All employees whose average performance score is 2.0 or greater will be eligible for the increase. Employees with an average performance score of less than 2.0 will be ineligible for the full General Schedule increase and may receive either none or one-half of the increase. Pay increases for employees receiving retained rates will be determined in accordance with 5 U.S.C. 5363 except that those with an average performance score of less than 2.0 may receive either none or one- quarter of the increase in the maximum rate of basic pay for the applicable pay band. (b) The minimum and maximum pay rates of basic pay for each pay band in an occupational family will be adjusted by any general pay increase to reflect the new rates in accordance with the [[Page 12013]] criteria reflected in Section III, Broadbanding, of this plan. 2. Performance Evaluation The performance appraisal system will link compensation to performance through annual performance evaluations and performance ratings. Performance will be evaluated against generic performance standards. Rating elements will be provided for all employees. All rating elements will be critical and scored on a scale of 0 to 5. The score will be based on employees performance as evaluated against generic performance standards for each element. The supervisor will discuss performance rating standards with the employee to clarify performance criteria at the beginning of the rating period. The generic performance standards, with the provision to add specific work plans, will be used to evaluate employee performance. The standards will describe the level of performance required for the employee to be rated fully successful. Reviews will be conducted at least at mid-year to evaluate employee progress in meeting performance standards. However, WES interns in recognized career programs will be appraised semi- annually until they complete their internship. The last performance rating in each annual cycle will be considered to be the rating of record for interns. Since all employees will not have the same number of rating elements, the element scores will be summed and averaged by the number of elements rated to determine the overall performance score. The score will be used for setting performance pay increases and determining eligibility for performance awards. Employees must have an average performance score of 2.5 and above to be eligible for performance pay increases. Employees with an average performance score of 2.0 or greater will be eligible for performance awards and full General Schedule increases. Employees with an average score of less than 2.0 will be ineligible for performance awards and full General Schedule increases. A within-the-year review may be used to reevaluate employees with performance scores of less than 2.0. If the employee's performance has improved sufficiently since the last rating period, the employee may be eligible for a nonretroactive General Schedule pay raise at that time. 3. Awards WES currently has an extensive awards program consisting of both internal and external awards. On-the-spot, special act, and other internal awards (both monetary and nonmonetary) will continue under the project. MACOM, DA, and DoD awards and other honorary noncash awards will be retained. Cash awards may be given for performance and to recognize and encourage special contributions. Awards can be made to individuals, teams, or organizations. Awards must be approved at a managerial level at least one level higher than the recommending official except in the case where the WES Director is the recommender. Cash awards will not be considered to be a part of base pay. D. Pay Setting Provisions 1. Pay and Compensation (a) Pay Ceilings. An employee's total monetary compensation paid in a calendar year may not exceed the rate of basic pay for level I of the Executive Schedule consistent with 5 U.S.C. 5307 and 5 CFR part 530, subpart B. Each pay band will have its own pay ceiling, just as grades do in the GS system. Basic pay rates for the various pay bands will be directly keyed to the GS basic rates of pay except for pay band VI in the Engineers and Scientists occupational family. Pay band VI will have pay rates keyed to a minimum of 120% of the minimum rate of basic pay for GS-15 basic pay with a maximum of the basic rate of pay established for level IV of the Executive Schedule. (b) Staffing Supplements. Employees assigned to occupational series covered by special rates will be eligible for a staffing supplement if the maximum adjusted rate for the banded GS grades to which assigned exceeds the maximum GS locality rate for the banded grades (e.g., engineers in pay bands II and III). The staffing supplement is added to the base pay, much like locality rates are added on to base pay. The employee's total pay immediately after implementation of the demonstration project will be the same as immediately before the demonstration project, but a portion of the total will be in the form of a staffing supplement. Adverse action and pay retention provisions will not apply to the conversion process as there will be no change in total salary. The staffing supplement is calculated as described below. Upon conversion, the demonstration base rate will be established by dividing the old maximum GS adjusted rate (special rate or locality rate) by the staffing factor. The staffing factor will be determined by dividing the maximum special rate for the banded grades by the GS unadjusted rate corresponding to that special rate (step 10 of the GS rate for the same grade as the special rate). The employee's demonstration staffing supplement is derived by multiplying the demonstration base rate by the staffing factor minus one. So the employee's final demonstration special staffing rate equals the demonstration base rate plus the special staffing supplement; this amount will equal the employee's former maximum GS adjusted rate. Simplified, the formula is: [GRAPHIC] [TIFF OMITTED] TN13MR97.011 [[Page 12014]] Example: In the case of a GS-801-11/03 employee who is receiving a special salary rate, the salary before the demonstration project is $42,944. The maximum special rate for a GS-801-11 Step 10 is $51,295 and the corresponding regular rate is $46,523. The staffing factor is computed as follows: [GRAPHIC] [TIFF OMITTED] TN13MR97.012 Then to determine the staffing supplement, multiply the demonstration base by the staffing factor minus 1. [GRAPHIC] [TIFF OMITTED] TN13MR97.013 The staffing supplement of $3,996 is added to the demonstration base rate of $38,948 and the total salary is $42,944, which is the salary of the employee before conversion to the demonstration project. If an employee is in a band where the maximum GS adjusted rate for the banded grades is a locality rate, when the employee is converted into the demonstration, the demonstration base rate is derived by dividing the employee's former GS maximum adjusted rate (locality or special rate) by the applicable locality pay factor. The employee's demonstration locality-adjusted rate will equal the employee's former maximum GS adjusted rate. Annual pay adjustment for employees in special rate occupations will require recomputation of the staffing supplement. If OPM discontinues or decreases special rates, employees will be entitled to pay retention. Upon geographic movement, an employee who receives the special staffing supplement will have the supplement recomputed. Any resulting reduction in pay will not be considered an adverse action or a basis for pay retention. Established salary including the staffing supplement will be considered basic pay for the same purposes as a locality rate under 5 CFR 531.606(b), i.e., for purposes of retirement, life insurance, premium pay, and severance pay purposes and for advances in pay. It will also be used to compute worker's compensation payments and lump sum payments for accrued and accumulated annual leave. 2. Promotions A promotion is the movement of an employee to a higher pay band within the same occupational family or to a pay band in a different occupational family which results in an increase in the employee's salary. Progression within a pay band, whether by performance pay increases or supervisory adjustments, are not subject to the provisions of this section. Promotions will be processed under competitive procedures in accordance with merit principles and requirements. The following actions are excepted from competitive procedures: (a) Re-promotion to a position which is in the same pay band and occupational family as the employee previously held on a permanent basis within the competitive service. (b) Promotion, reassignment, demotion, transfer, or reinstatement to a position having promotion potential no greater than the potential of a position an employee currently holds or previously held on a permanent basis in the competitive service. (c) A position change permitted by RIF procedures. (d) Promotion without current competition when the employee was appointed through competitive procedures to a position with a documented career ladder. (e) A temporary promotion, or detail to a position in a higher pay band, of 180 days or less. (f) Impact of person-in-the-job promotions. (g) Promotion resulting from the accretion of duties and responsibilities. (h) A promotion resulting from the correction of an initial classification error. Upon promotion to a higher pay band, an employee will be entitled to a 6 percent basic pay increase or the lowest level in the pay band to which promoted, whichever is greater. 3. Link Between Promotion and Performance Noncompetitive promotions (e.g., accretion of duties, recognition of impact of person-in-job, career ladder) will require an acceptable level of performance in their current position. To be promoted noncompetitively from one band to the next within an occupational family, an employee must meet the minimum qualifications for the job and have a current average performance score of 2.5 or above (Section III, Performance Evaluation) or equivalent under a different performance management system (an equivalence chart will be developed by HRM specialists and included in the implementation instructions). Selection of employees through competitive procedures will require a current average performance score of 2.5 or above. 4. Supervisory Pay Adjustments Supervisory pay adjustments may be used, at the discretion of the WES Director, to compensate employees in the Engineers and Scientists occupational family in supervisory positions. Supervisory pay adjustments are increases to the supervisor's basic rate of pay, ranging up to 10 percent of that pay rate, subject to the constraint that the adjustment may not cause the employee's basic rate of pay to exceed the pay band maximum rate. Only employees in supervisory positions with formal supervisory authority meeting that required for coverage under the OPM GS Supervisory Guide will be considered for the supervisory pay adjustment. Criteria to be considered in determining the pay increase percentage include the following organizational and individual employee factors: needs of the organization to attract, retain, and motivate high quality supervisors; budgetary constraints; years of supervisory experience; amount of supervisory training received; performance; and managerial impact on the organization. Conditions, after the date of conversion into the demonstration project, under which the application of a supervisory pay adjustment will be considered are as follows: (a) New hires into supervisory positions will have their initial rate of basic pay set at the supervisor's discretion within the pay range of the applicable pay band. This rate of pay may include a supervisory pay [[Page 12015]] adjustment determined using the ranges and criteria outlined above. (b) An employee selected for a supervisory position that is within the employee's current pay band may also be considered for a supervisory pay adjustment. (c) If a supervisor is already authorized a supervisory pay adjustment and is subsequently selected for another supervisory position, within the same pay band, then the supervisory pay adjustment will be redetermined. (d) An employee promoted to a supervisory position in a higher pay band may be considered for a supervisory adjustment in addition to the pay increase that resulted from the promotion. Supervisors, upon initial conversion into the demonstration project into the same, or substantially similar position, will be converted at their existing basic rate of pay and will not be offered a supervisory pay adjustment. Before supervisory employees may receive the pay adjustment, they must sign a statement acknowledging that the entire adjustment will be immediately withdrawn if they are removed from the supervisory position because of unacceptable performance or conduct. Supervisory employees who are reassigned to a nonsupervisory position for any other reasons (i.e., employee choice, management directed reassignment, or RIF) will receive one-half of the pay adjustment for one year following the reassignment. Eliminations or reductions in supervisory pay adjustments are not adverse actions, are not subject to appeal, and are not covered under pay retention provisions. 5. Supervisory Pay Differentials Supervisory pay differentials may be used, at the discretion of the WES Director, to incentivize and reward E&S supervisors who are in pay bands IV and V whose pay is at the maximum rate of the pay band. Formal supervisory authority meeting that required for coverage under the OPM GS Supervisory Guide is required. A supervisory pay differential is a cash incentive, paid out on a pay period basis, which is not included as part of the supervisor's basic rate of pay. The differential may be up to 10 percent of the supervisor's basic rate of pay. Criteria to be considered in determining the amount of this supervisory pay differential includes those identified for supervisory pay adjustments. The supervisory pay differential may be considered, either during conversion into or after initiation of the demonstration project. The differential will be terminated if the employee is removed from a supervisory position, regardless of cause. As specified in the Supervisory Pay Adjustment Section, all personnel actions involving a supervisory differential will require a statement signed by the employee acknowledging that the differential may be terminated or reduced at the discretion of the WES Director. The termination or reduction of the differential is not an adverse action, is not subject to appeal, and is not covered under pay retention provisions. E. Hiring and Placement Authorities 1. Modified Term Appointments WES conducts many research and development projects that range from 3 to 6 years. The current 4-year limitation on term appointments imposes a burden on laboratory managers by forcing the termination of some term employees prior to completion of projects they were hired to support. This disrupts the research and development process and reduces the ability of WES to serve its customers. Under the demonstration project, WES will have the authority to hire individuals under modified term appointments. These appointments will be used to fill positions for a period of more than 1 year but not more than 5 years when the need for employee's services is not permanent. The modified term appointments differ from term employment as described in 5 CFR part 316 in that they may be made for a period not to exceed 5, rather than 4 years. The WES Director is authorized to extend a term appointment 1 additional year. Employees hired under the modified term appointment authority may be eligible for conversion to career-conditional appointments. To be converted, the employee must: have been selected for the term position under competitive procedures, with the announcement specifically stating that the individual(s) selected may be eligible for conversion to a career-conditional appointment at a later date; have served 2 years of continuous service in the term position; be selected under WES merit promotion procedures for the permanent position; and have a current performance score of 2.5 or better. Employees serving under term appointments at the time of conversion to the demonstration project will be converted to the new modified term appointments provided they were hired for their current positions under competitive procedures. These employees will be eligible for conversion to career-conditional appointment if they have a current performance score of 2.5 or better and are selected under merit promotion procedures for the permanent position after having completed 2 years of continuous service. Time served in temporary or term positions prior to conversion to the modified term appointment is creditable, provided the service was continuous. Employees serving under modified term appointments under this plan will be covered by the plan's pay-for- performance system. 2. Extended Probationary Period A new employee needs to demonstrate adequate contribution during all cycles of a research effort for a laboratory manager to render a thorough evaluation. The current 1-year probationary period will be extended to 2 years for all newly hired career employees in the Engineers and Scientists occupational family. The purpose of extending the probationary period is to allow supervisors an adequate period of time to fully evaluate an employee's contribution and conduct. Aside from extending the time period, all other features of the current probationary period, including the criteria for crediting prior service and the limited notice and appeal rights, are retained. The requirements for conversion to career tenure are unchanged. Employees appointed prior to the implementation date will not be affected. Probationary employees will be terminated when the employee fails to demonstrate proper conduct, technical competency, and/or adequate work contribution for continued employment. When WES decides to terminate an employee serving a probationary period because their work contribution or conduct during this period fails to demonstrate their fitness or qualifications for continued employment, it shall terminate their services by written notification of the reasons for separation and the effective date of the action. The information in the notice as to why the employee is being terminated shall, as a minimum, consist of WES's conclusions as to the inadequacies of their work contribution or conduct. 3. Voluntary Emeritus Program Under the demonstration project, the WES Director will have the authority to offer retired or separated individuals (engineers and scientists) voluntary assignments in the laboratory. This [[Page 12016]] authority will include individuals who have retired or separated from Federal service. Voluntary Emeritus Program assignments are not considered ``employment'' by the Federal Government (except for purposes of injury compensation). Thus, such assignments do not affect an employee's entitlement to buy-outs or severance payments based on an earlier separation from Federal service. The Voluntary Emeritus Program will ensure continued quality research while reducing the overall salary line by allowing higher paid individuals to accept retirement incentives with the opportunity to retain a presence in the scientific community. The program will be of most benefit during manpower reductions as senior E&Ss could accept retirement and return to provide valuable on-the-job training or mentoring to less experienced employees. To be accepted into the emeritus program, a volunteer must be recommended by a Laboratory Director to the WES Director. Everyone who applies is not entitled to a voluntary assignment. The WES Director must clearly document the decision process for each applicant (whether accepted or rejected) and retain the documentation. To ensure success and encourage participation, the volunteer's federal retirement pay (whether military or civilian) will not be affected while serving in a voluntary capacity. Retired or separated federal employees may accept an emeritus position without a waiting period. Volunteers will not be permitted to monitor contracts on behalf of the government or to participate on any contracts or solicitations where a conflict of interest exists. The same rules that currently apply to source selection members will apply to volunteers. An agreement will be established between the volunteer and the WES. The agreement will be reviewed by the local Office of Counsel for ethics determinations under the Joint Ethics Regulation. The agreement must be finalized before the assumption of duties and shall include: (a) A statement that the voluntary assignment does not constitute an appointment in the civil service and is without compensation and any and all claims against the Government because of the voluntary assignment are waived by the volunteer. (b) A statement that the volunteer will be considered a federal employee for the purpose of injury compensation. (c) Volunteer's work schedule. (d) Length of agreement (defined by length of project or time defined by weeks, months, or years). (e) Support provided by the laboratory (travel, administrative, office space, supplies). (f) A one page Statement of Duties. (g) A provision that states no additional time will be added to a volunteer's service credit for such purposes as retirement, severance pay, and leave as a result of being a member of the Voluntary Emeritus Program. (h) A provision allowing either party to void the agreement with 10 working days written notice. (i) The level of security access required (any security clearance required by the assignment will be managed by the laboratory while the volunteer is a member of the Voluntary Emeritus Program). F. Employee Development The objective of the employee development program will be to develop the competence of employees for maximum achievement of Laboratory, MACOM, DA, and DoD goals. WES will continue its employee development programs, such as local training, off-site training, long- term training, and developmental assignments. Under this Project, the opportunity to apply for expanded developmental opportunities to include sabbaticals and training for degrees, which was previously restricted, will be made available to permanent employees. 1. Sabbatical WES will have the authority to grant sabbaticals to career employees to permit them to engage in study or uncompensated work experience that will contribute to their development and effectiveness. Each sabbatical should benefit WES as well as increase the employee's individual effectiveness. Examples are as follows: advanced academic teaching, study, or research; self-directed (independent) or guided study; and on-the-job work experience with a public, private, or nonprofit organization. Each recipient of a sabbatical must sign a continued service agreement and agree to serve a period equal to at least three times the length of the sabbatical. 2. Degree Training Degree training is an essential component of an organization that requires continuous acquisition of advanced and specialized knowledge. Degree training in the academic environment of DoD laboratories is also a critical tool for recruiting and retaining employees with or requiring critical skills. Constraints under current law and regulation limit degree payment to shortage occupations. In addition, current government-wide regulations authorize payment for degrees based only on recruitment or retention needs. Degree payment is currently not permitted for non-shortage occupations involving critical skills. Under the Personnel Demonstration Project, WES will expand the authority to provide degree training for purposes of meeting critical skill requirements, to ensure continuous acquisition of advanced and specialized knowledge essential to the organization, and to recruit and retain personnel critical to the present and future requirements of the organization. It is expected that the degree payment authority will be used primarily for attainment of advanced degrees. G. Reduction in Pay or Removal Actions Employees covered by the project will be evaluated under a performance evaluation system that affords grievance and/or appeal rights the same as those provided currently. 1. Unacceptable Performance Employees whose performance is unsatisfactory (equivalent to a performance score of 0 on any critical element) at anytime during the year shall be placed in a Performance Improvement Plan (PIP). If in a PIP at the end of a rating period, the employee will not be given a performance rating while in that program. If performance remains unsatisfactory upon completion of the PIP, the employee will be separated from his or her position or reduced to a lower pay band. If performance becomes satisfactory, the employee will receive a performance rating of record and appropriate adjustments to pay may be made at that time (i.e. granting General Schedule increase). These performance-based actions will follow the same procedures as current performance-related removals and reductions in grade under Chapter 43 or Chapter 75 when appropriate. 2. Placement in a Lower Pay Band An employee who is determined ineligible for a performance award may receive either none or one-half the General Schedule pay increase and will not receive a performance pay increase or performance award. Because the minimum pay rate for each pay band will be increased each year by the amount of the General Schedule increase, it is possible that the new minimum rate of a pay band will exceed the basic pay of an employee in that band who did not receive the full [[Page 12017]] General Schedule increase. In these cases, the employee will be moved to the next lower band level and the action will be considered a demotion. This will not be considered an adverse action, will not be appealable through a statutory appeals process, and will not be covered under grade retention provisions. G. Revised Reduction in Force (RIF) Procedures Modifications include limiting competitive areas to occupational families and increasing the emphasis on performance in the RIF process. These modifications will increase the probability of retaining the highest performing individuals in their positions and will increase the probability of displacing the lowest performing individuals. 1. Competitive Areas For RIF purposes, the competitive area will be the occupational family in which the employee is assigned and will cover all geographic locations. 2. Retention Retention registers will be established based on the following criteria listed in order of priority: tenure status (Tenure I-career, Tenure II-career conditional, Tenure III-modified term); veteran's preference; most recent employee performance score; and service computation date. Modified term employees within the affected occupational family will be separated before permanent Tenure I and II employees. The present RIF system essentially remains in effect, except that performance scores are part of the retention order. Performance scores will not be used to adjust the service computation date. A preference eligible with a compensable service-connected disability of 30 percent or more may displace employees in positions equivalent to 5 GS grades below the minimum grade level of his/her current pay band. Increasing the emphasis on job performance will help ensure the retention of outstanding individuals in RIF situations. 3. Grade and Pay Retention Except where waived or modified in the waiver section of this plan, grade and pay retention will follow current law and regulations. IV. Training The key to the success or failure of the proposed demonstration project will be the training provided for all involved. This training will not only provide the necessary knowledge and skills to carry out the proposed changes, but will also lead to commitment to the program on the part of all participants. Training will be tailored to fit the requirements of every employee included and will fully address employee concerns to ensure that everyone has a comprehensive understanding of the program. Training at the beginning of implementation and throughout the demonstration will be provided to supervisors, employees, and the administrative staff responsible for assisting managers in effecting the changeover and operation of the new system. The elements to be covered in the orientation portion of this training will include the following: a description of the system; how employees are converted into the system; pay adjustment process; familiarization with the new position descriptions and performance objectives; the individual performance rating process; the reconsideration process; and the demonstration project administrative and formal evaluation process. A. Supervisors The focus of this project on management-centered personnel administration, with increased supervisory and managerial personnel management authority and accountability, demands thorough training of supervisors and managers in the knowledge and skills that will prepare them for their new responsibilities. Training will include detailed information on the policies and procedures of the demonstration project, skills training in using the classification system, position description preparation, and performance evaluation. Additional training may focus on nonproject procedural techniques such as interpersonal and communication skills. B. Administrative Staff The administrative staff, generally personnel specialists, technicians, and administrative officers, will play a key role in advising, training, and coaching supervisors and employees in implementing the demonstration project. This staff will need training in the procedural and technical aspects of the project. C. Employees WES will train employees covered under the demonstration project. In the months leading up to the implementation date, meetings will be held for employees to fully inform them of all project decisions, procedures, and processes. V. Conversion A. Conversion to the Demonstration Project Initial entry into the demonstration project for covered employees will be accomplished through a full employee protection approach that ensures each employee an initial place in the appropriate occupational family and pay band without loss of pay. An automatic conversion from current GS/GM grade and pay into the new broad banding system will be accomplished. Except for special rate employees, each employee will be converted at their current GS salary at the time of conversion. Special conversion rules will apply to special rate employees (see Section III, Pay Setting Provisions). Employees who enter the demonstration project later by lateral reassignment or transfer will be subject to the same pay conversion rules. Employees serving under regular term appointments at the time of project implementation will be converted to the modified term appointment. Position announcements, etc. will not be required for these term appointments. If conversion into the demonstration project is accompanied by a geographic move, the employee's GS pay entitlements in the new geographic area must be determined before performing the pay conversion. Employees who are on temporary promotions at the time of conversion will be converted to a pay band commensurate with the grade of the position to which temporarily promoted. At the conclusion of the temporary promotion, the employee will revert to the pay band which corresponds to the grade of record. When a temporary promotion is terminated, pay will be determined as described in Section III, Pay Setting Provisions. The only exception will be if the original competitive promotion announcement stipulated that the promotion could be made permanent; in these cases, actions to make the temporary promotion permanent will be considered and, if implemented, will be subject to all existing priority placement programs. At the time of conversion, each employee will be given a lump sum cash payment for the time credited (in weeks) to the employee toward what would have been the employee's next within-grade increase. This step buy-in is applicable only to employees converted into the project at the time of its initial establishment. Any OCONUS employee covered by the project will continue to be ineligible for locality pay. The maximum basic [[Page 12018]] salary payable in the pay band will be limited to the maximum rate of pay on the GS salary table which does not include any locality pay. B. Conversion From the Demonstration Project If a demonstration project employee is moving to a position not under the demonstration project, or if the project ends and each project employee must be converted back to the GS system, the following procedures will be used to convert the employee's project pay band to an equivalent grade and the employee's project rates of pay to equivalent rates of pay. The converted grade and rates of pay must be determined before movement or conversion out of the demonstration project and any accompanying geographic movement, promotion, or other simultaneous action. For conversions upon termination of the project and for lateral reassignments, the converted grade and rates will become the employee's actual grade and rates after leaving the demonstration project (before any other action). For transfers, promotions, and other actions, the converted grade and rates will be used in applying any pay movement out of the project (i.e., promotion rules, highest previous rate rules, pay retention rules) as if the converted grade and rates were actually in effect immediately before the employee left the demonstration project. 1. Grade-Setting Provisions. An employee in a pay band corresponding to a single grade is converted to that grade. An employee in a pay band corresponding to two or more grades is converted to one of those grades according to the following rules: (a) The employee's adjusted rate of basic pay under the demonstration project (including any locality payment or staffing supplement but excluding any supervisory pay adjustment) is compared with step 4 rates in the highest applicable GS rate range. For this purpose, a ``GS rate range'' includes a rate range in the GS base schedule, the locality rate schedule for the locality pay area in which the position is located, or the appropriate special rate schedule for the employee's occupational series, as applicable. If the series is a two-grade interval series, only odd-numbered grades are considered below GS-11. (b) If the employee's adjusted project rate equals or exceeds the applicable step 4 rate of the highest GS grade in the band, the employee is converted to that grade. (c) If the employee's adjusted project rate is lower than the applicable step 4 rate of the highest grade, the adjusted rate is compared with the step 4 rate of the second highest grade in the employee's pay band. If the employee's adjusted rate equals or exceeds step 4 rate of the second highest grade, the employee is converted to that grade. (d) This process is repeated for each successively lower grade in the band until a grade is found in which the employee's adjusted project rate equals or exceeds the applicable step 4 rate of the grade. The employee is then converted at that grade. If the employee's adjusted rate is below the step 4 rate of the lowest grade in the band, the employee is converted to the lowest grade. (e) Exception: If the employee's adjusted project 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 (i.e., between step 1 and step 4), then the employee shall be converted that next higher applicable grade. (f) Exception: 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 into the project, unless since that time the employee has undergone a reduction in band. 2. Pay-Setting Provisions. An employee's pay within the converted GS grade is set by converting the employee's demonstration project rates of pay to GS rates of pay in accordance with the following rules: (a) The pay conversion is done before any geographic movement or other pay-related action that coincides with the employee's movement or conversion out of the demonstration project. (b) An employee's adjusted rate of basic pay under the project (including any locality payment or staffing supplement but excluding any supervisory pay adjustment) is converted to a GS adjusted rate on the highest applicable GS rate range for the converted GS grade. For this purpose, a ``GS rate range'' includes a rate range in the GS base schedule, an applicable locality rate schedule, or an applicable special rate schedule. (c) If the highest applicable GS rate range is a locality pay rate range, the employee's adjusted 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 unadjusted rate of basic pay would be the GS base rate the 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. (d) If the highest applicable GS rate range is a special rate range, the employee's adjusted 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 unadjusted rate of basic pay will be the GS rate corresponding to the converted special rate (i.e., same step position). 3. Within-Grade Increase--Equivalent Increase Determinations. Service under the demonstration project since the last pay-for- performance determination is creditable for within-grade purposes upon conversion back to the GS pay system. Performance pay increases (including a zero increase) under the demonstration project are equivalent increases for the purpose of determining the commencement of a within-grade increase waiting period under 5 CFR 531.405(b). VI. Project Duration Public Law 103-337 removed any mandatory expiration date for this demonstration. The project evaluation plan adequately addresses how each intervention will be comprehensively evaluated for at least the first 5 years of the demonstration (Proposed Plan for the Evaluation of the DoD Laboratory Demonstration Program, OPM, 1995). Major changes and modifications to the interventions can be made through announcement in the Federal Register and would be made if formative evaluation data warranted. At the 5 year point, the entire demonstration will be reexamined for either: permanent implementation; change and another 3-5 year test period; or expiration. VII. Evaluation Plan Authorizing legislation mandated evaluation of the demonstration project to assess the merits of project outcomes and to evaluate the feasibility of applications to other federal organizations. A comprehensive and methodologically rigorous evaluation of the personnel system changes will be carried out. The overall evaluation consists of two components--external and internal evaluation. The external evaluation will be conducted by OPM's Personnel Resources and Development Center (PRDC) to benefit from their extensive experience evaluating demonstration projects. PRDC will serve in the role of external evaluator to [[Page 12019]] ensure the integrity of the evaluation process, outcomes, and interpretation of results. Their external evaluation will be supplemented by an internal evaluation to be accomplished by the staff of WES. Selected parts of the evaluation will be completed using contractor support. The contractor(s) will be well qualified and experienced with demonstrated expertise in performing relevant support functions. Essential elements of the evaluation plan are set forth below. The demonstration project is a complex experiment to be conducted in a dynamic environment over several years. Modifications and refinements to the evaluation plan will be made as required by mid-course project changes. All additions, deletions, and refinements to the current plan will be fully documented and explained as part of the evaluation reporting process. The main purpose of the evaluation is to determine the effectiveness of the personnel system changes described by the individual interventions. Every effort will be made to establish direct cause-and-effect relationships between the interventions and effectiveness criteria. An ancillary objective is to assess the effects of the interventions on improved organizational performance. An indirect causal link is hypothesized between the personnel system changes and improved organizational effectiveness, i.e., improved laboratory performance, mission accomplishment, and customer satisfaction. The current personnel management system with its many rigid rules and regulations often is perceived as a barrier to mission accomplishment. Together, the demonstration project initiatives are intended to remove some of those barriers, and therefore, are expected to contribute to improved laboratory performance. The evaluation effort will be accomplished in four distinct phases: (a) Design phase--includes development of the evaluation model, selection of experimental and comparison sites, and collection of baseline data prior to implementation. (b) Implementation phase--includes actual project implementation and monitoring of the degree and support of implementation to assure that each of the project interventions has been operationalized as originally conceived. (c) Formative evaluation phase--includes data collection and analysis for five years for purposes of evaluating the effects of the interventions. Periodic reports and annual summaries will be prepared to document the findings. (d) Summative evaluation phase--focuses on summary evaluation and overall assessment of the project's impact, including presentation of conclusions and final recommendations upon completion of the project. An intervention impact model (Appendix A) will be used to measure the effectiveness of the various personnel system changes or interventions. Additional measures will be developed as new interventions are introduced or existing interventions modified with consistent with expected effects. Measures may also be deleted when appropriate. Activity specific measures may also be developed to accommodate specific needs or interests which are locally unique. The evaluation model for the Demonstration Project identifies elements critical to an evaluation of the effectiveness of the interventions. The overall evaluation approach will also include consideration on context variables that are likely to have an impact on project outcomes (e.g., HRM regionalization, downsizing, cross-service integration, and the general state of the economy). However, the main focus of the evaluation will be on intermediate outcomes, i.e., the results of specific personnel system changes which are expected to improve human resources management. The ultimate outcomes are defined as improved organizational effectiveness, mission accomplishment, and customer satisfaction. Data from a variety of different sources will be used in the evaluation. Information from existing management information systems supplemented with perceptual data will be used to assess variables related to effectiveness. Multiple methods provide more than one perspective on how the demonstration project is working. Information gathered through one method will be used to validate information gathered through another. Confidence in the findings will increase as they are substantiated by the different collection methods. The following types of data will be collected as part of the evaluation: workforce data; personnel office data; employee attitudes and feedback using surveys, structured interviews and focus groups; local activity histories, and core measures of laboratory effectiveness. VIII. Demonstration Project Costs A. Step Buy-Ins Under the current pay structure, employees progress through their assigned grade in step increments. Since this system is being replaced under the demonstration project, employees will be awarded that portion of the next higher step they have completed up until the effective date of implementation. As under the current system, supervisors will be able to withhold these partial step increases if the employee's performance is not at an acceptable level of competence. At the time of conversion, each employee will be given a lump sum cash payment for the time credited (in weeks) to the employee toward what would have been the employee's next within-grade increase. Employees at the top step of their grade on the date of implementation will not be eligible for within-grade increase equity adjustments since they are already at the top of the step scale. B. Development Costs Costs associated with the development of the personnel demonstration system include software automation, training, and project evaluation. All funding will be provided through the WES budget. The projected annual expenses for each area is summarized in Table 4. Project evaluation costs are not expected to continue beyond the first 6 years. Table 4.--Projected Developmental Costs -------------------------------------------------------------------------------------------------------------------------------------------------------- FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 -------------------------------------------------------------------------------------------------------------------------------------------------------- Training....................... $97K $19K .................. .................. .................. .................. Project Evaluation............. 25K 60K $60K $60K $60k $60K Automation..................... 80K 10K Totals..................... 202K 89K 60K 60K 60k 60K -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 12020]] IX. Required Waivers to Law and Regulations Public Law 103-337 gave the DoD the authority to experiment with several personnel management innovations. In addition to the authorities granted by the law, the following are the waivers of law and regulation that will be necessary for implementation of the Demonstration Project. In due course, additional laws and regulations may be identified for waiver request. A. Waivers to Title 5, U.S. Code Section 3111, Acceptance of volunteer service Section 3324, Appointments to positions classified above GS-15 Section 3341, Details Section 4107, Non-Government facilities; restrictions (to the extent that training may be paid for the purpose of an employee to obtain a degree) Section 4108, Employee agreements; service after training (to the extent that continued service is required only for long-term training and sabbaticals) Sections 5101-5111, Purpose, definitions, basis, classification of positions, review, authority (to the extent that white collar employees will be covered by broadbanding. Pay category determination criteria for Federal Wage System positions remain unchanged). Sections 5301; 5302 (8), and (9); 5303; and 5304, Pay comparability system (Sections 5301, 5302, and 5304 are waived only to the extent necessary to allow: (1) Demonstration project employees, except employees in band VI of the Engineers and Scientists occupational family, to be treated as General Schedule employees; (2) basic rates of pay under the demonstration project to be treated as scheduled rates of basic pay; and (3) employees in band VI of the Engineers and Scientists occupational family to be treated as ST employees for the purposes of these provisions) Section 5305, Special pay authority Sections 5331-5336, General Schedule pay rates Sections 5361-5366, Grade and pay retention (to the extent necessary to (1) Replace ``grade'' with ``pay band'; (2) allow demonstration project employees to be treated as General Schedule employees; (3) provide that pay band retention provisions do not apply to movements to a lower pay band as a result of receiving no or only part of a general pay increase because of poor performance; (4) provide that pay retention provisions do not apply to conversions from General Schedule special rates to demonstration project pay, as long as total pay is not reduced, and to reductions in pay due solely to the removal of all or part of a supervisory pay adjustment upon leaving a supervisory position; and (5) provide that an employee on pay retention whose performance rating is less than 2.0 is not entitled to 50 percent of the amount of the increase in the maximum rate of basic pay payable for the pay band of the employee's position. This waiver does not apply to employees in band VI of the Engineers and Scientists occupational family who are to be treated as ST employees for the purposes of applying the grade and pay retention provisions.) Section 5545, Night, standby, irregular, and hazardous duty differential (to the extent necessary to allow demonstration project employees to be treated as General Schedule employees. This waiver does not apply to employees in band VI of the Engineers and Scientists occupational family.) Sections 5753, 5754, and 5755, Recruitment and relocation bonuses, retention allowances, and supervisory differentials (to the extent necessary to allow: (1) Employees and positions under the demonstration project to be treated as employees and positions under the General Schedule; and (2) employees in band VI of the Engineers and Scientists occupational family to be treated as ST employees) Section 7512(3), Adverse actions (to the extent necessary to (1) substitute ``pay band'' for ``grade.'' Section 7512(4), Adverse actions (to the extent necessary to provide that adverse action provisions do not apply to: (1) Conversions from General Schedule special rates to demonstration project pay, as long as total pay is not reduced; and (2) reductions in pay due to removal of all or part of a supervisory adjustment) B. Waivers to Title 5, Code of Federal Regulations Part 300.601-605, Time-in-grade restrictions (to the extent that time- in-grade restrictions are eliminated) Part 308.101-103, Volunteer service (to the extent that volunteer service is unrestricted) Parts 315.801(a) and 315.802(a), Length of probationary period (to the extent that the probationary period for engineers and scientists is increased to 2 years) Part 316.301, Term appointment (to the extent that modified term appointments may cover a maximum period of 6 years) Part 316.303, Tenure of term employees (to the extent that term employees may compete for permanent status through local merit promotion plans) Part 335.103, Covering the length of details and temporary promotions Part 351.402(b), Competitive area (to the extent that occupational family is the competitive area) Part 351.403, Competitive level (to the extent that pay band is substituted for grade) Part 351.504, Retention standing, credit for performance (to the extent that service credit will not be modified based on performance rating) Part 351.701, Assignment involving displacement (to the extent that a performance score of 1 is substituted for level 2 and bumping and retreating will be limited to no more than 2 pay bands except for 30 percent compensable veterans who can retreat to the equivalent of 5 GS grades) Part 430.101-210, subparts A and B, Performance Management System Part 432.103-105, Performance based reduction-in-grade and removal actions (to the extent that pay band is substituted for grade, reduction in band level as a result of non-receipt of General Schedule increases because of poor performance is not an adverse action, and unacceptable performance is redefined) Part 511.101, 201-203, General provisions and coverage of the General Schedule (to the extent that positions are covered by broadbanding) Part 511.601-612, Classification appeals (to the extent that positions are covered by broadbanding) Part 530, subpart C, Special salary rates Part 531, subparts B, D, and E, Determining the rate of basic pay, within-grade increases, and quality step increases Part 531, subpart F, Locality-based comparability payments (to the extent necessary to allow: (1) demonstration project employees, except employees in band VI of the Engineers and Scientists occupational family, to be treated as General Schedule employees; (2) basic rates of pay under the demonstration project to be treated as scheduled annual rates of pay; and (3) employees in band VI of the Engineer and Scientist occupational family to be treated as ST employees) Part 536, Grade and pay retention (to the extent necessary to: (1) replace ``grade'' with ``pay band'; (2) provide [[Page 12021]] that pay band retention provisions do not apply to movements to a lower pay band as a result of receiving no or only part of a general pay increase because of poor performance; (3) provide that pay retention provisions do not apply to conversions from General Schedule special rates to demonstration project pay, as long as total pay is not reduced, and to reductions in pay due solely to the removal of all or part of a supervisory pay adjustment upon leaving a supervisory position; and (4) provide than an employee on pay retention whose performance rating is less than 2.0 is not entitled to 50 percent of the amount of the increase in the maximum rate of basic pay payable for the pay band of the employee's position. This waiver does not apply to employees in band VI of the Engineers and Scientists occupational family who are to be treated as ST employees for the purposes of applying the grade and pay retention provisions) Part 550.703, Severance pay (to the extent necessary to modify the definition of ``reasonable offer'' by replacing ``two grade or pay levels'' with ``one band level'' and ``grade or pay level'' with ``band level'' Part 550.902, Hazardous duty differential, definition of ``employee'' (to the extent necessary to allow demonstration project employees to be treated as General Schedule employees. This waiver does not apply to employees in band VI of the Engineers and Scientists occupational family) Part 575, subparts A, B, C, and D, Recruitment bonuses, relocation bonuses, retention allowances and supervisory differentials (to the extent necessary to allow (1) employees and positions under the demonstration project to be treated as employees and positions under the General Schedule and (2)employees in band VI of the Engineers and Scientists occupational family to be treated as ST employees) Part 752.401 (a)(3), Adverse actions (this provision is waived only to the extent necessary to (1) substitute ``pay band'' for ``grade'' and (2) provide that moving a lower pay band as a result of not receiving the full amount of a general pay increase because of poor performance is not an adverse action) Part 752.401 (a)(4), Adverse actions (to the extent necessary to provide that adverse action provisions do not apply to: (1) conversions from General Schedule special rates to demonstration project pay, as long as total pay is not reduced; and (2) reductions in pay due to the removal of all or part of a supervisory adjustment) BILLING CODE 6325-01-P [[Page 12022]] [GRAPHIC] [TIFF OMITTED] TN13MR97.017 [[Page 12023]] [GRAPHIC] [TIFF OMITTED] TN13MR97.018 [[Page 12024]] [GRAPHIC] [TIFF OMITTED] TN13MR97.019 [FR Doc. 97-6169 Filed 3-10-97; 8:45 am] BILLING CODE 6325-01-C