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7 October 2008. Add correction.
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[Federal Register: October 7, 2008 (Volume 73, Number 195)]
[Rules and Regulations]
[Page 58435]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07oc08-2]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 9901
RIN 3206-AL62
National Security Personnel System; Correction
AGENCY: Department of Defense; Office of Personnel Management.
ACTION: Final rule; correction.
-----------------------------------------------------------------------
SUMMARY: The Department of Defense (DoD) and the Office of Personnel
Management (OPM) published in the Federal Register of September 26,
2008 (73 FR 56344) a final rule governing the operation of the National
Security Personnel System (NSPS), a human resources management system
for DoD, as originally authorized by the National Defense Authorization
Act for Fiscal Year 2004 and amended by the National Defense
Authorization Act for Fiscal Year 2008. This correction document
clarifies the effective date of the final rule.
DATES: Effective October 7, 2008.
FOR FURTHER INFORMATION CONTACT: At DoD, Bradley B. Bunn, (703) 696-
5303; for OPM, Charles D. Grimes III, (202) 418-3163.
SUPPLEMENTARY INFORMATION: In FR Doc. E8-22483, appearing on page 56344
in the Federal Register of Friday, September 26, 2008, the DATES
section should read, ``Effective November 25, 2008.''
Office of Personnel Management.
Charles D. Grimes III,
Deputy Associate Director, Center for Performance and Pay Systems,
Department of Defense.
Bradley B. Bunn,
Program Executive Officer, National Security Personnel System.
[FR Doc. E8-23727 Filed 10-6-08; 8:45 am]
BILLING CODE 6325-39-P
[Federal Register: September 26, 2008 (Volume 73, Number 188)]
[Rules and Regulations]
[Page 56343-56420]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se08-17]
[[Page 56343]]
-----------------------------------------------------------------------
Part IV
Department of Defense
Office of Personnel Management
-----------------------------------------------------------------------
5 CFR Part 9901
National Security Personnel System; Final Rule
[[Page 56344]]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 9901
RIN 3206-AL62
National Security Personnel System
AGENCY: Department of Defense; Office of Personnel Management.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Defense (DoD) and the Office of Personnel
Management are issuing final regulations governing the operation of the
National Security Personnel System (NSPS), a human resources management
system for DoD, as originally authorized by the National Defense
Authorization Act for Fiscal Year 2004 and amended by the National
Defense Authorization Act for Fiscal Year 2008. This final regulation
governs compensation, classification and performance management under
NSPS. NSPS aligns DoD's human resources management system with the
Department's critical mission requirements and protects the civil
service rights of its employees.
DATES: November 25, 2008.
FOR FURTHER INFORMATION CONTACT: At DoD, Bradley B. Bunn, (703) 696-
5303; for OPM, Charles D. Grimes III, (202) 418-3163.
SUPPLEMENTARY INFORMATION:
Table of Contents
This SUPPLEMENTARY INFORMATION section is organized as follows:
I. The Case for Action
II. The Need for Change
III. Significant Changes to the Original Law
IV. Two Years of Operational Experience Under NSPS
A. Classification
B. Compensation
C. Pay Administration
D. Performance and Pay Pool Management
E. Other Changes
V. Response to Public Comments
A. Major Issues
1. Specificity of the Regulation
2. Collective Bargaining and Labor Relations
3. Performance and Pay Pool Management
4. Influence of Performance Versus Market Factors on Pay
5. Control Points
B. General Issues
C. Issues by Subpart
1. Subpart A--General Provisions
2. Subpart B--Classification
3. Subpart C--Pay and Pay Administration
4. Subpart D--Performance Management
VI. Next Steps
I. The Case for Action
The United States needs a future force that is defined less by size
and more by mobility and swiftness, one that is easier to deploy and
sustain, one that relies more heavily on stealth, precision weaponry,
and information technologies.
With this philosophy established in 2001, DoD set the direction for
the transformation of defense strategy and defense management--the way
DoD achieves its mission. To accomplish this, DoD transformed the way
it leads and manages the people who develop, acquire, and maintain our
Nation's defense capability. Those responsible for defense
transformation--including DoD civilian employees--anticipate the future
and, where possible, help create it. The Department continues to
implement new capabilities to meet tomorrow's threats as well as those
of today.
The National Security Personnel System (NSPS) is a key pillar in
the Department of Defense's transformation. NSPS was established to
provide a flexible and contemporary civilian personnel system that is
essential to the Department's efforts to create and maintain an
environment in which the DoD Total Force thinks and operates as one
cohesive unit.
DoD civilians are unique in Government. They are an integral part
of an organization that has a military function. DoD civilians
complement and support the military around the world in every time
zone, every day. Just as new threats, new missions, new technologies,
and new tactics are changing the work of the military, they are
changing the work of our entire civilian workforce as well. To continue
to support the interests of the United States in the current national
security environment--where unpredictability is the norm and greater
agility the imperative--civilians must be an integrated, flexible, and
responsive part of the Total Force team.
The Federal personnel system in use by much of the Department and
the Federal Government is based on 20th century assumptions about the
nature of public service and cannot adequately address public service
requirements in the 21st century national security environment.
Although this personnel system is based on important core principles,
the principles are manifested in an inflexible, one-size-fits-all
system of defining work, hiring staff, managing people, assessing and
rewarding performance, and advancing personnel. The inherent weaknesses
of this system make support of DoD's mission complex, costly, and
ultimately risky. The pay and movement of personnel is linked to
outdated, narrowly defined work definitions with inadequate means of
making distinctions in pay between high and low performers.
Recognizing this, NSPS is designed to provide a more flexible,
mission-driven system of human resources management that retains core
principles while providing a more cohesive Total Force. Additionally,
the Department's 28 years of experience with transformational personnel
demonstration projects, covering approximately 30,000 DoD employees,
has demonstrated that fundamental change in personnel management
results in individual career growth and opportunities, workforce
responsiveness, and innovation. All of these things multiply mission
effectiveness.
The immense challenges facing DoD today support the continuation of
this civilian workforce transformation. Civilian employees are being
asked to assume new and different responsibilities, take more risk, and
be more innovative, agile, and accountable than ever before. It is
critical that DoD supports the entire civilian workforce with modern
systems--particularly a human resources management system that supports
and protects their critical role in DoD's Total Force effectiveness.
The enabling legislation provides the Department with the authority to
meet this transformation challenge.
More specifically, the law provides the Department and OPM
authority to establish a flexible and contemporary civilian human
resources management system for DoD civilians. The attacks of September
11 and the continuing war on terrorism make clear that flexibility is
not a policy preference. It is nothing less than an absolute
requirement, and it must be the foundation of civilian human resources
management.
NSPS promotes a performance culture in which the performance and
contributions of the DoD civilian workforce are more fully recognized
and rewarded. The system provides the civilian workforce a contemporary
pay-banding construct which includes performance-based pay. This allows
for the establishment of more competitive salaries and the ability to
adjust salaries based on various factors, to include labor market
conditions, performance, as well as changes in employee duties.
In other words, NSPS provides a more flexible HR management system
to attract skilled, talented, and motivated people, while also
retaining and improving the skills of the existing workforce. The
system retains the core values of the civil service while
[[Page 56345]]
allowing employees to be paid and rewarded based on performance,
innovation, and results. It also provides employees with greater
opportunities for career growth and mobility within the Department. DoD
leadership will ensure that supervisors and employees understand NSPS
and can function effectively within it.
The NSPS pay and classification system provides a more flexible
support structure that helps attract skilled and talented workers,
retain and appropriately reward current employees, and create
opportunities for civilians to participate more fully in the total
integrated workforce. A pay-banding structure replaced the artificial
limitations created by the previous pay and classification systems.
With broad pay bands, the Department is able to move employees more
freely across a range of work opportunities without being bound by
narrowly described work definitions. The pay structure is more
responsive to market conditions. The Department is able to adjust rate
ranges and local market supplements based on variations relating to
specific occupations, rather than using a one-size-fits-all approach.
Labor market conditions also are considered when making pay-setting
decisions. As prescribed in the enabling legislation, NSPS better links
individual pay to performance using performance rather than time on the
job to determine pay increases.
Despite the professionalism and dedication of DoD civilian
employees, the limitations imposed by the Governmentwide Federal
personnel system often prevent managers from using civilian employees
effectively. This causes the Department to sometimes use military
personnel or contractors when civilian employees are the best choice to
accomplish the task. The Federal personnel system limits opportunities
for civilians at a time when the role of DoD's civilian workforce
includes more significant participation in Total Force effectiveness.
NSPS generates more opportunities for DoD civilians by providing an
incentive for managers to turn to them first when certain vital tasks
need doing. This frees uniformed men and women to focus on matters
unique to the military.
A key to the continued success of NSPS is ensuring that the system
is perceived as being fair, i.e., establishing a trust between
employees and supervisors. The Department's mission cannot be
accomplished without the civilian workforce. NSPS recognizes that
employees more readily exercise personal responsibility and sustain a
high level of individual performance and teamwork when they perceive
that the system and their supervisors are fair. The Department and the
Office of Personnel Management have addressed fairness in NSPS in
several dimensions: system design; the right to seek review of
important categories of management decisions; workforce access to
information about system provisions, processes, and decisions criteria;
and accountability mechanisms.
NSPS regulations and implementing issuances include safeguards
against arbitrary actions. Examples include written performance
expectations, multi-level reviews of performance plans expectations and
performance rating and payout decisions, and mandatory within-grade
increase buy-in for all employees who are moved to NSPS via management-
directed actions. In addition, NSPS continues employees' and labor
organizations' rights to challenge or seek review of key decisions. For
example, non-bargaining unit employees will be able to request
reconsideration of their job objective rating or their rating of record
through an administrative grievance procedure. Bargaining unit
employees use a negotiated grievance procedure to challenge matters
related to their rating of record. Employees must be notified in
advance of a proposed adverse action, be given time and opportunity for
reply, and be given a decision notice that includes the reasons for the
decision in accordance with Governmentwide adverse action and employee
appeal rules. Labor organization officials may file unfair labor
practices claims or grievances. Labor organizations may seek collective
bargaining on NSPS implementation under Governmentwide labor relations
rules.
The Department and Components make information about NSPS rules,
policies, and practices readily available to the workforce in the form
of published regulations, published implementing issuances, local level
instructions, training, and other sources.
The last dimension of accountability for fair decisions and
practices under NSPS builds on human capital management mechanisms
beyond NSPS, and on internal NSPS provisions. First, there are human
resources management accountability reviews within the Department that
identify and address issues regarding the observance of merit system
principles and regulatory and policy requirements, including those
established under NSPS. In addition, the Department monitors the
outcomes of administrative and negotiated grievances, performance
rating reconsiderations, equal employment opportunity complaints, and
whistleblower complaints to correct chronic problems and particular
failings.
Second, NSPS program evaluation findings enable the Secretary and
the OPM Director to determine whether the design of NSPS and the
pattern of its results meet statutory requirements like fairness and
equity and the specific performance expectations for a credible and
trusted system. Section 9901.107 of this rule identifies the
requirement for an NSPS program evaluation. A robust and long-term NSPS
program evaluation plan of studies and reviews, transactional data
analyses opinion surveys, and other evaluative methods has been
fielded.
Fairness in NSPS is not a specific thing, but rather an intrinsic
quality built into the design of a flexible human resources management
system--one to be accounted for during reviews and evaluations of NSPS
operations and decisions.
II. The Need for Change
The Department's experience operating under the current NSPS
regulations as well as the 28 years of experience with transformational
personnel demonstration projects, covering nearly 30,000 DoD employees,
has shown that fundamental change in personnel management has a
positive impact on individual career growth and opportunities,
workforce responsiveness, and innovation; all these things enhance
mission effectiveness.
Public Law 108-136 amended title 5, United States Code, to provide
the Department with the authority to meet this transformation challenge
through development and deployment of NSPS. Public Law 110-181, while
amending Public Law 108-136, continues to promote a performance culture
in which the performance and contributions of the DoD civilian
workforce are linked to strategic mission objectives and are more fully
recognized and rewarded. It also retains flexibilities to streamline
the method for classifying positions and to provide a more flexible
support structure for both pay and classification in order to help
attract skilled and talented workers; retain and appropriately reward
current employees; respond to DoD mission requirements; and create
opportunities for employees to participate more fully in the total
integrated workforce. The System offers the more than 181,000 currently
covered employees a contemporary pay banding construct, which includes
performance-based pay. NSPS allows the Department to be more
[[Page 56346]]
competitive in setting salaries and to adjust salaries based on factors
such as labor market conditions, performance, and changes in duties.
The updated HR management system rules more specifically govern how
retained classification, compensation, and performance management
flexibilities will be implemented. The greater level of detail reflects
a continued commitment to greater transparency regarding provisions of
Pub. L. 110-181 and system improvements in light of operational
experience with NSPS. The System retains the core values of the civil
service, including merit system principles and veterans' preference,
and allows employees to be paid and rewarded based on performance,
innovation, and results.
III. Significant Changes to the Original Law
The original NSPS statute was enacted on November 24, 2003, and
provided the Secretary of Defense, in regulations jointly prescribed
with the Director of OPM, the authority to establish a flexible and
contemporary civilian personnel system called the National Security
Personnel System. This new civilian personnel system was intended to
cover most of the approximately 700,000 DoD civilian employees,
including blue-collar employees.
Among its features, it provided authority to establish a pay-for-
performance system that recognizes and rewards employees based on
performance and contribution to the mission; a new pay-banding system
to replace the General Schedule (GS); a simplified job classification
process and flexible processes to assign new or different work;
streamlined hiring processes and the ability to offer more competitive,
market-sensitive compensation; improved workforce shaping procedures
that reduce disruption with greater emphasis on performance as a factor
in retention; expedited disciplinary and employee appeals processes for
faster resolution of workplace issues, while preserving due process
rights of employees; and a labor-management relations system that
recognized DoD's critical national security mission and the need to act
swiftly to execute that mission, while preserving collective bargaining
rights of employees. The changes to labor relations included the
ability to negotiate at the national level instead of negotiating with
more than 1,500 local bargaining units, and the ability to establish a
new independent third party to resolve labor relations disputes in DoD.
The National Defense Authorization Act of 2008 (Pub. L. 110-181,
January 28, 2008) amended 5 U.S.C. 9902, retaining authority for
performance-based pay and classification and compensation
flexibilities, but substantially modifying other NSPS authorities. The
law, among other things--
Brings NSPS under Governmentwide labor-management
relations rules.
Excludes Federal Wage System (blue collar) employees from
coverage under NSPS.
Requires DoD to collectively bargain procedures and
appropriate arrangements for bringing DoD bargaining unit employees
under NSPS prior to conversion of these employees.
Brings NSPS under Governmentwide rules for disciplinary
actions and employee appeals of adverse actions.
Brings NSPS under Governmentwide rules for workforce
shaping (reduction in force, furlough, and transfer of function).
Requires that this regulation be considered a major rule
for the purposes of section 801 of title 5, United States Code, with
advance Congressional reporting for OPM/DoD jointly-prescribed NSPS
regulations.
Gives these regulations the status of Governmentwide rules
for the purpose of collective bargaining under chapter 71 when these
rules are uniformly applicable to all organizational or functional
units included in NSPS.
Mandates that all employees with a performance rating
above ``unacceptable'' or who do not have current performance ratings
receive no less than sixty percent of the annual Governmentwide General
Schedule pay increase (with the balance allocated to pay pool funding
for the purpose of increasing rates of pay on the basis of employee
performance).
Limits NSPS conversions to no more than 100,000 employees
per year and eliminates the requirement for the Secretary of Defense to
determine if the performance management system meets key parameters
before increasing NSPS coverage to more than 300,000 employees.
Based on the changes Public Law 110-181 made to section 9902 of
title 5, the revised rule deletes subparts E, F, G, H, and I (dealing
with staffing, workforce shaping, adverse actions, appeals, and labor
relations, respectively) of the current NSPS regulations.
Public Law 110-181 also amended section 9902 by modifying the
authority to conduct national-level bargaining and retains the rights
of employees to organize, bargain collectively and participate through
labor organizations of their own choosing in decisions that affect
them, subject to any exclusion from coverage or limitation on
negotiability established pursuant to law. It extends and expands
exclusions from NSPS coverage for certain DoD laboratories through
October 1, 2011. Some of these laboratories operate under demonstration
project authorities which provide their own pay-for-performance
systems.
In establishing the revised System, only certain provisions of
title 5, United States Code, may be waived or modified by DoD and OPM:
Chapter 43 (dealing with performance management);
Chapter 51 (dealing with General Schedule job
classification);
Chapter 53 (dealing with pay for General Schedule
employees and pay for certain other employees), except for certain
sections for which waiver or modification is barred by law; and
Subchapter V of chapter 55 (dealing with premium pay),
except sections 5544 (dealing with prevailing rate employees) and 5545b
(dealing with firefighter pay).
Finally, Public Law 110-181 has a significant effect on the content
of the current regulations governing NSPS. Previous legislation
authorizing NSPS permitted the promulgation of regulations outlining a
framework for NSPS. Implementing issuances provided the detail lacking
in the regulatory framework. Taken together, the regulations and the
implementing issuances formed the structure of NSPS. However, Public
Law 110-181 eliminated the previous legislation's exclusive statutory
collaboration process for employee representatives to participate in
design and implementation of NSPS. Public Law 110-181 mandated the
Governmentwide labor relations system in title 5, chapter 71, for NSPS
and conferred the status of Governmentwide rule on regulations
governing NSPS. Given these new provisions, much of the structure of
NSPS must be established in regulation, rather than through the
collective bargaining process, for purposes of uniformity and
consistency of the operation of NSPS, much like the Governmentwide
regulations that establish the structure of the General Schedule.
IV. Two Years of Operational Experience Under NSPS
In order to provide consistency and uniformity of application
throughout the Department, certain NSPS features
[[Page 56347]]
previously described in DoD implementing issuances have been
incorporated into this regulation. DoD now has more than 2 years of
experience with these features and has determined that they effectively
support key performance parameters of NSPS. In addition, the regulation
includes modifications made to NSPS as a result of operational lessons
learned over the last two years.
A. Classification
Effective Date of Classification of Position
The regulation now provides specific details for entitlement to
retroactive effective date of a classification decision. While the
prior regulation provided for both a classification reconsideration
process and a retroactive effective date, more detail has been added to
provide for a uniform and consistent application.
B. Compensation
The regulation modifies rules governing the current compensation
structure by removing the link between increases in the minimum rate of
the rate range and across-the-board increases. This change enables more
flexibility in responding to labor market changes that may impact the
lower end of a pay range for an occupation, but not the middle or upper
ranges. Also, discretionary authority is now provided to give targeted
general salary increases to designated occupational series within a pay
band. This flexibility enables management to adjust pay to recognize
market forces when the pay band itself is market competitive but, due
to rapidly changing markets, the current salaries paid to employees in
certain occupations are not.
C. Pay Administration
Several changes have been made in the area of pay administration.
Pay-setting flexibilities have been expanded to permit discretionary
within-grade increase buy-ins when employees from outside of NSPS move
to an NSPS position. Safeguards have been incorporated for employees
who are moved to NSPS via management-directed actions. In these cases,
the regulation now specifies a required within-grade increase buy-in. A
significant level of detail has been added to describe how pay is
administered upon promotion, reassignment, reduction in band and
appointment to the Federal service. Most of this detail reflects the
pay-setting rules that have proven effective during the past 2 years in
the operation of NSPS.
The regulation retains management's flexibility to set pay within a
given range, but provides safeguards by placing limitations on the
factors management may use in exercising its discretion as well as
establishing pay increase limits that cannot be exceeded without
higher-level review. There have also been some modifications to pay-
setting practices based on DoD's experience with the System. Most
significantly, pay-setting rules for employees moving into NSPS from
other systems or moving from NSPS positions covered by targeted local
market supplements have been revised. Pay for these employees was
previously set using ``base salary.'' Pay will now be set using
``adjusted salary'' (includes base salary plus any applicable locality
pay, special rate supplement, or other equivalent supplement) and any
physicians' comparability allowance payable for the position held prior
to the reassignment. In these cases, when the new position is in a
different location, a geographic pay conversion will be processed.
These rules allow management to set pay more competitively and
equitably compensate employees by permitting pay to be set in a manner
that prevents a loss in adjusted salary in certain circumstances.
Further changes in NSPS pay-setting rules include the discretion to
adjust the rate of pay of a teacher moving into NSPS up to 20 percent
to take into account the shorter work year incorporated in the annual
rate of a teacher paid under 20 U.S.C. 901.
Pay Retention
Pay retention rules have been modified to provide a ``grandfather''
clause for employees who are covered by General Schedule grade and pay
retention rules at the time they are converted into NSPS. These
employees will not be subject to the 104-week limit on pay retention.
They will be entitled to pay retention indefinitely, subject to
specifically identified pay retention termination events. Much detail
has been added in the area of pay retention to identify circumstances
for which pay retention is mandatory, eligibility requirements for
optional pay retention, and events leading to termination of pay
retention. These rules reflect current practices under NSPS.
Accelerated Compensation for Developmental Positions (ACDP)
``Treatment of Developmental Positions'' (Sec. 9901.345) has been
modified to specify criteria for Accelerated Compensation for
Developmental Positions (ACDP) increases, identify the range of pay
increases that are permitted under this discretionary authority, and to
expand the discretionary use of ACDP to employees in developmental or
trainee level positions assigned to the lowest pay band of a
nonsupervisory pay schedule and trainee level positions or positions
assigned to the Student Career Experience Program. To date, this
authority has been available only to employees in developmental or
trainee level positions in professional and analytical occupations. The
change provides additional flexibility in recognition of pay
progression patterns in other occupations.
Premium Pay
A critical feature of NSPS compensation is the ability to modify
premium pay in response to current and future needs. This flexibility
facilitates the Department's ability to accomplish its diverse mission.
The revised regulation incorporates rules governing NSPS premium pay.
Premium pay includes pay such as overtime pay, compensatory time off,
holiday, Sunday, and standby pay. Among the premium pay features unique
to NSPS are on-call premium pay for health care personnel in specified
circumstances, pay for weekend duty for health care personnel, and
foreign language proficiency pay. For the most part, the regulations
reflect current premium pay policies under NSPS, which include certain
modifications to the standard title 5 premium pay laws and regulations
to address unique DoD mission requirements and differences in the NSPS
classification and pay structure.
Conversion/Movement Out of NSPS
Regulations have been added to provide a process for converting
employees out of NSPS when their position is removed from coverage
under the System and to provide a ``virtual GS grade'' to employees who
leave their NSPS position to accept employment in a General Schedule
position. These rules promote more equitable pay setting upon moves to
the General Schedule pay system.
D. Performance and Pay Pool Management
Higher Level Review
The revised regulation more specifically outlines safeguards to
ensure the NSPS performance and pay pool management system is fair and
equitable based on employee performance. For example, under subpart D,
the revised regulation now
[[Page 56348]]
provides for a higher level review of performance expectations and
recommendations for ratings of record, share assignment, and payout
distribution. This review helps ensure that assigned employee
objectives are reviewed for appropriateness and consistency within and
across the organization and/or pay pool as well as employee ratings,
share assignments, and payout distribution. These safeguards help
ensure equity in performance payouts.
Calculating Annual Payout
Rating levels, share assignment ranges, and rounding rules for
conversion of raw performance scores are also specified in the revised
regulation, as well as formulas for share values and calculation of
performance payouts. The language also clarifies the intended
application of a common share value (expressed as a percent of pay)
throughout an entire pay pool, to include all sub pay pools. This
further preserves equity across a pay pool.
Flexibility in Extending Performance Appraisal Periods
The authority to extend individual performance appraisal periods to
enable employees to complete minimum periods is specified as well as
limitations on this authority. By specifically providing for extension
of individual rating cycles, valued performers and higher-performing
employees moving to NSPS positions can more quickly benefit from the
NSPS performance-based pay features.
Pay Pools
The pay pool concept has also been further defined in this
regulation by providing parameters for pay pool composition and
specifying the roles of pay pool officials within the pay pool process.
Much thought was given to achieving the ``right'' balance between
safeguards and management flexibility. For example, although pay pool
share ranges have been specified for each rating level, management
still has the flexibility to determine assignment of shares within that
range. System safeguards were added to ensure fairness, equity, and a
performance focus by expressly stating and limiting the factors which
may be used in the determination of share assignment. Similarly,
management still retains the flexibility and authority to determine the
distribution of a performance payout between base salary increase and
bonus or a combination thereof. However, to ensure safeguards within
the system, the factors management may use in exercising this authority
have also been expressly defined and limited to ensure fairness,
equity, and a performance focus. While pay pool funding is still
determined by management, higher-level reviews have been required to
provide internal controls. Additional safeguards added include a
uniform approach to handling performance payouts for employees who
leave a pay pool after the end of the performance period, but before
the date of the payout. Finally, to promote transparency of the pay
pool process, a requirement has been added for organizations to share
with employees the average rating, ratings distribution, share value
(or average share value), and average payout (expressed as a percentage
of base salary) at the completion of the performance payout process.
Reconsideration Process
Employee performance reconsideration opportunities have been
expanded to permit reconsideration of individual performance objective
ratings in addition to the overall rating of record. This change
recognizes that many pay pools use raw performance scores as a guide in
determining how many shares to assign to employees. Since raw
performance scores may be impacted by individual performance objective
ratings, the ability to request review of individual performance
objectives enables employees to seek redress on all performance rating
decisions affecting their pay.
E. Other Changes
Other changes reflected in this regulation include language
providing salary increases for employees who did not meet the minimum
period of performance due to an approved paid leave status or
performance of labor activities on ``official time.'' These pay
adjustments will be based on the modal rating of a pay pool. Likewise,
provisions have been made to adjust the pay of employees returning from
temporary assignments outside of NSPS or returning from long-term
training for which no NSPS performance plan was assigned. These changes
ensure that employee pay is not harmed by the inability to meet a
minimum performance period or inability to rate performance while
employees either exercise statutory leave entitlements or fulfill other
roles important to the organization.
Finally, the regulations in subpart D (dealing with performance
management) permit limited coverage under NSPS pay-setting and
classification flexibilities for employees who are appointed for less
than 90 days. Providing access to NSPS pay-setting flexibilities for
these positions enhances DoD's competitive position in the labor market
when hiring temporary employees for 90 days or less.
V. Response to Public Comments
A. Major Issues
The proposed rule was published in the Federal Register on May 22,
2008. The public comment period concluded June 23, 2008. In response to
the proposed rule, the Department received 526 comment submissions
during the 30-day public comment period. In reviewing the comment
submissions, we discerned several recurring themes that spanned
multiple sections of the proposed regulation. Major issues identified
included: (1) Specificity of the regulation; (2) collective bargaining
and labor relations; (3) performance and pay pool management; (4) the
influence of performance versus market factors on pay; and (5) control
points. Because these issues are critical to understanding the
objectives of NSPS, as well as its implementation, we have given them
particular attention in the following sections of this Supplementary
Information.
1. Specificity of the Regulation
A significant issue raised in the public comments concerned the
level of specificity in the proposed regulation. Some commenters,
pointing to a lack of detail regarding specific issues, such as
performance management, sought more specificity in the proposed
regulation itself as opposed to the Department providing future
direction in implementing issuances, which are not open to public
comment. However, many of the commenters who weighed in on this issue
argued that the proposed regulation is too specific. Commenters
suggested that the increased level of detail was written into the
proposed regulation not to improve the clarity of the regulation, but
to preclude negotiation with labor organizations. Labor organization
representatives argued that because DoD, under the National Defense
Authorization Act for Fiscal Year 2008 (NDAA 2008), no longer has
authority to establish a labor relations system under its control, the
Department is attempting to write regulations as narrowly as possible
to avoid the collective bargaining process.
Interestingly, during the public comment period for the 2005
regulation, a large number of commenters recommended that the
regulation include far greater specificity, with
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numerous commenters stating that they were unable to provide
substantive comments without more information. Some additional
specificity was written into the final 2005 regulation in response to
these comments, but it retained its original goal of establishing a
general policy framework to be supplemented by detailed implementing
issuances.
This regulation of necessity includes more specificity than the
2005 regulation in order to preserve uniformity and consistency of
application of NSPS in the changed statutory environment created by
Public Law 110-181. The uniform and consistent application of NSPS is
important to ensure equitable treatment of all employees, whether
bargaining unit or non-bargaining unit; for ease of movement of
employees across components and organizations; and to achieve
efficiencies in support systems such as automated performance
management tools and training. Public Law 110-181 restored the
Governmentwide labor relations coverage of title 5, chapter 71, to NSPS
employees and conferred the status of Governmentwide rule upon this
NSPS regulation. It also removed the statutory collaboration process
which ensured uniformity and consistency and was the exclusive process
for employee representative involvement in the design and
implementation of NSPS. Given those provisions, OPM and DoD concluded
the 2005 regulatory framework and detailed implementing issuance
construct created unwarranted risk to the goal of uniform and
consistent application of NSPS to both bargaining unit and non-
bargaining unit employees. With much of the operational core of NSPS in
its implementing issuances subject to collective bargaining, we
concluded the likely outcome of bargaining over the various components
of NSPS would be multiple versions of NSPS for bargaining unit
employees (there are more than 1,500 local bargaining units in DoD) and
one NSPS for non-bargaining unit employees. Therefore, OPM and DoD
chose to incorporate sufficient detail in this regulation, under the
legislative grant of Governmentwide regulation status, to preserve the
uniformity and consistency of a single NSPS. The regulation provides a
standardized, yet flexible, DoD NSPS environment that promotes the
growth of all employees and improves management's ability to manage the
workforce. Labor organizations still retain collective bargaining
rights regarding NSPS under title 5, chapter 71. In fact, labor
organizations may seek to collectively bargain implementation of NSPS
prior to implementation for bargaining unit employees to the same
extent bargaining occurs on implementation of other Governmentwide
regulations across the Federal Government.
2. Collective Bargaining and Labor Relations
In addition to their concerns on how the specificity of the
regulations affects the collective bargaining rights, labor
organizations made numerous comments in each subpart that various
matters should be subject to collective bargaining under 5 U.S.C.
chapter 71. In some cases these matters are not subject to collective
bargaining today for bargaining unit employees outside NSPS as such
matters are covered by law. In other cases, these matters are limited
in collective bargaining because they are covered by Governmentwide
regulations encompassing these employees. There were also various
suggestions to include language throughout the regulations that
collective bargaining rights exist on certain specified matters, even
where the scope of collective bargaining rights is actually more
limited than what is suggested by the labor organizations.
DoD is committed to fulfilling its obligation to bargain in good
faith consistent with Governmentwide labor relations rules under 5
U.S.C. chapter 71 and the requirements of 5 U.S.C. 9902 and section
1106(b) of Public Law 110-181. However, it is appropriate that the
Department seek uniformity and consistency in its NSPS employment
practices through issuance of regulations. We do not believe it is
necessary to repeat throughout the regulations a statement regarding
any statutory collective bargaining rights and have not adopted the
suggestion. This does not occur today in other Governmentwide
regulations or agency policies. However, we have added a clarifying
general statement in subpart A regarding collective bargaining
obligations prior to converting bargaining unit employees to NSPS.
3. Performance and Pay Pool Management
Background
The Department designed NSPS to be a robust performance management
system in recognition of the increased importance of performance in
making pay and retention decisions. NSPS uses a multi-level appraisal
system that makes distinctions in levels of employee performance and
links employee achievements, contributions, knowledge, and skills to
organization results. NSPS also allows the Department to better
recognize and support team contributions and accomplishments. The
System ensures that performance expectations are clearly communicated
to employees and are linked to the organization's strategic goals and
objectives. This provides the ability to recognize valid distinctions
in performance and reward employees based on those distinctions, which
will foster a high-performance culture within the Department.
NSPS modifies the way DoD employees are paid. NSPS bases individual
pay increases on performance instead of primarily on tenure and time-
in-grade, i.e., the emphasis is on quality of results achieved as
opposed to length of experience. In addition, this system is far more
market-sensitive. Both of these goals are met through the changes in
the classification, pay, and performance management systems.
We believe the Department's pay-for-performance system is essential
to DoD's ability to attract skilled and talented workers; retain and
appropriately reward current employees; respond to DoD mission
requirements; and create opportunities for employees to participate
more fully in the total integrated workforce.
Performance and pay pool management inspired a large number of
comments during the public comment period. In fact, many commenters
raised issues that related to both subparts C and D, since pay
administration and performance management are so closely aligned. In
reviewing the comments that addressed aspects of performance management
under the proposed regulation, we identified seven recurring issues.
These issues are addressed in the following paragraphs.
Fairness
Many commenters expressed concerns about fairness in operation of
the NSPS performance management system. Whether they characterized
their concern as ``favoritism,'' ``cronyism,'' ``nepotism,'' or the
euphemism ``good ol' boy'' system, commenters expressed concerns that
NSPS could or would present opportunities for unfairness within the
performance appraisal and overall performance management system. These
commenters feared supervisors and Pay Pool Managers would assign
ratings based on personal preferences and relationships unrelated to
performance.
From the beginning, NSPS was designed to be consistent with
specific
[[Page 56350]]
guiding principles. Among the principles emphasized in the performance
management process are fairness, credibility, and transparency, as well
as adherence to merit system principles. The regulation establishes
many safeguards--or checks and balances--specifically designed to guard
against favoritism, cronyism, and unfair practices.
First and foremost, the performance management system design
features uniform performance criteria across NSPS (see SC 1940 of NSPS
implementing issuances). By using uniform criteria, NSPS ensures
employees performing similar categories of work are evaluated using the
same tools of measurement. To ensure that the measurement tools are
interpreted consistently across the organization and in a manner free
from favoritism, cronyism, or other inappropriate consideration, NSPS
provides multiple-level reviews of recommended ratings, share
assignments, and payout distribution determinations. Not only does the
supervisor/rating official offer a recommended rating of record based
on an overall assessment of the employee's accomplishments (Sec.
9901.412(b)), but these recommended ratings receive a higher-level
review--a requirement identified and added to the revised regulation in
Sec. 9901.412(c) and made effective via implementing issuances.
Following the higher-level review, a panel of senior leaders (i.e., the
Pay Pool Panel) reviews and reconciles ratings within a pay pool (Sec.
9901.412(f)). In reconciling ratings, share assignments and payout
distribution recommendations, the panel compares the employee's
accomplishments (via supervisory assessments and optional employee self
assessments) to job objectives and standard rating criteria to ensure
that the same understanding of performance criteria has been applied to
employees across a pay pool. The Pay Pool Panel considerations do not
include a pre-established distribution of ratings as a factor in
determining the rating of record. This is because NSPS regulations also
prohibit forced distribution of ratings (Sec. 9901.412(a)). As opposed
to a forced alignment of employee ratings against a particular
distribution pattern, employee performance reflects a measurement of
``what'' an employee accomplished (and ``how'') against standardized
performance measurements. The employee also has a voice in how his or
her work is viewed via the opportunity to write a self-assessment of
what was accomplished by the employee and in what manner objectives
were achieved during the performance cycle. Such assessments become
part of the record that is forwarded to the higher-level reviewer and
Pay Pool Panel. Checks and balances such as those described above form
the safeguards for fairness and equity built into the regulation and
the performance management system.
As with the multi-level review for employee ratings of record, NSPS
also provides for reviewing performance plans at multiple levels.
First, supervisors are responsible for making sure that performance
objectives accurately reflect an employee's work and for engaging
employees in that determination (Sec. 9901.406). Employees participate
in the development of performance expectations via conversations and
written communication with their supervisors (Sec. 9901.406(g)).
Second, there is a review of performance expectations at a higher level
to ensure that assigned employee objectives are consistent and
equitable with similar positions within and across the organization
(Sec. 9901.406(h)).
In addition to the checks and balances outlined in the preceding
paragraphs, NSPS contains four other important features intended to
contribute to the sustainment of a fair, credible, and transparent
system. First, supervisors and managers will be held accountable in a
specific job objective for effectively managing the performance of
employees under their supervision and will be assessed and measured on
their performance against this objective (Sec. 9901.406(d)). There is
a connection between administration of the performance management
system and supervisory performance ratings and, consequently, a
supervisor's pay. Second, DoD is committed to extensive training, both
initial and ongoing, for supervisors, managers, and employees so that
they understand the requirements of the performance management system.
For supervisors and managers, in particular, training is focused on how
to establish and communicate performance expectations, how to assess
employee performance, and how to appropriately translate that
assessment into pay adjustments. Third, there are various review and
evaluation processes designed to monitor the implementation of NSPS and
identify inconsistent, unfair treatment of employees so that these
situations, if they occur, can be remedied in a timely manner. As a
final check and balance, employees may also request reconsideration of
ratings of record as well as ratings for individual job objectives
under Sec. 9901.413.
To ensure that employees are treated fairly, there are rules to
guard against arbitrary actions, enable employees to challenge or seek
review of key decisions, and for setting up accountability mechanisms.
All of these safeguards and checks and balances are monitored during
regular and recurring reviews and evaluations of NSPS at multiple
levels within the Department.
Uniformity and Consistency
Some commenters questioned whether performance would be measured
uniformly and consistently among pay bands, occupational areas, and
Components. While there is opportunity for some aspects of
implementation of NSPS performance management to be handled flexibly to
accommodate different circumstances, NSPS is designed to ensure
uniformity and consistency in the most important core features of
performance management. For example, the regulation mandates a uniform
summary rating level pattern (Sec. 9901.405(b)(5)) and share
assignment range for each rating level (Sec. 9901.342(f)), and it
provides common formulas for determining the share factor value and
payout within each pay pool (Sec. 9901.342(g)).
The NSPS implementing issuances and NSPS performance tools further
institutionalize uniformity and consistency via the establishment of
standardized NSPS performance measures applied across NSPS. For
example, NSPS uses standardized performance criteria, which evaluate
``what'' was accomplished (also known as performance indicators), as
well as standardized contributing factors and benchmark descriptors,
which serve to measure ``how'' an objective was accomplished (SC 1940).
The use of standardized criteria and rules helps to ensure consistency
across NSPS.
Transparency
Several commenters expressed concern that ratings and performance
payout determinations are made ``behind closed doors,'' and commenters
questioned whether the NSPS system meets its stated goal of
transparency. While it is true that Pay Pool Panels deliberate in
private, this is necessary to protect the privacy of employees as
individuals as well as to provide an atmosphere for robust performance
management discussion. Nevertheless, there are a number of requirements
in the system that helps preserve transparency outside of the pay pool
deliberation. The regulation adds language to specify requirements for
sharing of pay pool information to NSPS
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employees (Sec. 9901.342(g)(10)). In addition, through implementing
issuances (SC 1940), NSPS requires notice to employees of additional
pay pool related information. This information may include the
membership and composition of the pay pool to which the employee
belongs; projected pay pool funding amounts; rules for making share
assignment and payout distribution determinations; percentage of pay
pool funding to be applied to bonuses versus increases to base salary;
criteria for Organizational Achievement Recognition (OAR) awards;
identity of Pay Pool Manager, Pay Pool Panel members, and Performance
Review Authority; and performance indicators and contributing factors.
The regulation also specifies that performance expectations (e.g., job
objectives) must be communicated to employees in writing (Sec.
9901.406(b)). Performance measurement criteria are available to all
employees through Web sites (e.g., http://www.cpms.osd.mil/nsps) and
agency implementing issuances. The regulation adds greater detail to
performance and pay pool management (such as specifying number of
rating levels (Sec. 9901.405(b)(5)), rounding rules for raw
performance scores (Sec. 9901.405(b)(6)), share ranges (Sec.
9901.342(f)), factors that may be considered in making a share
assignment or payout distribution determination (Sec. 9901.342(g)),
share value and payout formulas (Sec. 9901.342(g)), minimum criteria
for eligibility for a performance payout (Sec. 9901.342), as well as
identification of and procedures for performance payouts for specially
situated employees not previously covered in the regulation (Sec.
9901.342(i)-(l)).
Premium on Good Appraisal Writing Skills
A few commenters expressed concern that the NSPS system rewards
those who can write well, not necessarily those who perform best.
Commenters believe that employees who have difficulty communicating
their accomplishments in a self-assessment will be at a disadvantage in
comparison to good writers, even if their performance level actually
exceeds that of the good writers. Another commenter expressed concern
that employees are required to write their own appraisals. The written
employee self-assessment is optional and is just one of many components
of the NSPS performance management system. Another component of the
performance management system is that each rating official also
prepares a written assessment of employee performance. One of the
system safeguards that helps ensure employees are not adversely
affected by the ``written word'' is the requirement that Pay Pool
Panels afford a rating official the opportunity to provide further
justification before the panel changes a recommended rating of record
(Sec. 9901.412(f)). This requirement provides an opportunity for
further explanation as well as that presented in writing. Additionally,
to assist both employees and rating officials in the development of
written assessments, DoD has developed and made available both
classroom and Web-based writing classes (see ``iSuccess'' training at
http://www.cpms.osd.mil/nsps/training.html). Also, DoD has made
available guidance in the form of writing tips and ``lessons learned''
by other organizations that have implemented NSPS to help employees and
rating officials write effective self-assessments, performance plans,
and performance assessments.
Finally, mock pay pool exercises offer both employees and rating
officials the opportunity to practice their writing skills. A mock pay
pool exercise is a way for organizations to understand the pay pool
process. During the exercise, employees may submit written self-
assessments and rating officials may submit supervisory assessments for
consideration by the pay pool panel. Pay pool panels can communicate
back to both rating officials and employees the value of those
assessments to the appraisal process and make suggestions on how to
write such assessments more effectively. Also through mock pay pools,
organizations identify ways to improve their process to achieve greater
consistency and ensure fairness in ratings and payouts. Past experience
has shown that these exercises improve not only participants'
familiarity with the process, their understanding of the various
aspects of the pay-for-performance system, and the quality of their
decisions, but also their writing skills in the context of the
performance management system.
Differences Between Grade-Based Systems and NSPS in Rewarding
Performance
Commenters noted that the proposed regulation allows organizations
with wage grade workers and NSPS employees to reward performance
differently, which could result in inequities. We assert differences do
not necessarily result in inequities. Without doubt, there are
differences between the design of the NSPS personnel and performance
award system and the Federal Wage System (FWS) personnel and
performance management systems. These differences with the FWS existed
even when NSPS positions were still covered by the General Schedule
(GS). They are a result of overall differences in the compensation
systems. For example, GS grades have 10 steps, with waiting periods
from one to three years between steps. Each step represents
approximately a 3 percent increase in base pay awarded primarily based
on seniority. The FWS has only five steps, but much shorter waiting
periods (six months to two years) and larger increases (approximately 4
percent increase in base pay). Like the GS, the FWS also awards steps
primarily based on seniority. The basis for pay progression under both
GS and FWS systems is primarily a combination of seniority-based pay
progression in the form of step increases, promotions, and cost of
labor (e.g., locality pay). Performance pay, when awarded, is typically
paid out via bonuses. In contrast, the design of the NSPS compensation
and classification architecture has no step increases and fewer
promotions. The express purpose of this design decision is to redirect
pay, formerly paid out based, in part, on seniority, toward rewarding
and encouraging performance (i.e., performance-based pay). Therefore,
under NSPS, pay progression primarily occurs via performance-based
increases. In the absence of step increases and promotions to grades
that no longer exist, NSPS applies civilian pay increase dollars that
would have been expended on those pay progression methods to
performance-based increases and Accelerated Compensation for
Developmental Positions (ACDP). In redirecting the seniority-based and
promotion-based pay increases under the General Schedule to performance
pay, it is appropriate that performance awards under NSPS be greater
than performance awards under systems that do not redirect step
increases and promotions associated with more defined levels of work to
performance. The differences between NSPS and grade-structured systems
are simply differences rather than inequities. Therefore, we made no
attempt to align NSPS performance rewards to those of other personnel
systems. In so doing, we reiterate the belief that Congress and the
American people expect their public employees to be paid according to
how well they perform, rather than how long they have been on the job.
Another commenter expressed an equity concern that NSPS employees
may be disadvantaged over General Schedule employees where there is
internal competition for reassignment
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and promotion to other positions. In particular, the commenter
expressed a belief that the NSPS performance appraisal system creates
an impression that an employee with a ``3'' as his or her last rating
of record is inferior to a GS employee with all Level 9's. Despite
inconsistencies in rating scales across the government (to include
pass/fail, NSPS, and 3 and 4 level rating systems, etc.), the
employee's record of accomplishment along with appropriate employment
references and a copy of the aggregate NSPS rating distribution
(available via NSPS web site) should serve to inform prospective
employers of the value of a NSPS Level 3 rating of record.
Communication of Performance Expectations
Commenters also noted that the proposed regulation does not place
enough accountability on supervisors to communicate performance
expectations. One commenter noted that the proposed regulation does not
explicitly require the supervisor to notify the employee of performance
expectations. Yet Sec. 9901.406 of the proposed regulation very
explicitly states the requirement to communicate performance
expectations to employees prior to holding the employee accountable for
them (``Performance expectations will be communicated to the employee
in writing, prior to holding the employee accountable for them.'').
That section further states: ``Performance expectations that comprise a
performance plan are considered to be approved when the supervisor has
communicated the performance plan to the employee in writing.'' In
addition to the employee requirements stated in Sec. 9901.406(c),
Sec. 9901.406(d) states that performance expectations of supervisors
and managers additionally will include assessment and measurement of
how well supervisors and managers plan, monitor, develop, correct, and
assess subordinate employees' performance. Inasmuch as the ``planning''
phase of performance management is considered to incorporate
development and implementation of subordinate employees' performance
plans and those plans, per the regulation, are only considered approved
once communicated to the employee in writing, the regulation does in
fact hold supervisors and managers accountable for communicating
performance expectations.
Perceived Administrative Burden
Some commenters objected to the amount of time and resources needed
to administer NSPS, particularly the performance management component.
Commenters cited the amount of paperwork required under NSPS and the
limitations of the NSPS Performance Appraisal Application (PAA) tool.
We agree that the design of NSPS and the safeguards built into the
system result in increased time demands, especially during the start-up
years. However, DoD's experience with Personnel Demonstration Projects
indicates that the amount of time required for the same tasks levels
off and even decreases as the organization gains experience with the
pay pool process. Additionally, as experience and efficiency increase,
organizations tend to parlay the process of reviewing individual
performance into an examination and driver of overall organizational
performance, thus increasing the return on their investment of time.
Consequently, we have not altered the requirements, believing that the
end result is fairness and consistency--key objectives of NSPS--and the
ability to further individual as well as organizational performance.
Another commenter indicated that there are an insufficient number of
characters available in the PAA to adequately provide self assessment
information. We continuously evaluate the PAA tool to improve it to
better meet user needs. We have addressed many of the initial
limitations of the system and are currently reviewing changes to other
features such as the limitation on the number of characters that users
can enter into various fields.
4. Performance Versus the Influence of Market Factors on Pay
While a number of commenters supported the idea of a performance-
based pay system, some commenters were less supportive of the
consideration of non-performance-related factors when setting pay.
These commenters objected to the weight given to factors other than
performance. For example, one commenter stated: ``The factors used in
determining if [employees] get a raise or a bonus are * * * complicated
and * * * have nothing to do with performance. Employees have no
control over many of these factors, which include attrition rates,
shortages of skills, and labor market. Obviously, this really isn't a
true pay-for-performance system.'' In response to this comment--and the
many commenters who expressed similar concerns about the use of factors
other than ``performance'' in setting pay--we acknowledge that it is a
misperception that compensation under NSPS is based solely on
performance. From its inception, NSPS was designed to emphasize both
performance pay and compensating employees based on market factors. In
the Supplementary Information for the 2005 regulation we said the
following about the new system: ``The pay structure will be much more
responsive to market conditions'' and ``Labor market conditions will
also be considered when making pay-setting decisions. As prescribed in
the enabling legislation, the new compensation system will better link
individual pay to performance * * * ''. We also said: ``As the
Department moves away from the General Schedule system, it will become
more competitive in setting salaries and it will be able to adjust
salaries based on various factors, including labor market conditions,
performance, and changes in duties.''
The NSPS compensation system, first described in the 2005 NSPS
regulation, is designed to fundamentally change the way employees in
the Department are paid. First, it allows DoD, after coordination with
OPM, to define occupational career groups and levels of work within
each career group that are tailored to the Department's missions and
components. Second, it gives DoD considerable discretion, after
coordination with OPM, to set and adjust the minimum and maximum rates
of pay for each of the pay schedules and pay bands within those career
groups based on national and local labor market factors and other
conditions. Instead of ``one size fits all'' pay rates and adjustments,
NSPS allows DoD to customize those adjustments and optimize valuable
but limited resources. This kind of flexibility, which is lacking under
the GS and FWS pay systems, enables DoD to allocate payroll dollars to
the occupations and locations where they are most needed to carry out
the Department's mission. At the same time, NSPS is a system that
balances linking individual pay to performance and aligning positions
both internally based on position classification and externally based
on labor market.
The NSPS classification, compensation, and performance management
structures are designed to act in tandem to achieve two significant
objectives: Reward performance and pay employees consistent with
current national and local market conditions. As a result, beyond
providing a system for rewarding performance, NSPS is structured to be
far more responsive to applicable labor markets than grade-based
systems and provides the flexibility needed to quickly adjust to a
constantly changing labor market. Some of the mechanisms by which NSPS
responds to applicable markets are
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decisions involving setting the pay of employees initially hired into
NSPS positions, payout distributions between base salary and bonus,
establishment of control points, establishment of targeted local market
supplements, targeted general salary increases, and the adjustment of
pay band minimums and maximums. By utilizing contemporary pay practices
to establish a market-sensitive system, DoD is better able to establish
itself as an attractive employer in a competitive environment.
Under NSPS, DoD has created a system that allows the flexibility
necessary to consider both market factors and performance in making
compensation decisions. As a result, DoD is in a better position to
attract, retain, and reward a workforce that is able to meet the high
expectations set for it by the Department's senior leaders for the
purpose of accomplishing the Department's mission--the defense of our
nation.
5. Control Points
A number of commenters expressed concerns about control points.
Many perceived them as inappropriately limiting employees' potential
for salary growth in a pay-banded system where pay is expected to be
based on performance. They felt the full pay band salary range should
be accessible to every employee in a band and advanced the argument
that control points effectively cap a top performer at the control
point, subverting the goal of a pay-for-performance system. Others
opined that by establishing control points, the merit system principle
of equal pay for equal work has been thwarted. The concept of control
points is not inconsistent with the goals of a pay-for-performance
system which, from the initial design phase of NSPS, envisioned a
greater link between pay decisions and an individual's performance.
While a statutory requirement exists for NSPS to better link
individual pay to performance, the NSPS performance-based features are
not intended to result in ``performance'' trumping all other factors
that may be considered in setting pay and pay progression. Unlike the
GS and FWS pay systems, which compensate employees primarily on a
seniority basis, NSPS requires that many factors be considered in
setting pay. For example, the statutory requirements for NSPS specify
that the system shall ``not waive, modify, or otherwise affect the
public employment principles of merit and fitness'' set forth in 5
U.S.C. 2301, ``* * * including the principles of * * * equal pay for
equal work.'' Inasmuch as the merit system principle of ``equal pay for
equal work'' further requires that equal pay should be provided for
work of equal value, ``with appropriate consideration of both national
and local rates paid by employers in the private sector and appropriate
incentives and recognition * * * provided for excellence in performance
[italics added] * * *'', managing pay using either or both market and/
or performance-based control points makes sound business management
sense and is consistent with statutory requirements.
Another key requirement of NSPS is that it be ``flexible and
contemporary.'' While compensation structures prior to the 1980's were
primarily aligned to highly structured classification systems, the need
to compete for talented employees who possess the knowledge, skills,
abilities and/or competencies associated with 21st century technologies
and industries essential to the DoD national security mission requires
a shift in emphasis to a market-sensitive compensation strategy in
order to respond to quickly changing labor markets. Therefore, NSPS
regulations governing control points allow management to consider and
balance a variety of factors, in addition to performance, in
determining rates of pay and salary progression through a pay band.
Control points represent one tool that can be used to manage
employees' progression through the bands and can help ensure that only
the highest performers move to the upper range of a pay band. Control
points also allow management to account for variances in position
responsibilities within a pay band. This allows the Department to set
pay more consistently with the labor market and to be more effective in
attracting and retaining top performers. In fact, several of the DoD
demonstration projects have successfully used control points in their
pay-for-performance systems.
Sometimes, higher parts of a pay band are reserved for the highest
of performers; at other times, parts of the pay band are reserved for
work or skill combinations not easily acquired for which the labor
market pays a higher rate of pay and which management has identified as
being important to organizational performance. Therefore, for pay
progression to occur beyond an established control point, the employee
must meet certain criteria, such as specific work assignments,
acquisition of particular competencies, and/or a rating of record at a
particular level. With one exception, the restriction on receiving pay
increases once a control point is reached is no different from the
restriction on increases in basic pay a General Schedule employee
experiences once he or she reaches the maximum step of his or her
grade. The one exception to this analogy is that the General Schedule
employee must be promoted in order to pass the step 10 or maximum rate
of the pay range for the grade. In contrast, an NSPS employee may move
past a control point subject to meeting the criteria associated with
passing that control point.
Control points also provide management with the latitude needed to
positively impact a variety of pay decisions, such as starting rates,
rate ranges, and the size and mix of performance payouts. Control
points manage pay progression to reflect duties and responsibilities,
labor markets, and/or performance. DoD requires that control points be
applied consistently to similar positions in the same pay band and
career group within a pay pool.
A commenter noted that ``pay bands with control points are the GS
scale by another name.'' Some control points may indeed be similar to
the GS grade structure. This may merely reflect a common labor market
between the positions assigned those control points and the General
Schedule system. As stated earlier, however, there is considerably more
room for pay progression within a band than within a GS grade. NSPS
employees may move more easily from control point to control point
within their assigned band, or other comparable bands. Additionally,
unlike the General Schedule employee who reaches the step 10 of his or
her GS grade, an employee with a Level 3 or higher rating of record is
guaranteed a share of the pay pool and any amount in excess of the
control point (or the top of the pay band, if applicable) is paid out
as a bonus.
Another individual noted that control points can be a factor in
determining whether a performance payout is awarded as a bonus or a
base salary increase, which could have the effect of reducing
retirement benefits, since bonuses are not counted toward retirement in
retirement calculations. As under the General Schedule, performance
bonuses under NSPS do not count toward retirement. However, they are a
means of recognizing and paying for performance when an employee is not
eligible for further increases in pay.
One labor organization representative suggested that control points
may delay advancement for employees in one band compared to employees
in another band even though both employees perform at the same level.
This is true. Under
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NSPS, employees performing similar levels of work may be compensated
quite differently based on type of work, competencies required, or
level of performance. This was also true under the General Schedule.
For example, GS-13 pilots at one time received a special rate of pay
that was approximately 30 percent higher than the rate GS-13 employees
in other occupations received. This difference in rates reflected
differences in staffing difficulties and labor markets between
different occupations.
Another labor organization representative noted that we state that
the Secretary will determine control points when previously this
function was delegated to Components. They believe this is an attempt
to limit their ability to bargain and take away a flexibility
previously delegated by DoD to its own managers. We note that the
Secretary is ultimately responsible for decisions involving NSPS, and
authority is provided to the Secretary throughout the regulation to
make these decisions. However, the day-to-day operation of many
features may be delegated to the Components, including determining
control points. These delegations will be provided in implementing
issuances. Concerns about collective bargaining rights have been
addressed under ``Collective Bargaining and Labor Relations'' located
under ``Major Issues''.
Other commenters suggested that if control points must exist,
language should be inserted in the rules to the effect that control
points will increase at the same time that rate ranges are adjusted and
by an equivalent percentage. However, the basis for decisions driving
the establishment of control points may not always mirror adjustments
in rate ranges. No change has been made to the regulation in response
to these comments. Nevertheless, it should be noted that whether or not
control points are adjusted consistent with rate ranges, control points
do not bar increases to base salary due to across-the-board NSPS
general salary increases under Sec. 9901.323(a)(1).
Another commenter suggested that, because control points are a
somewhat foreign concept to most employees and will likely be viewed as
incompatible with the pay band concept, additional information about
the reasons for and need for control points might be helpful, either in
the Supplementary Information for this regulation or the implementing
issuances. Consequently, we have taken care to elaborate on responses
addressing comments concerning control points and will continue to
examine other means of providing a greater understanding concerning the
use of control points.
Finally, another commenter noted that ``budget'' should be added to
the list of factors to consider when establishing a control point and
noted that adding this factor is consistent with information provided
in the Table of Changes for Sec. 9901.321(c) for the proposed
regulation, which listed budget as a factor. In fact, we have
determined that a budget or cost factors should absolutely not
influence the setting of control points. We have not adopted this
suggestion.
B. General Issues
We received some comments which were not aimed directly at the
substance of the proposed regulation but which we felt should be
addressed.
One commenter noted that in the SUPPLEMENTARY INFORMATION of the
proposed regulations (73 FR 29898) we certify, in accordance with the
Paperwork Reduction Act of 1995, that this proposed regulatory action
will not impose any additional reporting or recordkeeping requirements
under the Act. The commenter asserted that this is an improper
statement since it means that the new NSPS pay pool decisions and with
it the monies that the pay pool will be ``playing with'' and dividing
among employees will have no records concerning how the decisions were
made. The commenter stated that this is especially worthy of
recordkeeping if the Pay Pool Panel makes pay and award decisions that
are different from those of the rating official and higher-level
reviewer. The commenter said that these records seem extremely
necessary since the pay pool is distributing taxpayers' money and
because they ensure the application of equal treatment of pay for job
performance. Actually, the Paperwork Reduction Act applies to the
burden placed on the public by Government agencies in gathering
information related to the agencies' missions. It does not pertain to
the generation of records within the agency. Rating officials and Pay
Pool Panels will, in fact, generate records associated with the rating
and pay pool processes.
Another commenter requested that we allow noncompetitive temporary
promotions for 180 days instead of 120 days. This comment relates to
NSPS staffing provisions which we did not address in the proposed
regulation. The original NSPS statute, Public Law 108-136, permitted
the Department and OPM to modify certain OPM staffing regulations,
including the 120-day limit on temporary promotions, but the currently
governing statute does not.
One commenter expressed concern that the proposed regulation does
not include references to applicable 5 CFR regulations, thus requiring
users to review and study both the Federal Register rules and the 5 CFR
regulations to determine which apply to a particular situation. This
individual stated that it would be better if the NSPS regulations had
the applicable sections from 5 CFR included so that there is a single
reference source. In response, we note that the NSPS regulations
published in the Federal Register are ultimately incorporated into 5
CFR and the section(s) referenced in the Federal Register become the 5
CFR reference(s) (e.g., Sec. 9901.101 in the Federal Register becomes
5 CFR 9901.101). To the extent that the comment was intended to
recommend inclusion of 5 CFR language in lieu of a cross reference when
one has been provided, we note that references allow for application of
revisions to those sections without change to this regulation in the
event the language in the referenced section is modified. Therefore,
cross references to 5 CFR sections covering the General Schedule
continue to be incorporated in the final rule.
A labor organization representative articulated apprehension with
the fact that an employee's performance payout can be provided as a
salary increase, a bonus, or a combination of the two, potentially
resulting in each person's pay being different and, thereby, greatly
multiplying the workload of administrative staffs and the Defense
Finance and Accounting Service. The representative stated that
previously there were standard pay increments, but now each employee's
pay is different, requiring more time to process actions, raising the
possibility of more errors, and requiring increased staff to correct
the errors, all of which conflicts with DoD's recent staff
consolidations and downsizing initiatives to reduce overhead costs. It
is true that employees will no longer be paid at fixed step rates but,
rather, may have their pay set at numerous points within their pay band
rate range as a result of many different decisions based on various
factors. To the extent possible, pay actions will be programmed to
occur through an automated process. For example, general salary
increases and most performance payouts will occur through an automated
process. Many other pay decisions, however, will require manual
intervention because it is not possible to program the many potential
pay-setting variations. With the flexibility of pay banding come the
challenge and the
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responsibility for setting pay correctly and minimizing errors.
However, both sufficient training for all personnel involved in NSPS
pay setting and the establishment of adequate review processes prior to
finalizing pay actions will create the expertise associated with pay-
setting decisions as well as mitigate error rates.
Several comments were received related to various issues involving
reassignments and promotions. Several commenters observed that, since
many movements that were formerly promotions under the GS system are
now processed as reassignments in the NSPS pay banding environment, the
financial enticement for taking on a new assignment is not as great as
in the past. Another commenter stated that in addition to the higher
salary received upon promotion, the promotion itself is a prestigious
event, insinuating that the lack of promotion opportunities in a pay-
banded system is detrimental to employee self-esteem. One commenter
declared that being reassigned instead of promoted is ``unfair'' and
``cheats'' those who qualify for higher-level positions. This commenter
further believes that this practice discourages employees from
accepting an NSPS position and will force young, energetic employees to
leave DoD for agencies operating under the old system. Others commented
that reassignments and promotions can occur noncompetitively without
other employees even being made aware of vacant positions. Some of
these commenters asserted that employees would be placed in high-level
positions without required knowledge, skills, and abilities simply
because they are someone's close friend. Another employee asked that we
change the proposed rules to permit a fair process for notifying
employees of promotion opportunities because a model employee might not
have a chance to compete because they do not belong to an association,
do not participate in community work, or fish with the boss. Still
another commenter alleged that the system will effectively eliminate
certain groups of employees from obtaining promotions based on the
supervisor's personal feelings toward those people.
By law, and by design, NSPS does not waive, modify, or otherwise
affect the public employment principles of merit and fitness set forth
in section 2301 of title 5 (merit system principles) or any provision
of section 2302 of title 5, relating to prohibited personnel practices.
At the same time, NSPS is designed to be a modern, contemporary,
flexible, and agile human resources management system to help DoD meet
the national security challenges of the 21st century. The NSPS
classification system recognizes ranges of difficulty in various
organizational and work situations, allowing for natural progression
from entry/developmental to journey and expert levels of work, and
provides broad-banded pay that offers employees greater advancement
opportunities. NSPS pay bands combine a range of work into one discrete
pay band level--each individual or single pay band level normally
encompasses work formerly performed at one or more GS grade levels.
This structure permits employees to move more easily, i.e., be
reassigned, between different positions or assignments within their
assigned pay band or to positions in comparable pay bands. It also
results in fewer ``promotions'' than under the GS system.
NSPS is a performance-based pay system; the primary method of pay
progression with a pay band is the performance payout. Under NSPS,
employees have the opportunity, based on performance, to move more
rapidly through a salary range than they may have had under a previous
system. In many cases, they may have additional earning potential.
Additionally, NSPS provides other pay incentives. For example,
employees in pay band 1 of the nonsupervisory pay schedules may receive
an Accelerated Compensation for Developmental Positions payment as
described in Sec. 9901.345. In addition to regular performance
payouts, high-performing employees may receive additional performance
increases that reward extraordinary individual performance,
organizational or team achievement, or for other special circumstances.
Employees are also eligible to receive chapter 45 incentive awards.
Unlike the GS system, NSPS employees may also receive reassignment base
salary increases of up to 5 percent in accordance with the rules at
Sec. 9901.353. When employees are promoted to a higher-level pay band,
they are entitled to a more significant base salary increase of at
least 6 percent and may receive an increase of up to 12 percent, or
more, in accordance with the rules at Sec. 9901.354. While many
studies have indicated that employees are motivated by more than money
to accept challenging work, we think the potential to progress
financially in a pay-banded system, without being constrained by a
``one-size fits all'' design, will be accepted and welcomed by high-
performing employees. We acknowledge, however, that this may take some
time.
With respect to the comments regarding competitive versus
noncompetitive movement, as with the GS system, many NSPS positions to
which employees are reassigned are advertised; however, some are not.
As under the GS system, some reassignments are done competitively if
the position the employee will be reassigned to ultimately leads to a
position in a higher full performance pay band (i.e., a higher-level of
work under the NSPS classification architecture). Whether a position is
advertised or not, employees who are reassigned to another position
must be qualified for the position, unless they are reassigned as a
result of reduction in force procedures and qualification requirements
are waived.
C. Issues by Subpart
1. Subpart A--General Provisions
Subpart A defines the roles and general characteristics of the
National Security Personnel System (NSPS). This subpart describes who
is eligible for coverage under NSPS, identifies the authorities and
responsibilities of OPM and DoD for administering and implementing the
system, and defines key terms used through the regulation.
Section 9901.101--Purpose
Section 9901.101 explains the overall purpose of the regulation in
5 CFR part 9901, which is to implement a human resources management
system as authorized by section 9902 of the National Defense
Authorization Act for Fiscal Year 2008 (NDAA 2008). Section 9901.101
states various guiding principles and key operational characteristics
and requirements. It also describes who is eligible for coverage under
NSPS, identifies the authorities and responsibilities of OPM and DoD
for administering and implementing the system, and defines key terms
used throughout the regulation.
Labor organization representatives stated that the process of
issuing a regulation prior to any bargaining does not meet the intent
of Congress. The law requires DoD to honor collective bargaining
obligations prior to any decision to implement NSPS for bargaining unit
employees. The law also requires the Department honor national
consultation rights under 5 U.S.C. chapter 71 for any proposed rule
before it becomes final. Collective bargaining does not occur prior to
national consultation and only occurs after the proposed rule becomes
final and if a decision is made to implement for bargaining unit
employees. DoD and OPM have met the requirements of law and the intent
of Congress in issuing these regulations.
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Labor organization representatives expressed concern that the
requirement in Sec. 9901.101(a) to establish implementing issuances to
supplement any matter in the regulation excludes input from the Office
of Personnel Management (OPM) and prevents collective bargaining. They
also stated that the Department has published these proposed changes
without employee involvement or collective bargaining, contrary to the
requirement at 9901.101(b) that the system be more ``credible and
trusted.'' We received many comments regarding issues surrounding
collective bargaining; we have addressed them more in depth under the
``Major Issues'' section. DoD is committed to fulfilling its obligation
to bargain in good faith on this regulation consistent with
Governmentwide labor relations rules under 5 U.S.C. chapter 71 and the
requirements of 5 U.S.C. 9902 as amended by NDAA 2008 and section
1106(b) of NDAA 2008. The scope of collective bargaining for this
regulation, however, was determined by the statute.
Labor organization representatives expressed concern that the new
regulation incorporates content from implementing issuances developed
under the 2005 regulations. These commenters felt that incorporation of
material from existing issuances into the revised regulation somehow
conflicted with Public Law 110-181 (NDAA 2008). Some commenters
indicated they believed the implementing issuances themselves were no
longer valid due to the passage of that law. While portions of the
implementing issuances became invalid due to the passage of Public Law
110-181, the implementing issuances were left largely intact and valid.
To the extent the implementing issuances are inconsistent with the
requirements of Public Law 110-181, we have not incorporated that
material into the revised regulation. Revised implementing issuances
were published on June 10, 2008 to implement policy changes and
technical corrections, as well as make revisions based on requirements
of Public Law 110-181. The authority for these issuances extends from
the 2005 regulations, currently still effective where consistent with
Public Law 110-181 (see section 1106(b)(3) of Public Law 110-181).
Since certain modifications in these issuances impact equity with
respect to the treatment of the Department's employees, we considered
the release of the revised issuances crucial. We anticipate that these
issuances will need additional revisions once this regulation is
finalized and published.
Section 9901.102--Eligibility and Coverage
Section 9901.102 sets forth general rules regarding employee
eligibility and coverage under the various subparts of part 9901.
Categories of eligible employees become covered only when the Secretary
affirmatively approves coverage. Under this section, the Secretary has
the explicit discretion to extend or rescind coverage to the
Department's civilian employees.
Commenters objected to Sec. 9901.102(a), stating that there is no
statutory authority in Public Law 110-181 that allows DoD to apply NSPS
to employees covered by anything other than the waivable or modifiable
chapters of title 5, United States Code. We do not agree. The language
at Sec. 9901.102(a)--stating that employees are eligible for coverage
``except to the extent specifically prohibited by law''--does not
permit the Department to convert to NSPS any employees who cannot
legally be covered by NSPS. Section 9901.102(f) describes the special
circumstances under which it would be possible for the Secretary to
extend NSPS coverage to employees who are not in systems established
under the waivable or modifiable title 5 chapters. The Secretary may
extend coverage to eligible employees under subparts B through D to the
extent those provisions are not in conflict with other statutory
requirements. We made no change to the proposed regulations based on
these comments.
Several commenters expressed concern that the newly proposed NSPS
regulation did not adequately define eligible employee groups for
coverage under NSPS. Commenters described Sec. Sec. 9901.102(a) and
9901.102(f) as inappropriately allowing NSPS to be applied to employees
not specifically covered by title 5, including Domestic Dependent
Elementary and Secondary Schools (DDESS) personnel. Another commenter
stated that personnel not explicitly covered under title 5 had
protective rights entitling them to collectively bargain their pay
outside the scope of any NSPS statute. We have not modified the
proposed regulation because it does not permit the Secretary to convert
to NSPS any employee who cannot be legally covered by NSPS. Although
title 10 DDESS educators are authorized to negotiate rates of pay,
including any rates of pay linked to performance, to the same extent
that they could before the enactment of NDAA 2004 as noted in 5 U.S.C.
9902(e)(9) (2008), that does not preclude the Secretary from taking
action to convert them to coverage under NSPS if that is determined to
be appropriate.
Commenters requested we amend Sec. 9901.102(b) to conform to 5
U.S.C. chapter 71 requirements to provide advance notice to labor
organizations regarding the extension of NSPS coverage to specific
categories of employees. Although the proposed regulation was silent on
this matter, the Department is committed to meeting its statutory
obligations under 5 U.S.C. chapter 71 regarding advanced notice and
opportunity to bargain the implementation of any decision to extend
NSPS coverage to bargaining unit employees. The absence of a specific
reference to chapter 71 language does not relieve the Department of its
chapter 71 obligations. For clarification, we have added the following
to Sec. 9901.102(b): ``The Secretary will notify affected employees
and labor organizations in accordance with the requirements of 5 U.S.C.
chapter 71 regarding a decision to extend NSPS coverage to any
bargaining unit employees.'' Any such notices would be provided at the
appropriate level of recognition where the collective bargaining
relationship exists.
Another commenter remarked that Sec. 9901.102(b) was confusing and
that we should rewrite the section to indicate that any category
covered under this paragraph must be covered by all the subparts listed
to be eligible. Similarly, another commenter stated that we should
amend this section by deleting ``one or more subparts'' from Sec.
9901.102(c) and substituting ``subparts B-D''; changing the last
sentence of Sec. 9901.102(e) to state ``The Secretary will notify
affected employees and labor organizations in advance of a decision to
rescind the application to them of subparts B-D''; and deleting from
the first sentence of Sec. 9901.102(f)(1) the words ``one or more
subparts'' and substituting ``subparts B-D.'' The commenter reasoned
that the current proposed language allows employees to be covered by
(1) subparts B, C, and D; (2) subparts B and D; (3) subparts C and D;
or, (4) subpart D. The commenter asserted that, because no apparent
reason exists for this variety of options and the provisions of all of
these subparts are related, employees should be covered by all of them
or none of them. The law requires coverage by a performance management
system that links pay and performance (subpart D); however, the
Secretary has statutory discretion to apply the other subparts (B and
C) to employees once these employees are covered by the NSPS
performance management system. We do not agree and have not changed the
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proposed regulation in response to this comment.
Another commenter noted that Sec. 9901.102(e) does not clearly
state that the Department is under no obligation to notify a labor
organization if the organization is not affected by an NSPS rescission.
This section requires notification to labor organizations when an NSPS
rescission affects bargaining unit employees. While we agree with this
comment, no change to the proposed regulation is necessary.
Commenters stated that we should strike Sec. 9901.102(f),
pertaining to the Secretary's authority to make coverage decisions,
because the NSPS statute does not grant such authority to the
Secretary. This section does not permit the Secretary to convert to
NSPS any employees who cannot legally be covered by NSPS. The language
at Sec. 9901.102(f) is consistent with law and remains unchanged.
Finally, under Sec. 9901.102(b) we have added a requirement
imposed by NDAA 2008 to the end of the first sentence of this paragraph
specifying that no more than 100,000 employees per year may be moved
into NSPS. Also, in Sec. 9901.102(f)(3), we have added a reference to
Sec. 9901.231 and clarified the language found in the proposed
regulations.
Section 9901.103--Definitions
Section 9901.103 provides definitions of terms used in more than
one subpart.
Commenters differed with respect to the degree of specificity in
the definitions. Some commenters stated that some of the new or revised
definitions are too broad and fail to provide enough detail for
important terms. Others considered the definitions misleading because
they are too detailed. One commenter recommended reinserting removed
definitions, even though the terms and subparts to which these
definitions applied have been removed from this regulation. We have not
made changes in response to these comments.
A commenter requested that the definition for appraisal in Sec.
9901.404 be moved to this section and redefined to say, ``Appraisal
means a written assessment of an employee's accomplishment of job
objectives and contributions.'' We have not inserted the definition for
appraisal in this section because the term is not used outside of
subpart D. We have also not changed the definition of this term in
Sec. 9901.404 in response to this comment.
Commenters expressed concern over the lack of consideration for
earning potential in the definition of comparable pay band or
comparable level of work as it applies to classification. The
definition is consistent with the NSPS classification structure.
Comparable pay bands mean a comparable level of work without regard to
the earning potential of the bands because labor markets may drive
different salary ranges for different pay schedules due to differences
in types of work vs. level of work. We have not revised this definition
in response to these comments.
Similarly, one commenter objected to the terms higher level of work
and lower level of work as they relate to movement to an NSPS position
from a non-NSPS (e.g., GS) position. The commenter stated that it was
inappropriate to apply the broad classification criteria associated
with a pay banding system with more narrowly defined non-NSPS
classification criteria. The commenter pointed out that each NSPS
position does have a specific level of difficulty, complexity of
duties, and independence; therefore, it is more appropriate (albeit
impractical) to consider these factors in light of the GS
classification standards in order to determine whether they constitute
a higher or lower level of work. For example, since a GS-9 position is
not comparable in terms of job complexity or qualifications needed,
movement to a YA-2 position that was formerly classified to a GS-13
should be considered a higher level of work, and promotion rules should
apply. This view is completely contrary to the flexibility we have
designed into NSPS and would have the effect of continuing to bind us
to the GS or other more restrictive systems. Therefore, we have not
revised our definition of these terms. However, for clarity, we
modified the last sentence of the definition of these terms, as well as
the last sentence of the definition of comparable level of work, to
say, ``When moving from a non-NSPS position to NSPS, the band of the
NSPS position is determined to be at a [higher, lower, comparable]
level of work than the grade or level of the non-NSPS position based on
application of the NSPS classification structure as described in
implementing issuances.''
One commenter suggested that the word ``behaviors'' be deleted from
the definition of competencies because this term relates to skills, not
behaviors. Another commenter also asked us to revise this term stating
that ``competency'' means capability, not behavior. According to OPM's
Delegated Examining Operations Handbook, a competency is a ``measurable
pattern of knowledge, skill, abilities, behaviors, and other
characteristics that an individual needs to perform work roles or
occupational functions successfully.'' The definition in Sec. 9901.103
is an adaptation of OPM's definition; therefore, we have not revised
this definition in response to the comment.
Another commenter stated that the term contribution is vague and
unnecessary because it is duplicative of the concept of
``accomplishment of assigned work.'' The commenter also said that the
phrase ``or group of employees,'' which appears within the definition,
is improper because performance evaluation properly concerns only an
individual's performance, not a group's performance. An employee's
contribution may go well beyond accomplishing assigned work. The
employee may add value to the finished product by performing a task
exceptionally well or by moving beyond assigned work to produce more
than is required or expected. Similarly, we consider it appropriate to
take into account an employee's role in team contributions when
assessing an employee's overall contribution to the organization. As a
result, we have not removed the term or revised the definition.
Another commenter asked that we add information to the definition
of Pay Pool Manager (PPM) to indicate that the payout distribution
includes salary increases and bonuses, thereby establishing the
agency's approval authority for each type of payment. We agree and have
revised this definition accordingly.
Commenters expressed concern over the broad definition of the term
performance. These commenters stated that performance means ``effort to
accomplish assigned work,'' and they objected to the references to
``demeanor'' and ``attitude'' in the definition of performance, saying
that these requirements are inappropriate absent a genuine nexus
between demeanor and accomplishment of an assignment. These commenters
also stated that any ``behavior'' or lack of ``civility'' or ``respect
for others'' that has no nexus with accomplishment of work assignment,
but is so egregious as to be intolerable in any employee, is a conduct
issue, not a performance issue. We note that the attributes causing
concern are observable behaviors that affect the accomplishment of
assignments, responsibilities, and organizational goals. We believe
performance assessments would not be complete without considering
employees' behaviors in carrying out work assignments. For example,
because customer service is a paramount organizational objective, the
manner in which employees treat customers is an
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important aspect of overall performance. Employee behaviors can be
objectively observed and evaluated against established performance
expectations. Under NSPS, supervisors may consider how underlying
misconduct negatively impacts the execution of an employee's duties,
those of the team, and/or those of the organization to the same extent
such matters may be considered under other performance management
systems. We have not revised the definition for performance in response
to these comments.
Commenters also objected to the definition of unacceptable
performance as being over broad and stating that we should define it as
meaning ``failure to meet a performance expectation that may affect job
retention''--a long-understood meaning of this term. These commenters
recommended that, when defining the work assignment, managers should
state the extent to which work should be done by a particular method or
means, satisfy a particular qualitative or quantitative standard, or be
done with a particular demeanor. We have not revised the definition of
unacceptable performance in response to these comments.
Another commenter requested that the definition of Performance
Review Authority (PRA) be changed to refer to ``official(s)'' to better
indicate that a PRA can be more than one person. We agree and have
modified the definition of PRA to clarify that this entity may be more
than one person.
A commenter suggested the elimination of the mandatory use of
contributing factors in determining performance ratings. In addition,
the use of contributing factors was explained in response to a concern
regarding whether the NSPS system is meeting its stated goal of
transparency. These specific issues are discussed in the applicable
sections of this regulation. Because this term is found in more than
one subpart of the regulation, we moved the definition for contributing
factor from Sec. 9901.304 to Sec. 9901.103 and provided a link to
that section.
Other commenters recommended that the role of the Pay Pool Manager
in the pay pool panel process be clarified. We did so by amending the
definition of Pay Pool Panel to clarify the active membership of the
Pay Pool Manager on that panel.
A commenter suggested that the definition of rating of record in
the proposed regulation did not clearly define the term. We clarified
the definition of rating of record as meaning the final numerical
rating and narrative justification associated with a performance
appraisal. In addition, we revised item (2) under the definition of
this term to reflect that we are referring to an unacceptable rating
``of record.''
Section 9901.105--OPM Coordination and Approval
Section 9901.105 identifies those actions requiring DoD to
coordinate with or request approval from OPM prior to promulgating
certain implementing issuances and certain other actions related to the
ongoing operation of NSPS, where such actions could have a significant
impact on other Federal agencies and the Federal civil service as a
whole.
As described in this section, ``coordination'' entails (1)
providing OPM with an opportunity to review and comment on DoD
proposals and to officially concur or nonconcur with all or part of the
proposals, (2) taking OPM's views into account, and (3) advising OPM of
the final DoD decision, including reasonable advance notice of the
decision's effective date.
Many commenters requested we broaden Sec. 9901.105(c) to require
OPM approval for any action outlined in Sec. Sec. 9901.105(a) through
(e). By design, and in keeping with the statutory objective of
establishing a ``flexible'' system, these regulations give DoD
considerable authority within the regulatory framework. At the same
time, OPM continues to have a role in overseeing the civil service
system and in advising the President on civil service matters,
including matters covered by these regulations. We believe the
coordination and approval roles as defined in this section allow OPM
full latitude to fulfill its responsibilities. To require OPM approval
for every action would undermine the intent to create a flexible
system, especially when the action is in response to a time-sensitive
national security matter. As a result, we have not revised the language
in this section in response to these comments.
Finally, a modification to Sec. 9901.105(b)(9) changes ``general
salary increases'' to ``targeted general salary increases'' in
accordance with revised terminology at Sec. 9901.323(a)(2). This
change was made in response to a comment discussed under that section.
Section 9901.106--Relationship to Other Provisions
Section 9901.106 describes the relationship of the NSPS regulation
to other laws and regulations.
Several commenters expressed concern over the use of the term
``great deference'' in Sec. 9901.106(a)(2), with respect to the DoD
and OPM interpretation of this regulation. Commenters suggested that
this term has legal implications and that the degree of deference owed
to an agency is determined by a court applying judicial precedents, not
an agency's own declaration of the degree of deference that the agency
believes it is owed. Commenters also stated that the provisions of this
regulation will also be interpreted in light of their consistency with
5 U.S.C. chapter 71. The degree of deference courts afford an agency's
interpretation of a statute it administers is well-settled by judicial
precedent. Accordingly, we have removed the sentence addressing
deference from the proposed regulation.
Section 9901.107--Program Evaluation
Section 9901.107 prescribes the Secretary's responsibility for
evaluating the design and implementation of NSPS.
Many commenters questioned the deletion of the employee
representative reference. They expressed concern that not explicitly
including employees or employee representatives in the evaluation
process excludes those on the ground level from that process. Some
commenters expressed concern that, at the least, this omission was
symbolic of a decrease in the importance of employee representatives in
the evaluation process. One commenter suggested reinsertion of the
reference to employee representatives as an explicit recognition of the
importance of employee representatives to the evaluation process. The
removal of the reference to employee representatives does not diminish
their importance to program evaluation; rather, it clarifies that their
participation is not a requirement for evaluation of NSPS.
Commenters also declared that Public Law 110-181 requires reviews
by the Comptroller General under section 1106(c). We note that the
requirements of Sec. 9901.107 are not based on any statutory
requirements. This section places a self-evaluation requirement on DoD
and does not address third-party evaluations of NSPS, such as
evaluations by the Comptroller General. Any obligations that may exist
with regard to labor organizations will be honored consistent with 5
U.S.C. chapter 71, 5 U.S.C. 9902, and section 1106(b) of Public Law
110-181. We believe it is a matter of good management that any agency
implementing a new human resources management system has a
responsibility for evaluating that system so that any problems can be
corrected and improvements made. We have made no change to the proposed
regulation based on these comments.
[[Page 56359]]
One commenter suggested that the evaluation process that has
occurred thus far in the life cycle of NSPS has been less than ideal
and that evaluation teams do not have the power or the authority to
follow up meaningfully on any specific evaluation. To address concern
that NSPS regulations can and will be ignored with respect to the
implementation of specific features, commenters asked that this section
clearly give the NSPS Program Executive Office the responsibility and
authority to investigate, analyze, and appropriately report on
implementation of NSPS and to follow up, as necessary, to address
issues and ensure compliance with the regulation. Another commenter
noted the importance of evaluation of compliance and that evaluation of
program outcomes cannot be a basis for deciding whether or not to
change the regulation unless a proper determination is made as to
whether the outcomes are the result of following or not following the
requirements of the regulation. The commenter suggested that we add the
following language to this section, ``Evaluation will seek to determine
compliance with and the consistency and fairness of the implementation
of the regulations, as well as the effectiveness and employee views of
classification, compensation, and performance management practices.''
The Department's established Human Capital Accountability System
includes compliance-oriented reviews at field activities to ensure that
personnel actions, decisions, and practices adhere to merit system
principles and pertinent regulations, and holds DoD managers and human
resource practitioners accountable for their human capital decisions
and actions. These reviews include decisions and actions under NSPS as
well as other personnel systems covering the non-NSPS workforce.
Sharing NSPS-related information gleaned during accountability system
reviews with the Program Executive Office makes a separate
accountability program or authority unnecessary. Therefore, we have
made no change to the proposed regulation in response to comments
recommending incorporation of compliance reviews.
2. Subpart B--Classification
General Comments
Subpart B covers classification under the NSPS system. This section
waives the current General Schedule classification system for those
eligible for NSPS and outlines the new system for classification. The
new classification system supports merit system principles and removes
constraints of the narrowly defined grades under the General Schedule
classification system.
Some commenters argued that the methodology and procedures for
classifying and establishing jobs under the current regulation are
ambiguous. Another commenter stated that NSPS lacks clear guidelines
and that, in contrast, the GS system had built-in parameters for
establishing pay grades using job factors. Some of these commenters
suggested that NSPS adhere to the broad parameters established for the
General Schedule classification criteria under 5 U.S.C. 5106. These
broad parameters applicable to the General Schedule included the
requirement that duties and responsibilities of the position, level of
difficulty, responsibility and qualification requirements serve as the
basis for determining the appropriate class and grade of a position. We
agree that the regulation would be the appropriate place to provide a
similar level of criteria for NSPS classification determinations. A new
paragraph Sec. 9901.201(b) has been added to address the basis for
determining appropriate classification under NSPS. The new language
reads as follows: ``The basis for determining the appropriate
classification under NSPS is the primary duties and responsibilities of
the position, level of difficulty, occupational qualifications,
competency requirements, mission of the organization, and relationship
of the position to other positions or organizational levels.''
Similar to General Schedule classification and qualification
standards, the specific criteria within the broad parameters for NSPS
position classification and qualification standards and functional
guides are described in an issuance system not incorporated in the Code
of Federal Regulations. While some commenters understood that the
classification criteria would be further defined and clarified in
implementing issuances, they objected to this approach because
issuances are not subject to public comment. These commenters suggested
that the NSPS classification program is less transparent and credible
as a result. The same commenters tended to uphold the General Schedule
classification system as a more transparent and credible system.
Nevertheless, the NSPS classification system is modeled in transparency
after the General Schedule. Neither the GS nor the NSPS classification
system publishes classification criteria through the Federal Register
process. As a result, agencies can respond more quickly to evolving
mission, technologies, and work methods applicable to Federal service
occupations. The Federal Register process, including the public comment
period, slows the ability of the agency to establish and implement
classification standards in a timely manner. For this reason, both DoD
and OPM opt to use other methods to engage stakeholders and solicit the
input of the agency and professional and employee organizations. Once
classification criteria are established, both the NSPS and GS systems
provide transparency by making criteria available to the DoD population
and the public sector at large via the Internet and the agency issuance
system. Those classification standards established for NSPS can be
found on the NSPS Web site at http://www.cpms.osd.mil/nsps as well as
at numerous other agency Web sites as well as through DoD civilian
personnel offices.
Many commenters expressed the desire to include OPM in every phase
of organization-wide classification changes. Their suggestions about
OPM's role varied considerably, however, from wanting OPM to approve or
disapprove any classification action taken by the Secretary to wanting
OPM to approve all establishments of and alterations to classification
standards. The regulation, which defines OPM's institutional role in
the process in Sec. Sec. 9901.105(b)(3) and (4), does provide for OPM
coordination on NSPS classification standards. This coordination role
enables OPM to meet its institutional role in the Federal Government at
large. Requiring OPM approval, however, would unnecessarily restrict
the ability of the Secretary to respond to unique national security
requirements. Therefore, no change has been made to the proposed
regulation in response to these comments.
Some commenters requested that the assignment of positions to
career groups, pay schedules, and pay bands be open to the collective
bargaining process as well as the classification appeals process.
Collective bargaining under NSPS is governed by 5 U.S.C. chapter 71, 5
U.S.C. 9902, and section 1106(b) of NDAA 2008. DoD is committed to
fulfilling any obligation to bargain in good faith on negotiable
conditions of employment related to these regulations, consistent with
those laws. We note that policies, practices, and matters involving
assignment of positions to career groups, pay schedules and pay bands
generally relate to classification of positions. To the extent that
proposals related to career groups, pay schedules and pay bands involve
negotiable conditions of
[[Page 56360]]
employment, the Department will satisfy its collective bargaining
obligations.
Comments on Specific Sections of Subpart B
Section 9901.201--Purpose
Section 9901.201 explains the purpose of subpart B, which
establishes a classification structure and rules for covered DoD
positions and employees.
One commenter suggested that a machinist on the east coast should
be paid the same as a machinist on the east [sic] coast and that we
should remove all local market supplements (LMS) and simply pay people
for the work they do. While machinists are excluded by this regulation,
the commenter appears to perceive that the LMS is in conflict with the
stated requirement to comply with merit principles in this section.
Specifically, this section requires that the NSPS classification
structure and rules in title 5, U.S. Code, are ``in accordance with the
merit principle that equal pay should be provided for work of equal
value, with appropriate consideration of both national and local rates
paid by employers in the private sector, and appropriate incentives and
recognition should be provided for excellence in performance.'' First,
we note that standard local market supplements under Sec. 9901.323 are
administered in the same manner and amount as locality pay for General
Schedule employees under 5 U.S.C. 5304. Whether the same or different,
however, local market supplements are in harmony rather than in
conflict with the merit principle of ``equal pay for equal work'' in
that they implement that part of the merit principle that states that
pay will be set in accordance with ``* * * appropriate consideration of
national and local rates paid by employers in the private sector, * *
*''. Therefore, no changes have been made to the proposed regulation in
response to this comment.
Section 9901.203--Waivers
Section 9901.203 of the regulations specifies the provisions of
title 5, U.S. Code, that are waived for employees covered by the NSPS
classification system established under subpart B. As specified in
Sec. 9901.203(a), the waivers apply when a category of DoD employees
is covered by a classification system established under this subpart,
except with respect to OPM's authority under 5 U.S.C. 5112(b) and
5346(c) to act on requests for review of classification decisions,
under Sec. 9901.106 and Sec. 9901.222(d).
Some commenters objected to the waiver of chapter 51 classification
provisions and the substitution of language that the commenters argued
is vague and does not contain clear standards. DoD is committed to
implementing an easily understood and applied NSPS classification
system across DoD. The waiver of chapter 51 was necessary to create a
performance-based pay system, and provide the framework for an agile
and responsive workforce. We do not believe that the waiver of chapter
51 provisions inhibits understanding or clarity of the NSPS
classification process. In fact, to the contrary, the waiver of chapter
51 permits simplification of the more complex classification
determination process designed under the General Schedule. While the
regulation itself does not prescribe the specific criteria to be used
in classifying NSPS positions, specificity is achieved in this system
through issuances of position classification standards and functional
guides. As stated earlier under subpart B general comments, we have
added a new paragraph to Sec. 9901.201 to address these criteria under
NSPS. Section 9901.201(b) provides the basis for classification under
NSPS. The basis for classification under NSPS takes into account
information about the duties and responsibilities of the position, the
level of difficulty, occupational qualifications, competency
requirements, mission of the organization, and relationship to other
positions or organizational levels.
Section 9901.204--Definitions
This subpart defines the key components and terms used in the NSPS
classification system.
One commenter requested that a definition for ``effective date'' be
added to this section. Because the meaning of the term ``effective
date'' can vary depending on the context in which it is being used and
can refer to different timing requirements when used in different parts
of the regulations, we have not modified the term under this section.
Instead, the regulation has been modified under Sec. 9901.221 to add
clarity where the term ``effective date'' is used and remove confusion
concerning which types of actions pertain to this term under that
section.
Section 9901.211--Career Groups
Section 9901.211 gives DoD the authority to establish career
groups. Many comments raised in response to this section are similar to
those raised in other sections (e.g., desire to bargain collectively
over classification criteria) and are therefore addressed under the
General Comments section.
Section 9901.212--Pay Schedules and Pay Bands
Section 9901.212 provides DoD with the authority to establish pay
schedules within each career group, as well as pay bands within each
pay schedule. One commenter noted that the pay bands, as defined in
this section, are simple to understand. Another commenter expressed
concern that the discretion to establish more than one pay schedule for
``similar'' career groups was contrary to the merit system principle of
``equal pay for equal work.'' Career groups, as a rule, are not
similar; rather they represent different types and categories of work
or functions. We can only assume that the commenter's concern is that
the ability to define different pay schedules for similar levels of
work in different career groups may be inconsistent with merit
principles. NSPS recognizes that different occupations may be subject
to different labor markets resulting in different pay levels for the
same level of work. Contrary to the commenter's concern, establishment
of different pay schedules reflecting appropriate labor markets is very
much consistent with the merit system principle of ``equal pay for
equal work.'' That principle specifically states that ``equal pay
should be provided for work of equal value, with appropriate
consideration of both national and local rates paid by employers in the
private sector, and appropriate incentives and recognition should be
provided for excellence in performance.'' Therefore the merit system
principle of ``equal pay'' requires consideration of pay based upon:
(1) Alignment and grouping of similar positions inside the
organization; (2) the rates paid by the private sector; and (3)
performance.
Another commenter suggested that the Secretary be required to
receive OPM approval/concurrence when establishing NSPS qualification
standards, rather than simply coordinating with OPM. The purpose of the
coordination role with OPM is to enable OPM to meet its institutional
role in the Federal Government-at-large and advise agencies of
potential issues. Requiring OPM approval, however, would unnecessarily
restrict the ability of the Secretary to timely respond to unique
national security requirements. Consequently, no change has been made
to the rule in response to these comments.
Additional comments raised in response to this section (e.g.,
recommendation to provide collective bargaining over matters covered by
this
[[Page 56361]]
section) are similar to those raised for other sections of subpart B
and are therefore addressed under the General Comments section dealing
with subpart B.
Section 9901.221--Classification Requirements
Section 9901.221 requires that DoD establish a method for
describing jobs and documenting those descriptions. DoD will establish,
through issuances, criteria and procedures for assigning each job to an
occupational series, career group, pay schedule, and band, and will
classify each job accordingly.
Some commenters requested further specificity about the roles in
the classification process. In particular, some commenters requested
that the person responsible for advising the employee of a personnel
action be explicitly mentioned. The proposed regulation is
intentionally broad in this regard. The regulation recognizes that DoD
agencies and components may choose different parties to be responsible
for notification requirements within their organizations. Consequently,
more specific information will be made available through Component-
level implementing issuances and guidance. No change has been made to
this part of the proposed regulation in response to these comments in
order to preserve discretion for DoD Components to assign work in a
manner that can be tailored to their organization's structures,
mission, and management philosophies.
One commenter said that managers might wait too long past the
effective date to file a personnel action, thus disqualifying an
employee from receiving retroactive pay. Another commenter said that
the seven-day notification period before a personnel action is too
short. These comments reflect a misunderstanding of the effective date
upon which the employee filing time begins. For purposes of preserving
retroactive benefits, the employee filing time for a classification
appeal does not begin until the effective date of the personnel action
implementing the reclassification of an employee's position.
Consequently, a manager cannot ``manipulate'' the timing of the
effective dates of classification and personnel actions to prevent an
employee from meeting a classification appeal filing timeline. Example:
A classification action reducing a position's pay band is signed on May
3rd. The personnel action (typically Standard Form 50) must be signed
within 4 pay periods (typically 8 weeks) of May 3rd. For this example,
the Notification of Personnel Action (SF 50) effecting the personnel
action is effective on June 10th. The employee must be notified no
later than June 3rd (``at least 7 days before'' the SF-50 is
effective). If the employee files a classification appeal within 15
calendar days of the SF-50's date (no later than June 25), the employee
preserves entitlement to retroactive action if the classification
decision is overturned on appeal. If the employee files a
classification appeal after 15 days of the effective date on the SF-50,
the employee is not eligible for retroactive benefits. Because many of
the comments reflected confusion over whether the employee's 15-day
filing period to preserve retroactive benefits begins on the effective
date of the classification action or the date of the personnel action,
the proposed regulation has been modified to clarify that the 15-day
filing period begins on the effective date of the personnel action.
Additionally, Sec. 9901.221(d) and (e) have been reversed in order
to help facilitate an understanding of employee filing timelines to
preserve retroactive benefits upon appeal. The filing time period,
which is the same as that allotted under GS and FWS, has proven
sufficient under normal circumstances for an employee to register a
classification issue. Therefore, no change was made to the proposed
regulation regarding the filing timeline.
Another commenter stated that classification decisions that reduce
an employee's pay should never be retroactive. We concur. There are no
provisions under NSPS allowing a retroactive reduction in an employee's
pay band or adjusted salary. The regulation states that a retroactive
effective date for a classification action and the implementing
personnel action is permitted only if the action resulted in a
reduction in pay band or adjusted salary and if that action is
subsequently reversed on appeal.
Several commenters suggested that the effective date of a
classification action that increases or invalidates a reduction of an
employee's pay and that follows an employee's formal raising of appeal
of the matter to DoD or OPM should be retroactive to the later of (1)
the date on which the employee first performed the work that is the
subject of the action or (2) 30 calendar days before the date on which
the employee first formally raised or appealed the matter. This
recommendation, however, would prevent management from pursuing options
that would result in more efficient position management in cases where
an employee had not previously been downgraded. For position management
purposes, management must retain discretion to remove higher-level
work, once identified, and assign that work to employees already
classified at the higher level.
Section 9901.222--Review of Classification Decisions
Section 9901.222 of the proposed regulations provides employees the
right to request that DoD or OPM reconsider the classification of their
official position of record, including the pay system, career group,
occupational series, pay schedule, or pay band. Commenters suggested
that Sec. 9901.222 be amended to include a procedure for appealing
classification standards. One association argued that optometrists
should be in the Medical Career Group and in pay band 3, suggesting
that the classification standard and description of duties and
requirements are based on 40-year-old information that does not reflect
the changes to the profession since then. The association argued that
the lack of an appeal right denies optometrists and others their
inherent right to a day in court regardless of the merits of their
case. All NSPS employees, including optometrists, have the right to
appeal the career group and pay band to which they have been assigned.
As under the General Schedule, classification criteria are not subject
to appeal. We have modified the proposed regulation to further clarify
this point in response to such comments.
Commenters asked for greater specificity in the language appearing
in this section. One commenter noted that, while Sec. 9901.222(b) says
an employee may not appeal classification of a position to which an
employee has been detailed or temporarily promoted, it does not
specifically mention temporarily reassigned positions. We have amended
the proposed regulation to include temporarily reassigned positions in
Sec. 9901.222(b). A commenter also noted that some temporary
promotions and positions can extend for longer periods of time than
considered in the regulation. The commenter suggested amending the
proposed regulation to allow for appeal for employees assigned to
temporary positions extending longer than two years. To ensure that
NSPS employees have similar rights to employees covered by OPM and DoD
appeal regulations, we have amended the proposed regulation to allow
classification appeals in situations where employees have been
temporarily promoted for two years or more.
[[Page 56362]]
Another commenter noted that the last sentence of the paragraph
describing who receives an appeal in Sec. 9901.222(c) is unclear. As
indicated in Sec. 9901.222(a), an employee may appeal to either DoD or
OPM, who will receive the appeal in accordance with Sec. 9901.223 or
Sec. 9901.224, respectively.
Commenters expressed concern that the pay bands of positions that
have been established in NSPS during the conversion process are not
currently open to appeal, even though the pay band classification of
individual positions is open to such consideration. Commenters claimed
that this difference means that employees whose positions and job
descriptions were placed in lower pay bands cannot seek
reconsideration. However, employees converted into NSPS were placed in
pay bands that correlated with the GS grade of the position to which
they were assigned prior to conversion. Consequently, there is no
reduction in pay band upon conversion. Employees who believe they were
converted to the wrong pay band may appeal their classification at any
time. Because employees were converted to NSPS without a loss of pay
and based on their GS classification at the time of conversion and not
that of a lower grade, there is no basis for retroactive benefits. We
have elected not to change the proposed regulation in response to these
comments.
Finally, commenters suggested deleting Sec. 9901.222(c) in its
entirety, citing the potential for conflict between the NSPS regulation
and local bargaining agreements in accordance with NDAA 2008. Some
commenters saw the new process outlined in this section as superfluous
because it and the local bargaining process are similar and have
overlapping steps. Commenters also suggested that the accuracy of
position descriptions was not a classification issue. One commenter
cited Veterans Administration and AFGE Local 2880, 16 FLRA 50 (1984) as
a reference. Many commenters deem the process as open to arbitration,
suggesting that attempting resolution through the NSPS process is
restrictive and inefficient. In response to these comments, Sec.
9901.222(c) was modified to reflect that the employee may raise the
issue of accuracy of a position description informally with the
employee's supervisor or file a grievance using the applicable
administrative or negotiated grievance procedure.
Section 9901.223--DoD Classification Appeals
Several commenters suggested that the reasons listed in Sec. Sec.
9901.223(a)(2) and 9901.223(a)(3) for disallowing an employee
representative (because the employee's duties are deemed priority work
of the Government, or the employee's release would give rise to
unreasonable costs) did not sufficiently protect the employee. The
commenters expressed concern that the guidelines were insufficient
justification to bar an employee representative from participating in
the appeals process. These commenters believed employees should have
the representative of their own choosing without regard to cost,
availability, or impact on mission. The criteria by which management
can disallow participation of a particular employee representative
under this section are standard across the Government and necessary to
the conduct of mission. No change was made to the proposed regulation
in response to these comments.
Many commenters found confusing and complicating the requirement in
Sec. 9901.223(b)(1) that employees formally raise concerns about their
classification to the immediate supervisor prior to filing an appeal.
They expressed concern that the supervisory review might overlap with
the employee's 15-day filing timeline and cause the employee to lose
eligibility for retroactive benefits. Some commenters also expressed
concern about what process would be followed in the event a supervisor
did not respond to such an issue raised by an employee. In response to
these comments, we modified Sec. 9901.223 of the proposed regulation
to remove the requirement that a classification concern must first be
raised with an employee's immediate supervisor.
Commenters requested an alignment of the timeline given to the
employee to preserve retroactive benefits with that given to the
manager for response to a classification issue presented by an employee
under Sec. 9901.223(b)(1). As we have modified Sec. 9901.223(b)(1),
the 30-calendar-day response time for supervisors is no longer
required, unless the employee chooses to use this step in the process.
However, we note that, while the filing timeline to preserve
retroactive benefits is 15 days from the effective date of the
personnel action implementing the classification decision, the
employee's timeline is at least 21 days from the notification of a
personnel action. Pursuant to Sec. 9901.221(d), employees must be
notified in writing of the effective date of a personnel action
implementing the classification decision resulting in a reduction in
pay band or adjusted salary. This notice must be provided at least
seven days before the personnel action is taken and provide the
employee with information on their right to appeal the classification
decision and the time limits for so doing. Consequently, each employee
will have seven or more days of awareness of a pending personnel action
and the consequent appeal rights before the 15-day filing period to
preserve retroactive benefits begins. Another commenter stated that
Sec. 9901.223(b) puts the supervisor in the role of human resources
officer and that the supervisor may not have the qualifications for
this role. We have not made any changes to the proposed regulation in
response to this comment. Supervisors and managers are assisted in this
role by their human resources office. The human resources office is
responsible for providing advice and expertise to supervisors and
managers throughout the classification appeals process. Additionally,
we are confident that supervisors are well-qualified to respond to
classification appeals due to their familiarity with the jobs and the
simplified classification structure and criteria established under
NSPS. Commenters suggested that the timeline in Sec. 9901.223(b)(3) to
challenge a classification decision be changed from 15 days after a
classification action takes effect to 15 days after an employee has
been notified of a personnel action. This change would allow the
employee to avoid situations where a personnel action is taken on a
classification matter with an effective date up to four pay periods
prior to notice of the personnel action. The commenter expressed
concern that such a situation would always put the employee outside the
15-day period to file an appeal after the effective date of a
reclassification. Further, the commenter stated that the employee would
have to request an extension under Sec. 9901.223(b)(3) or lose the
opportunity to appeal. We have concluded that the wording of the
proposed regulation was unclear as to whether the ``effective date''
starting the 15-day filing time period was that of the position
classification action or the personnel action implementing that action.
Therefore, Sec. Sec. 9901.221(e)(2) and 9901.223(b)(2) were revised to
clarify that the 15-day filing timeline for employee classification
appeals begins with the effective date of the ``personnel action.'' We
did not modify the proposed regulation to reflect the recommendation to
begin the 15-day
[[Page 56363]]
period on the date of notification of the personnel action because this
change would shorten the time period for employee appeal. Nevertheless,
we have also modified the proposed regulation to provide the deciding
official the authority to grant an extension of the filing timeline
when an employee shows that he or she did not receive notice of the
personnel action.
Several commenters objected to the requirement that an employee
provide such personal information as name, mailing address, office
telephone and fax numbers, name of the employee's Component and exact
location of the employee's position within the Component upon
submission of a classification appeal. These commenters preferred that
the agency be held accountable for providing that information. Such
information is standard to filing an employee classification appeal in
the Federal Government. For example, OPM requires the same information
in the filing of classification appeals under 5 CFR part 511. The data
provided ensures that adequate information is available to act on the
employee's request and thereby protects the employee's interests.
Consequently, no action was taken in response to these comments.
Another commenter suggested that two additional pieces of information
be required of the employee in submitting a classification appeal.
These additional documents included the current position description
and the latest evaluation statement for the position, if available.
Another commenter requested that the rule specify that the organization
will provide these materials to the employee, due to their importance
to the future of the appeal. No change was made based on these
comments. Such documents are typically provided by the servicing human
resources office.
Commenters also recommended that the proposed regulation be
modified to disallow cancellation under the events outlined in Sec.
9901.223(d)(2) when there may be an entitlement to retroactive
benefits. We have modified the proposed regulation to accept this
recommendation.
Some commenters interpreted Sec. 9901.223(d) as restricting the
employee's right to resolve classification grievances. They suggested
adding these cancellation provisions to the collective bargaining
process, thus not interfering with the employee's right to appeal by
any avenue. No change was made to the proposed regulation in response
to these comments. As previously stated, DoD is committed to fulfilling
its obligation to bargain in good faith on negotiable conditions of
employment related to these regulations consistent with 5 U.S.C.
chapter 71 and the requirements of 5 U.S.C. 9902 and section 1106(b) of
NDAA 2008.
Section 9901.224--Appeal to OPM for Review of Classification Decisions
This section outlines the right to and process for appealing
classification decisions to OPM.
One commenter expressed concern that this section would limit the
appeal of adverse actions, excluding them from the MSPB. The section
specifically addresses the employee's right to appeal a classification
decision and does not concern or impact appeals of adverse actions to
the MSPB. It should be emphasized that Sec. 9901.224(d), which states
that ``OPM's final determination on an appeal made under this section
is not subject to further review or appeal'' mirrors the language in
title 5 CFR 555.612, which states that ``[a]n appellate decision made
by the Office is final unless reconsidered by the Office. There is no
further right of appeal.'' The MSPB has no jurisdiction to review
classification decisions made by an agency. This regulation neither
limits appeals of adverse actions to the MSPB, nor does it confer
jurisdiction on the MSPB to adjudicate disputes regarding
classification decisions. We have not made any changes to the proposed
regulation in response to this comment.
Section 9901.231--Conversion of Positions and Employees to the NSPS
Classification System
Section 9901.231 of the regulations addresses the conversion of
positions to the classification system established under this subpart.
Commenters requested clarification regarding Sec. 9901.231(b). In
particular, commenters wondered whether the work level conversion
tables used to place an employee in a pay band would be based on an
employee's actual level of work or the work as described in the
employee's position description, arguing that the work level conversion
tables only consider positions that are properly classified under the
OPM classification structure. No change has been made to the proposed
regulation in response to this comment. Conversion tables are not
published in this regulation. However, we note that classification of
an employee's position upon conversion to NSPS is based on the
employee's official position of record, and that it is assumed the
employee's position is properly classified under the OPM or applicable
classification structure. Some commenters expressed confusion regarding
the issue of temporary promotions as they relate to conversion,
questioning whether or not the temporary position would be terminated
prior to conversion and whether or not the employee would return to the
temporary position after conversion (with pay adjustment). As explained
in Sec. 9901.231(c), an employee on a temporary promotion at the time
of conversion into NSPS will be returned to his or her official
position of record prior to processing the conversion. After the
employee is converted to NSPS, a determination will be made as to
whether there is still need for the temporary position. If so, that
position will be properly classified according to NSPS classification
criteria. Because NSPS bands are broader than General Schedule grades,
it is possible that the position may be classified into the band to
which the employee is assigned. Section 9901.371(k) of this regulation
provides authority for the organization to set pay immediately after
conversion if the employee is temporarily assigned back to the position
to which he or she was temporarily promoted before converting to NSPS.
That section permits temporary placement and pay subject to the same
terms and conditions as the initial temporary promotion.
One commenter requested that Sec. 9901.231(d) be changed to
protect grade retention for converting employees. No change was made to
the proposed regulation in response to this comment. NSPS does not
provide for General Schedule or other pay plan grade retention upon
conversion. If a converting employee's base salary exceeds that of the
assigned NSPS pay band, the employee will receive pay retention. If an
employee has a preexisting entitlement to pay retention under 5 CFR
part 536 immediately before becoming covered by NSPS, consistent with
Sec. 9901.356(m), he or she will be entitled to a retained rate of pay
without regard to the 104-week pay retention limit.
3. Subpart C--Pay and Pay Administration
Overview of Comments
Subpart C contains regulations establishing pay structures and pay
administration rules for covered DoD employees to replace the pay
structures and pay administration rules established under 5 U.S.C.
chapter 53 and 5 U.S.C. chapter 55, subchapter V, as authorized by 5
U.S.C. 9902 (subject to the limitations on waivers in Sec. 9901.303).
Additionally, this subpart sets forth the rules for performance-
[[Page 56364]]
based pay, premium pay, and pay upon conversion into NSPS, as well as
procedures for movement or conversion out of NSPS. By far, the largest
number of individuals and labor organizations submitting comments
focused on changes to this subpart of the proposed rule. Of the total
comment submissions, approximately 80 percent touched on at least one
aspect of pay and pay administration. General issues raised by
commenters included concerns that the rule would permit favoritism and
bias when determining performance payouts, mistrust of the pay pool
administration process (especially as regards the highest-level
reviewers), dissatisfaction with the use of control points within
bands, concerns about the impact of bonuses on retirement, concerns
about perceived infringements on collective bargaining rights, and
perceptions of unfairness in terms of salary increases as compared to
the GS system. Of those commenters dissatisfied with NSPS, many drew
direct comparisons between the GS and NSPS systems, indicating a
preference for the GS system. These commenters looked for consistency
and comparability between the two systems in all areas, not just those
prescribed by the NDAA. Commenters stated the concern that they would
lose pay comparability with DoD employees remaining under the General
Schedule and with employees in other Federal agencies. Also, many
commenters argued that employees should receive 100 percent of the pay
increases they would have received under the General Schedule in the
form of across-the-board increases (not the minimum NSPS across-the-
board increase of 60 percent of the Governmentwide GS pay increase with
the balance being applied to performance-based payouts). Some
commenters stated that the Department should disband NSPS altogether
and return to the General Schedule classification and pay system.
We have addressed the questions concerning fairness of performance
payouts and administration of the pay pool in ``Performance and Pay
Pool Management'' under ``Major Issues.'' Similarly, comments
concerning control points have also been addressed under ``Control
Points'' and concerns about collective bargaining rights have been
addressed in ``Collective Bargaining and Labor Relations'' located
under ``Major Issues.'' The remaining concerns have been addressed
under the various sections of this subpart. As a general statement in
response to preferences expressed for the General Schedule, we believe
that NSPS improves on the General Schedule by providing the opportunity
to appropriately reward top performers and/or compensate them in
relation to their labor market value and performance.
The proposed regulation provides that the overall amount allocated
for compensation of the DoD civilian employees included in NSPS may not
be less than the amount that would have been allocated for compensation
if they had not been converted to NSPS. Because NSPS takes the same
amount of money paid out under the General Schedule and redistributes
based on different factors (e.g., performance vs. seniority), it is
possible that some employees may not do as well as they did under the
General Schedule. At the same time, many other employees will do better
under NSPS than they would have under the General Schedule. Overall,
the payouts for NSPS employees under NSPS during the past 2 years of
implementation have proven to compare favorably to the General
Schedule. The changes made in the proposed regulation improve NSPS by
clarifying aspects of system implementation while ensuring that
important safeguards are in place to protect employee rights and uphold
merit system principles.
The revised system is consistent both with the requirements of the
National Defense Authorization Act (NDAA) 2008 and with the statutory
requirement that the Department establish a ``pay-for-performance''
system that better links individual pay to performance. (See 5 U.S.C.
9902(b)(7)(I).) Furthermore, we believe Congress and the American
public expect their public employees to be paid according to how well
they perform, rather than how long they have been on the job. They also
expect the Department to maximize its efforts to recruit and retain the
most talented and motivated workforce to accomplish its critical
national defense mission.
Comments related to specific sections of subpart C are described in
the following sections.
General
Section 9901.302--Coverage
Section 9901.302 lists eligible DoD employees and positions,
subject to a determination by the Secretary under Sec. 9901.102(b).
A few commenters suggested extending coverage to Federal Wage
System (FWS) prevailing rate employees, and several commenters
questioned the authority of the Secretary to designate additional
groups to be covered under NSPS. We have not revised this section in
response to these comments. NDAA 2008 specifically excluded FWS
employees from NSPS and, except for those employees excluded by law,
the Secretary has the discretion to extend coverage to eligible
employees and categories of positions.
Section 9901.304--Definitions
This section provides definitions of terms used throughout the
subpart.
Commenters objected to the definitions of contribution,
contribution assessment, performance share, sub pay pool, and
unacceptable performance. They felt the definitions are vague,
improper, inaccurate, unnecessary and, in the case of the last term,
contradictory to long understood interpretations of unacceptable
performance. We have not revised these definitions in response to the
comments because they accurately reflect the meaning of the terms as
used in the regulation.
One labor organization representative recommended that definitions
of local market and labor market conditions be included in this
section. Inasmuch as these terms have generally accepted meanings and
there is nothing particularly unique in the use of these terms in this
regulation, definitions have not been added for these terms. We note,
however, that generally labor market means the market in which workers
compete for jobs and employers compete for workers, as defined by (1)
the geographic parameter of a job search; (2) education and/or
technical background sought; (3) experience required by the job; (4)
licensing or certification requirements; (5) occupational membership;
(6) level of work to be performed; and (7) industry in which employers
compete for the same skills. The term labor market conditions generally
means the availability and cost of labor in a given market and the
factors/forces impacting the availability and cost of labor.
Another commenter recommended that either the YA-2 pay band maximum
rate of pay be amended to match that of pay band YC-2, which
establishes consistency between the maximum rates for YA and YC, or
that the definition of comparable pay band or comparable level of work
exclude those bands where there are differences in the maximum base
salary rates. We have not made any change based on this comment.
Structural adjustments to pay bands are made to reflect the overall
market value of the level and type of work encompassed by that band.
Levels of work can be comparable whether or not the pay range (minimum
and/or maximum rates) remains the same. Additional discussion regarding
the
[[Page 56365]]
terms comparable pay band and comparable level of work may be found at
Sec. 9901.103 in response to comments about these terms.
Finally, because the term is found in more than one subpart, we
moved the definition of contributing factor from this section to Sec.
9901.103 and provided a link to that section.
Section 9901.305--Rate of Pay
Section 9901.305 defines the term rate of pay and provides an
explanation of what it means to establish and adjust a rate of pay in
the context of 5 U.S.C. 9902(e)(9). Under that section of law, ``any
rate of pay established or adjusted in accordance with [5 U.S.C. 9902]
shall be non-negotiable, but shall be subject to procedures and
appropriate arrangements of [5 U.S.C. 7106(b)(2)-(3)].''
Representatives from several labor organizations commented that the
proposed rule appears far too specific, in effect broadening the
definition of rate of pay to narrow the scope of bargaining. The labor
organization representatives contend that, while NDAA 2008 restored
collective bargaining rights to DoD employees, this broader definition
of ``rate of pay'' contradicts the intent of Congress. The proposed
regulation language does not and cannot take away collective bargaining
rights regarding ``procedures and appropriate arrangements'' and DoD is
committed to fulfilling its obligation to bargain in good faith on
these NSPS regulations consistent with Governmentwide labor relations
rules under 5 U.S.C. chapter 71 and the requirements of 5 U.S.C. 9902
and section 1106(b) of NDAA 2008. The term ``rate of pay'' is undefined
in statute. Although it is used frequently in connection with various
aspects of title 5, it does not mean the same thing in every place it
appears. We believe it is important to clarify this term and the NSPS
statute provides authority to do so. Thus, DoD and OPM proposed a
definition to ensure uniformity and consistency for NSPS
implementation.
Some labor organizations suggested that all references to ``and the
conditions defining applicability of each rate'' in Sec.
9901.305(a)(2) be deleted from the definition of ``rate of pay''
suggesting that DoD was trying to evade its legal obligations by
broadening the definition and narrowing the scope of collective
bargaining. Establishing or adjusting a rate of pay for employees must
take into account both the amount of the rate and the required
eligibility criteria. Insofar as the term ``conditions of
applicability'' may be misinterpreted, we have removed multiple
references to ``conditions of applicability'' from this section.
Paragraph (b) of Sec. 9901.305 has been revised to instead refer to
``eligibility requirements''. Upon request, bargaining of procedures
and appropriate arrangements concerning ``rate of pay'' is required.
The definition of ``rate of pay'' will not preclude employee
representatives from negotiating over such matters as procedures for
determining order of overtime assignments. Order of overtime
assignments involves management's right to assign work in accordance
with 5 U.S.C. 7106(a) and does not concern decisions regarding ``rate
of pay.'' Rate of pay decisions are made separately from overtime
assignment decisions. Bargaining over seniority, or other procedures to
distribute overtime fairly, is not changed or impacted by this
definition of ``rate of pay.''
Several commenters suggested that the definition of ``rate of pay''
include within-grade adjustments, some of which are discretionary, as
provided for in Sec. 9901.351(c). Under Sec. Sec. 9901.351(c) and
9901.371(j), the regulations provide for both mandatory and
discretionary salary adjustments for employees moving from GS. These
adjustments are based on the amount of time an employee has served in
the GS within-grade increase waiting period. The absence of an explicit
reference to these pay adjustments does not exempt them from the
definition of ``rate of pay'' under Sec. 9901.305(a). Nevertheless,
for clarity purposes, ``within-grade increase adjustments'' has been
added to the examples of rates of pay in Sec. 9901.305(b)(3).
Overview of Pay System
Section 9901.311--Major Features
This section of the subpart describes the key structural features
of the NSPS pay system.
One labor organization representative questioned Sec. 9901.311(b)
which prescribes that the NSPS pay system will include policies
regarding the setting and adjusting of band rate ranges based on
mission requirements, labor market conditions, and other factors, as
described in Sec. Sec. 9901.321 and 9901.322. They indicated that
these sections, in fact, merely state that DoD will do these things but
do not contain any useful information and do not contain the details
that would allow them to comment effectively. They recommend that we
delete Sec. Sec. 9901.321 and 9901.322. We disagree with this comment.
As evidenced by the large number of substantive comments we received on
these sections, these sections address key features of the NSPS
compensation structure as well as criteria pertaining to these
features.
Section 9901.312--Maximum Rate of Base Salary and Adjusted Salary
This section establishes authority and criteria for limitations on
maximum rates of pay for base and adjusted salaries under NSPS.
One commenter suggested that if the Secretary establishes maximum
rates of base salary, the statutory comment and review process should
begin, followed by collective bargaining. We have not revised this
section in response to this comment. A statutory comment and review
process is not required for maximum rates of base salary. Such a
comment period is not required by law and would unnecessarily delay
DoD's ability to respond to labor market forces. The proposed
regulation does require, however, that the Secretary coordinate with
OPM prior to the establishment of maximum rates of basic pay. DoD is
committed to fulfilling its obligation to bargain in good faith on this
regulation consistent with Governmentwide labor relations rules under 5
U.S.C. chapter 71 and the requirements of 5 U.S.C. 9902, as provided
for in NDAA 2008.
One commenter suggested that the NSPS proposed regulation needs a
provision that allows the maximum of the rate range for physicians and
dentists to keep pace with the maximum rates paid to the same
occupations in the Veterans Health Administration under title 38, U.S.
Code, without large automatic pay increases. Physicians and dentists
are not subject to the maximum adjusted salary rate caps described in
this section in recognition of salary ranges unique to the physician/
dentist labor market, to include rates paid by the Veterans Health
Administration under title 38. In the absence of an adjusted salary cap
for physicians/dentists, adjusted salary in the proposed regulation is
limited only in relation to the aggregate pay cap, which cannot exceed
the salary of the President of the United States. Consequently, there
is sufficient authority in the proposed regulation to continue to
establish salaries for physicians and dentists consistent with title 38
as well as other labor markets without modification to the regulation.
Another commenter asked if the Secretary's authority to establish
higher adjusted salary rates for physicians and dentists applies to
researchers or non-medical PhD research scientists. The increased
maximum adjusted salary maximums are in recognition of a specific labor
market and include those types of health care positions covered by the
Veterans Health Administration
[[Page 56366]]
under title 38, which does not include researchers or other non-medical
scientists.
Section 9901.313--Aggregate Compensation Limitations
This section sets forth authority and criteria for aggregate
compensation limits.
One commenter suggested removing from the list of compensation
types at Sec. 9901.313(b) the following payments: Severance pay under
5 U.S.C. 5595, nonforeign area cost-of-living allowances under 5 U.S.C.
5941(a)(1), and lump-sum payments for accumulated and accrued annual
leave on separation under 5 U.S.C. 5551 or 5552. The commenter argued
that these payments are not compensation for work performed and
therefore should not be included when calculating aggregate
compensation limits. The commenter is correct because these specific
payments are not subject to the aggregate limitation on pay. However,
no change in the proposed regulation is needed because these payments
are listed as exclusions in Sec. 9901.313(b)(13).
Section 9901.314--National Security Compensation Comparability
Labor organization representatives commented that the proposed
regulation does not include any mention of 5 U.S.C. 9902(e)(3), which
requires rates of compensation for civilian employees to be adjusted
the same as rates for members of the uniformed services. Commenters had
objected to this omission in the 2005 regulation and objected again to
the omission of this provision in the current proposed regulation.
However, because comparability with military pay is already addressed
under 5 U.S.C. 9902(e)(3) and requires no further elaboration to
implement, there is no need to address it again in this regulation.
One commenter objected that Sec. 9901.314 fails to mention both
the requirement that aggregate compensation be no less than what would
have been available had employees not been converted to NSPS through
fiscal year 2012 and the requirement that a formula to be developed in
years after 2012 for calculating the overall amount to be allocated for
compensation of civilian employees included in NSPS. However, Sec.
9901.314(a) and (b) specify these requirements in almost the exact
language as that used in NSPS statute. Therefore, no change was made to
the proposed regulation in response to this comment.
Rate Ranges and General Salary Increases
Section 9901.321--Structure
This section describes the Secretary's authority to establish
ranges of base salary rates for pay bands.
Numerous comments were received on the control point feature of
NSPS. Consequently, a comprehensive response to those comments
including background information and the philosophy underlying the
establishment and use of control points has been provided under the
``Major Issues'' section of this Supplementary Information.
Section 9901.322--Setting and Adjusting Rate Ranges
This section provides the Secretary with the authority to set and
adjust the rate ranges established under Sec. 9901.321; establish the
effective date of new or adjusted rate ranges; establish different rate
ranges and range adjustments for different pay bands; and adjust the
minimum and maximum rates of a pay band by different percentages.
A commenter proposed that we delete ``mission requirements'' from
the list of factors the Secretary may consider in setting and adjusting
rate ranges under Sec. 9901.322(a). The commenter stated that this is
a vague, undefined concept that is not relevant to the value of work,
and pay should be determined according to the value of work. We have
not revised this section in response to this comment. While we have not
defined the term ``mission requirements,'' it is a frequently used term
relating to those factors necessary to accomplish the Department's
national security mission. We consider this to be among many relevant
and important factors the Department may consider in determining
appropriate rate ranges. It is essential that DoD devote its limited
financial resources to attracting, recruiting, and retaining employees
who possess the knowledge, skills, abilities and/or competencies
relevant to its missions. Where market forces drive up the cost of
labor in one or many occupations, DoD must have the ability to apply
its limited resources to the skills most critical to its mission. For
example, there may be a requirement for specific information
technology, program management, or acquisition management skills. If
those skills are in short supply in the labor market and critical to
accomplishment of mission, DoD needs to have the ability to direct its
resources to acquiring employees with those skills rather than losing
those employees to competitors or adjusting the pay of skills which
they have already competitively priced. It is important to note,
however, that the NSPS regulation does not give any one factor greater
weight than any other; given the circumstances of a particular year,
any factor may have a greater or lesser effect on decisions regarding
adjustments in rate ranges. We believe the American public expects DoD
to use its resources in the most cost effective manner possible.
One labor organization endorsed this section of the proposed
regulation, citing its origins in NDAA 2008 and the requirement that no
less than 60 percent of the general pay increase (GPI) go to all
employees rated above unacceptable. Another commenter stated that the
maximum rate of each pay band should be adjusted by the sum of the
amount of the increase applied to the NSPS GPI plus the amount of the
GPI applied to the pay pool because, if the pay ranges do not progress
by the full amount of the GPI, management will lose the ability to
compete with the GS market which is still a very significant competitor
with the NSPS labor force. This commenter additionally asserted that
continuing to increase the maximum of the pay range helps to reinforce
to employees that the main purpose of NSPS is to put emphasis on
performance rather than cutting civilian pay. We agree and have revised
the language at Sec. 9901.322(e) to add a requirement for the maximum
rate of all pay bands to be adjusted by no less than the percentage
amount of the General Schedule annual adjustment under 5 U.S.C. 5303. A
similar comment was received which stated that we should require
control point maximums to be adjusted at the same rate as the GPI;
otherwise an employee could be denied a full GPI increase. We note that
whether or not a control point is adjusted to reflect the amount of a
NSPS across-the-board increase, both the NSPS statute [5 U.S.C.
9902(c)(7)] and the proposed regulation [5 CFR 9901.323(a)(1)] require
that each employee eligible for such increase must receive it
regardless of pay band control points. Therefore, no adjustment has
been made to the proposed regulation in response to this comment.
Other labor organization representatives expressed concern that the
ability of DoD to raise the maximum rate of a pay band by an amount
different from the minimum rate could allow the Department to benefit a
few favorite employees at the top of their band at the expense of other
employees in the band. These commenters also believe this section of
the proposed regulation offers too much opportunity
[[Page 56367]]
for manipulation and inequity. We do not agree. The ability to adjust
pay band minimums and maximums is an important flexibility that enables
the agency to respond to changing labor markets. These flexibilities
include the ability to raise the minimum rate of a pay band while not
changing the maximum rate, as well as lowering or raising the maximum
of a pay range without adjusting the lower range for the purpose of
responding to labor market forces. When adjusting range rates under
this authority, the ranges are adjusted worldwide throughout all of
NSPS. With an NSPS population currently exceeding 180,000 employees,
the sheer volume of employees assigned to any given pay band at any
given time negates the ability of targeting range adjustments to a
``few favorite employees''. Additionally, any adjustments to rate
ranges must be coordinated with the OPM.
Another commenter questioned how often the Secretary can make rate
range and other adjustments to pay. The proposed regulation generally
does not specify when or how often the Secretary can authorize rate
range and other adjustments, although it does require the Secretary to
review established rate ranges for possible adjustment at least
annually and adjust the maximum of each pay band at the time of a
general salary increase under Sec. 9901.323(a)(1). With the exception
of the requirement to provide employees with ratings above unacceptable
an increase of 60 percent of the GPI at the same time that a General
Schedule annual adjustment takes effect under 5 U.S.C. 5303, and a
requirement to adjust standard local market supplements in the same
manner and to the same extent as corresponding locality payments under
5 U.S.C. 5304 and 5304a, the Secretary will make decisions regarding
rate range and other adjustments to pay based on many variables,
including mission requirements, labor market conditions, costs, pay
adjustments received by other employees of other Federal agencies, and
any other relevant factors.
One commenter recommended that the proposed regulation include a
provision that allows the maximum of the rate range (including any
occupational supplements) for physicians and dentists to keep pace with
the maximum rates paid to the same occupations in the Veterans Health
Administration under title 38, without large automatic pay increases.
The commenter argued that the maximum of a range needs to be allowed to
go higher without triggering a pay increase. The proposed regulation
does not link adjustments in rate ranges to mandatory increases in base
salary. Therefore, an adjustment in the maximum rate of a pay range can
be made without triggering a mandatory increase in an employee's base
salary. Consequently, no change has been made to the proposed
regulation in response to this comment.
Section 9901.323--Eligibility for General Salary Increase
This section describes the Secretary's authority and limitations on
authority to grant both general salary increases and targeted general
salary increases, as well as describing some requirements and criteria
concerning these increases.
This section generated a large number of comments. Many commenters
argued that employees should receive 100 percent of the pay increases
they would have received under the General Schedule (not the minimum
increase of 60 percent of the GS GPI plus performance-based payouts).
Of the commenters who focused on this issue, most expressed the view
that the Governmentwide GS GPI was actually a cost-of-living adjustment
(COLA), to which all Government employees were entitled. In fact, this
view is incorrect; the GS GPI reflects the cost of labor. The Federal
Employees Pay Comparability Act of 1990 provided two types of annual
salary adjustments: an across-the-board increase to the entire General
Schedule based on the Employment Cost Index (ECI), and a locality pay
increase to the entire General Schedule, in a particular locality area,
based on the salaries of non-Federal employees working in that area.
The ECI portion is based on an annual comparison of ECI changes as
measured by the Bureau of Labor Statistics (BLS). However, the BLS
comparison measures the ``cost of labor or wages'' as opposed to the
``cost of living.'' Ultimately, the purpose of the GS increase is to
ensure competitiveness with the private sector, versus offsetting
increases in the cost of living. While discretion exists for employees
to receive only a portion of the GPI as an across-the-board pay
increase, the balance of the GPI also continues to be paid out as a
base salary increase. The difference is that it is paid out based on
performance as opposed to an automatic ``across-the-board'' increase.
This enables DoD to pay the most competitive salaries to its highest
performing employees.
Some commenters suggested that even employees who have reached a
control point should receive the general increase, under the
supposition that employees at the control point arrived there by being
top performers. As indicated previously, under the proposed regulation
and 5 U.S.C. 9902(c)(7), such employees do not lose entitlement to the
NSPS general salary increase authorized under the proposed Sec.
9901.323(a)(1). Limitations on exceeding control points under increases
authorized under this section are limited to ``additional general
salary increases'' under Sec. 9901.323(a)(2) related to staffing
difficulties and Sec. 9901.323(c) pertaining to that part of the GPI
paid out through the pay pool process.
One commenter suggested that employees who experience an unintended
and unforeseen loss in pay as a result of an NSPS pay setting rule, or
lack of a rule, when they move to an NSPS position from a non-NSPS
position outside of the conversion process be eligible for a one-time
retroactive adjustment to compensate for the loss if that loss or
inequity is subsequently rectified by establishing or changing a rule
to address the situation. Such an adjustment could be a mechanism for
the Secretary to rapidly and immediately address or mitigate
inequitable situations resulting from the operation of the NSPS
regulation when a rule, or lack of a rule, has significant adverse
impact on an employee. We have not revised this section in response to
this comment. It is not feasible to pay employees for changes in pay-
setting rules that were not in effect on the effective date of
personnel actions affecting their pay. Standard practice throughout the
Government is to base all personnel actions affecting Federal employees
on the Federal laws and regulations applicable to them on the effective
date of the action. It is also not reasonable to presume that every
change in regulation would have been preferred earlier if only that
authority were permitted earlier.
Another commenter pointed out that non-NSPS candidates applying in
response to vacancy announcements should be notified that they will
receive only 60 percent of the general increase and no performance pay
if they accept a reporting date to an NSPS position just prior to
January. However, Sec. 9901.323(c)(1) of the regulation provides
authority to the Secretary to make such employees whole by providing
them an additional increase equal to the difference between the General
Schedule GPI and the amount of the GPI applied as an NSPS across-the-
board GPI. Therefore, such notification is not necessary.
A labor organization representative erroneously stated that a
determination to increase the minimum of the rate range would govern
what the annual increase for acceptable employees will
[[Page 56368]]
be and that employees in one pay band could get one percentage increase
while other employees in other bands could get different percentages
because of labor market conditions or because one occupational series
is considered to be more important than another at a particular point
in time. Under the proposed regulation, the link between adjustments in
the minimum of a pay band and an employee's entitlement to have his or
her base salary adjusted has been severed. Instead, annual general
salary increases are provided in accordance with the requirements of
this section. Nonetheless, it is true that pay band minimums and
maximums can be adjusted differently from pay schedule to pay schedule
based upon labor market considerations. Such adjustments to band ranges
in relation to the labor market are appropriate.
Another labor organization representative stated that they
interpret our Supplementary Information in the proposed regulation
concerning Sec. 9901.323(a)--which states, ``As required by section
9902(e)(7), the portion of the GS GPI amount that is not provided as an
NSPS general salary increase must be allocated to NSPS pay pool funding
for the purpose of increasing base salary rates on the basis of
employee performance''--to mean that DoD has to increase payroll
funding each year by the amount of the GPI and that it can't give any
part of it out as cash bonuses or use this money for other than
employee compensation purposes. It is correct that the balance of the
amount of the GPI which is not paid out as a general salary increase
must be allocated to pay pool funding for the purpose of increasing
rates of pay on the basis of employee performance. While this does not
guarantee that each employee will receive the remaining percentage as
an increase to base salary, it does mean, in the aggregate, the amount
must be paid out as an increase to base salary. This portion of the pay
pool funding may not be paid out as a bonus.
Another commenter suggested that Sec. 9901.323(a)(2) be revised to
allow the additional general salary increase to target specialties
within an occupation, such as Electronics Engineer versus Mechanical
Engineer, as well as specific locations. The commenter stated that the
ability to target specific occupational specialties and locations would
make it more likely that relief would be authorized, since it would not
impact as many employees. Another commenter recommended the general
increase under Sec. 9901.323(a)(2) should not only permit targeting to
specializations within an occupation, but also to segments of a pay
band. We agree in part. The proposed regulation has been modified in
response to these comments to enable targeting of specializations
within an occupation. However, the proposed regulation was not modified
to permit targeting by geographic location or parts of a pay band. The
appropriate tool to recognize salary and market differences based on
geographic location is through the use of the targeted local market
supplement authority described in Sec. 9901.332(c). We agree that
there is a need to amend the proposed regulation to provide NSPS with
the ability to design targeted local market supplements that will more
effectively compensate employees where the higher market value has been
recognized through the establishment of pay increases such as the OPM
series of special salary rates, and we have amended our regulations at
Sec. 9901.331(b) to address this concern.
A labor organization representative protested that Sec.
9901.323(a)(2) gives the DoD flexibility to provide some occupations
within a pay band a larger increase than workers in other occupations
in the same pay band based on factors other than individual
performance. Some commenters objected to the perceived lack of
objective criteria by which the Secretary would apply his or her
authority to provide additional NSPS general salary increases under
this section to employees in a designated occupational series in a pay
band at times other than the effective date of the GS annual
adjustment. They expressed concern that a general salary increase
provided under this paragraph could be subject to abuse,
discrimination, or inequity. There was also some confusion as to
whether this was meant to be a different type of targeted local market
supplement. It is not intended to function as a targeted local market
supplement; rather, it is a one-time increase to base salary without
geographic distinction. This provision provides an important tool to
attract and retain employees performing critical national security
missions. Contrary to concern about the perceived lack of objective
criteria, the proposed regulation does identify four specific factors
upon which these additional targeted salary increases will be based
(labor market conditions, staffing difficulties, cost, and mission
priorities). These criteria are much like the criteria governing the
authority to provide special salary rates under the General Schedule.
In fact, this authority and the targeted local market supplement are
meant to be similar to the special pay rate flexibility available for
General Schedule employees under 5 CFR 530.301. The NSPS ``additional
general salary increase'' functions as a ``catch up'' increase in base
salary. The ``targeted local market supplement'', similar to a GS
special rate, is paid out as a supplement to base salary. Both exist to
address labor market and staffing difficulties. Consequently, to
facilitate understanding of the ``additional general salary increase''
authority, we have renamed this authority ``targeted general salary
increase'' to align the authority with the terminology used for other
NSPS pay tools used to address staffing difficulties.
A few commenters recommended that even employees who received a
rating of unacceptable should receive at least 60 percent of the annual
increase. Providing this increase to individuals who receive a rating
of unacceptable is counter to one of the fundamental goals of NSPS,
recognizing and appropriately compensating employees based on
performance. This fundamental goal was recognized by the Congress in
the NDAA 2008. Therefore, no change was made in response to this
comment.
Local Market Supplements
Section 9901.331--General
This section of the proposed regulation describes the process by
which base salary ranges may be supplemented in appropriate
circumstances by local market supplements.
One commenter representing a labor organization suggested that,
because employees with performance/complexity levels that put them at
the top of the pay band will receive a partial or no increase when
local market supplements are applied, the system does not adhere to
principles of pay for performance. However, the only limits on paying a
local market supplement in the proposed regulation is that associated
with unacceptable performance under Sec. 9901.332(d) and the maximum
pay cap for adjusted salary under Sec. 9901.312(b) and Sec.
9901.332(b)(5) which limits adjusted salary to level IV of the
Executive Schedule plus 5 percent (a maximum adjusted pay cap which is
5 percent higher than the General Schedule). We believe the American
taxpayer favors a maximum pay cap that aligns NSPS salaries subordinate
to Executive Level salaries in the Federal Government. Therefore, no
change was made to the proposed regulation in response to this comment.
[[Page 56369]]
Another commenter suggested that Sec. 9901.331(c) be clarified to
clearly define the term ``official worksite'' for local market
supplement entitlement. The commenter stated that with the Government's
emphasis on telecommuting, clear and distinct information should be
provided to define ``official worksite.'' We have not changed the
proposed regulation in response to this comment. The regulation
references the General Schedule regulations at 5 CFR 531.605, which
define how the official worksite is determined for an employee who is
covered by a telework agreement.
Section 9901.332--Standard and Targeted Local Market Supplements
This section of the proposed regulation describes the Secretary's
authority and limitations on authority as well as employee entitlements
and coverage conditions concerning standard and targeted local market
supplements.
Labor organization representatives commented that the discretion
provided to the Secretary to set local market supplements is too broad
and that the Secretary should gain approval from, rather than merely
coordinating with, OPM prior to setting local market supplements. We
note that under NDAA 2008, the Secretary is required to set and adjust
standard local market supplements consistent with the setting and
adjusting of corresponding General Schedule locality payments under 5
U.S.C. 5304 and 5304a. We view the Secretary's ability to establish
targeted local market supplements as critical to appropriately
compensating employees and believe appropriate parameters, including
coordination with OPM, provide the necessary safeguards to address
concerns. We have, however, provided clarity to the information
concerning targeted local supplements by specifying that they are meant
to address significant recruitment and retention problems.
Other commenters from labor organizations suggested that the local
market supplement should not be dependent on employee performance;
rather, poor performance should be reflected in base pay. Denying
unacceptable performers adjustments in both their base salary and any
applicable local market supplement clearly conveys the Department's
desire for emphasis on performance. It is consistent with a fundamental
principle of NSPS, that is, we want to acknowledge and reward employees
for their performance. At the same time, we want to assure the American
taxpayer that the Department is not continuing to pay salary increases
to poor performers. This goal was recognized by the Congress in the
NDAA 2008.
One commenter asked how NSPS addresses the situation involving an
employee who moves to an NSPS position located in a geographic area
where pay is not computed using adjusted rates (i.e., a rate that
includes locality pay). If a salary-setting situation does not meet the
criteria for adjustment based on adjusted rates of salary, the salary
is set by comparison of base rates of salary. Where salary is set using
comparisons of adjusted rates, locality pay is considered part of the
adjusted rate of a General Schedule employee in the same manner as
targeted local market supplement is considered part of the adjusted
salary rate for NSPS employees.
Section 9901.333--Setting and Adjusting Local Market Supplements
This section addresses the setting and adjusting of standard and
targeted local market supplements.
Commenters from labor organizations suggested that basing the size
of local market supplements on available funds might demotivate current
employees and lead to difficulty in attracting high-quality new
employees to DoD. Standard local market supplements are determined in
the same manner and amount as provided to General Schedule employees
under 5 U.S.C. 5304 and therefore are not considered in terms of
availability of funds. However, in determining the Department's
response to staffing shortages or difficulties, it is only prudent to
consider cost in determining whether or not to approve a targeted local
market supplement, and for what amount. It is possible that
alternatives are available that will be less costly or that the cost
would jeopardize other mission priorities. Cost is an appropriate
factor for consideration in the use of optional pay tools.
A commenter expressed concern that the targeted local market
supplement as discussed in Sec. 9901.333(b) will be subject to abuse
and discrimination and will not be transparent or credible to
employees. Section 9901.332 of the proposed regulation has been
modified to reflect that the purpose of a targeted local market
supplement is to address significant recruitment or retention problems.
Given the parameter in which it is to be used, the requirement for
coordination with OPM, and the requirement for an annual review of each
targeted local market supplement, it is difficult to envision how this
authority might be used in a discriminatory manner. We believe the
regulation provides objective criteria, transparency and credibility to
such determinations.
Another commenter suggested that a subparagraph be added to this
section to clarify that, if the standard local market supplement
exceeds the targeted local market supplement, the standard local market
supplement should take effect corresponding to the same date of GS
locality payments. The commenter stated that, if a targeted local
market supplement is larger than the GS locality, at DoD's discretion
employees can receive the higher supplement because there are no
distinct words to protect people if the targeted local market
supplement falls below the GS locality payment. We have not revised
this section in response to this comment. In accordance with Sec.
9901.332(c) of this regulation, a targeted local market supplement
applies to an employee eligible for a standard local market supplement
only if the targeted local market supplement is a larger amount. While
the targeted local market supplement does not apply to everyone in a
pay band, once a category of employees has been identified to receive
it, all employees in that category receive the payment provided they
have a rating of record above unacceptable. The effective dates of
targeted local market supplements are not tied to the effective dates
for adjustments in the standard local market supplement in that
targeted local market supplements can be approved throughout the year.
Tying the effective date of a targeted local market supplement to that
of the standard local market supplement could result in costly manpower
delays in addressing significant recruiting or retention problems.
Section 9901.334--Eligibility for Pay Increase Associated With a
Supplement Adjustment
This section provides that an employee must have a rating of record
above ``unacceptable'' to receive a pay increase associated with a
local market supplement adjustment.
One commenter posed several questions related to paragraph (b) of
this section, which states that once an employee has a new rating of
record above unacceptable, the employee is entitled to the full amount
of any applicable local market supplement effective on the date of the
first adjustment in that local market supplement occurring on or after
the effective date of the new rating of record above unacceptable. The
commenter wondered whether the effective date of the new rating of
record was the day the
[[Page 56370]]
supervisor signed it, after it had been approved by the Pay Pool Panel,
or when it was entered into DCPDS. Also, the commenter asked if an
employee has a new rating of record signed by the supervisor but not
yet entered into DCPDS, could that rating of record be missed when a
change in the local market supplement takes place (particularly if the
change takes place at any other time of the year other than the first
pay period in January)? The commenter went on to suggest that Sec.
9901.334(b) be made clearer by stating that the employee is entitled to
the local market supplement occurring on or after the effective date,
as specified in Sec. 9901.412(b)(2) of subpart D, of the new rating of
record above unacceptable. We agree that the effective date of a rating
of record should be clarified. Consequently, we have revised this
paragraph to link to information in subpart D which discusses the
effective date of ratings of record (Sec. 9901.411(d)).
Commenters from labor organizations suggested that, while denying
underperforming employees their within-grade increase is appropriate,
it is inappropriate to deny them the local market supplement as well,
since the LMS should be awarded regardless of performance. Denying
unacceptable performers adjustments in both their base salary and any
applicable local market supplement clearly conveys the Department's
desire for emphasis on performance. It is consistent with a fundamental
principle of NSPS; that is, we want to acknowledge and reward employees
for their performance. At the same time, we want to assure the American
taxpayer that the Department does not continue to increase the salary
of poor performers.
Performance-Based Pay
Section 9901.341--General
This section briefly describes the performance-based pay component
of the pay system established under subpart C.
Labor organization representatives commented that performance-based
payouts of raises or bonuses should not be given to teams or
organizations as opposed to individuals, because this practice does not
truly reward individual performance. Under the NSPS concept,
organizational and team performance can be considered in assessing an
individual's accomplishments. We expect that the importance of teamwork
and cooperation will continue to be reinforced in the expression of
performance standards and performance objectives. Through
communication, ongoing feedback, performance rating and performance
rewards, the importance of teamwork and cooperation should be
understood by employees. In addition, the regulations clearly describe
in the definitions of job objective and unacceptable performance that
the measurement of an employee's performance in determining his or her
rating is based on the expectations set for the individual employee
during the appraisal period. When organizational or team performance is
considered in an employee's performance expectation, the assessment is
based on the efforts, cooperation, and contributions of that individual
employee to the success of the team and organizational goals. No change
has been made to the proposed regulation based on these comments.
Commenters suggested that two employees could be doing the same
exact work of the same exact quality, but because they are assigned to
two different pay pools, their compensation will differ because it is
now being dictated by the performance of the group. It is true that a
pay pool that has a higher percentage of high-performing employees may
have a different share value than a pay pool with a lower number of
high-performing employees because the payouts are based on shares of a
common fund. However, most pay pools are of sufficient size that the
rating distribution normalizes to the standard population. Where this
does not occur, we find we are similar to the General Schedule where
employees are sometimes awarded differently for similar levels of
performance.
Section 9901.342--Performance Payouts
Section 9901.342 describes the management and structure of
performance pay pools and provides for the allocation and distribution
of performance pay funds.
Labor organization representatives commented that, by employing Pay
Pool Panels and Pay Pool Managers, the proposed regulation attempts to
override any current locally bargained award panels consisting of union
representatives along with managers. However, we note that performance-
based pay and pay pools did not exist for most employees prior to NSPS.
Where such pay pools or collective bargaining provisions related to 5
U.S.C. chapter 45 (dealing with incentive awards) existed prior to
conversion to NSPS, DoD will continue to honor its collective
bargaining obligations under 5 U.S.C. chapter 71. Under chapter 71,
these regulations cannot override current collective bargaining
agreements. No change was made to the proposed regulation based on
these comments.
Several commenters suggested that Pay Pool Managers, Pay Pool
Panels, and Performance Review Authorities are additional layers
between an employee's supervisor and the actual payout the employee
receives. These extra layers of management, according to the
commenters, are removed from the employees they rate, and they will
likely have no direct knowledge of the employee's performance during
the year.
Pay pool panels serve as calibration committees and are comprised
of management officials who are usually in positions of line authority
or in senior staff positions. As such they are familiar with the
organization's mission and goals. First-hand knowledge of each employee
is not necessary. The pay pool process and the higher-level reviews
provide the necessary checks and balances to ensure that performance
decisions are made in a careful, deliberative environment that ensures
a common understanding of performance, share assignment, and payout
distribution criteria that is applied across the pay pool. The Pay Pool
Panel members ensure consistency by reviewing self and supervisory
assessments (both prepared by personnel knowledgeable of employee's
work) and comparing accomplishments to the employee's stated job
objectives and performance criteria. If there are any questions
regarding the recommended rating for an employee or the panel is likely
to change the rating official's recommended rating, the supervisor or
rating official will be requested to present further information or
justification to the pay pool. Additionally, employees who feel their
final job objective ratings or rating of record does not properly
reflect their work may seek reconsideration consistent with Sec.
9901.413 of the regulation. No change has been made to the proposed
regulation based on these comments.
Labor organization representatives also expressed disapproval of
the idea of sub pay pools, suggesting that the existence of large pay
pools that require sub pay pools sets up a bureaucratic structure that
separates the employee from the performance payout, obscures the
connection between pay and performance, and increases the chances for
erroneous and discriminatory pay decisions. In a further argument
against sub pay pools, representatives of labor organizations suggested
that Sec. 9901.342(b)(3) be deleted because the sole purpose of sub
pay pools is ``reconciling ratings of record'' and
[[Page 56371]]
consequent payouts, and the concept of ``reconciling ratings'' is
improper, in the view of the commenters. We disagree. Reconciling
ratings of record is an important safeguard for employees who are
members of a pay pool. Reconciliation of ratings ensures that
employees' pay is not harmed by the effect of ``high'' and ``low''
raters. Sub pay pools are established to create panels that can more
effectively manage the reconciliation of ratings in larger pay pools.
The duties and responsibilities of the sub pay pool are the same as
that of the pay pool but for a smaller section of the pay pool. In
addition, the sub pay pool operates within the requirements and
guidelines established for the pay pool to which they belong. The
overall Pay Pool Panel then reconciles the recommendations of the sub
pay pool panels. Generally, the same size pay pool that justifies a sub
pay pool panel (around 150 pay pool members) is also of a size that is
less apt to result in a skewed rating distribution in comparison to the
overall Department. This is because rating distributions tend to
``normalize'' to a distribution reflective of the overall organization
given sufficient size populations. No change has been made to the
proposed regulation based on this comment.
Another commenter requested clarification regarding what level of
management, referred to in Sec. 9901.342(b)(3), decides when to
establish sub pay pools. Due to the size of DoD and the subsequent
variable in organizations within DoD, these matters will be specified
further when implemented by the DoD organizations.
One commenter suggested that minimum levels of funding for each pay
pool must be established. The proposed regulation clearly indicates
that the Secretary determines a percentage of pay to be included in pay
pools and paid out in accordance with accompanying implementing
issuances. The implementing issuances give Components the discretion to
set funding for pay pools as long as they meet the minimums identified
by the Secretary. Such funding floors are established outside of the
regulation and are often dependent on Congressional determinations
concerning general pay increases under 5 U.S.C. 5303. No change has
been made to the proposed regulation based on this comment.
One commenter questioned whether it is expected that all of the
money assigned to a pay pool will be paid out, or whether managers
might be able to divert some funds to other uses or save them for use
the following year. We agree that proper funding of pay pools is
fundamental to the success of NSPS. Section 9902(e)(6) of Public Law
110-181 clearly states that the amounts allocated for compensation of
DoD civilian employees for NSPS shall be available for this purpose
only. In order to comply with this statutory requirement, DoD funding
floors for pay pools must be met in the aggregate at the Component
level. Senior-level Component officials must certify that they have met
this funding floor and have expended the resources within their
organization. No change has been made to the proposed regulation based
on this comment.
Commenting on Sec. 9901.342(f), one commenter suggested that
contributing factors add a level of complexity to the overall rating
process far beyond their value and increase the time to write and
evaluate both performance assessments. The commenter recommended
eliminating contributing factors as a separate step in the rating
process, to include eliminating the ``plus or minus'' concept and
instead require consideration of these factors when evaluating an
employee's performance. The specifics of how contributing factors will
be applied in the NSPS evaluation of performance are not addressed in
this regulation. Therefore, no change can be made to this proposed
regulation in response to this comment. However, contributing factors
will play an important role in defining an employee's performance by
reflecting the manner of performance that is important for the
accomplishment of the job objective. The specifics of this role will be
outlined in implementing issuances. This paragraph has been modified,
however, to eliminate any confusion regarding the consideration of
contributing factors in determining share assignments.
A few commenters recommended a revision to Sec. 9901.342(f) to
assign shares as follows: Level 5--2 shares; Level 4--1.5 shares; Level
3--1 share; Level 2--0 shares; Level 1--0 shares. Per the commenter,
the rationale for this suggested change is that performance payouts
should be based on objective, mathematical calculation based on
performance rating. The commenter expressed belief that the number of
shares for each performance level should be fixed. Further, the
variation should be proportionate to the true variation reflected in
the definitions of the levels. In the commenters' view, it is
appropriate that a Level 5 performer receive twice the number of shares
as a Level 3 performer, not up to six times as many. Similarly, another
commenter proposed to award partial shares for employees with a Level 3
rating of record.
The Department recognizes that a valid, reliable, and transparent
performance management system with adequate safeguards for employees is
essential. However, it must also avoid a rigid, one-size-fits-all
approach by providing the flexibility to address a variety of
circumstances. By allowing a range of decision points regarding the
number of shares, managers can more appropriately address the variety
and complexity of factors that relate to employee compensation. The
regulations provide the parameters and criteria for the performance-
share calculation methodology in sufficient specificity so that
managers, employees, and employee representatives can better understand
how performance pay increases will be determined and paid. These
criteria permit consideration of such factors as the employee salary in
relation to control points and pay band maximums, recent salary
increases, raw performance scores, and the employee's overall
contribution to the mission of the organization. This enables
organizations to recognize performance and reflect such market trends
as accelerating salaries for employees at lower ends of pay ranges and
decelerating salaries at higher ends of market ranges. No change has
been made to the proposed regulation based on these comments.
Several labor organizations and other commenters expressed concern
about grouping supervisors and upper-level managers in the same pay
pools as the non-management employees they supervise. These commenters
expressed concern that, by combining supervisory and nonsupervisory
personnel, there would be a temptation to lower nonsupervisory ratings
in order to produce higher payouts for supervisors. These regulations
and the implementing issuances currently provide safeguards to support
the neutrality and impartiality of pay pool proceedings. The
responsibilities of a Pay Pool Manager include the review of
supervisors' recommended ratings of record for consistency and equity
across organizational units and to guard against potential
discrimination or politicization before finalizing ratings. No change
has been made to the proposed regulation based on these comments.
One commenter indicated that factors that management may consider
in determining the amount to be paid out as a bonus versus an increase
in the rate of base salary do not include the option to establish a
default split based on the composition of pay pool funds allocated
[[Page 56372]]
for payout as a bonus versus a base salary increase. Section
9901.342(g)(4) has been changed to add to the factors that management
may consider in determining a pay pool payout distribution, a default
split for the pay pool. This is in keeping with the practice of many
NSPS pay pools to consider the percentage of pay pool funds applied to
salary increases versus bonuses when determining how to distribute the
payout between bonus and base salary increase for each employee.
One commenter suggested that Sec. 9901.342(g)(5) be revised to
include that an employee who has reached the maximum rate of the band
will receive his or her performance payout as a bonus in lieu of an
increase to base salary. This section has been revised to include this
provision.
Another commenter requested clarification as to the flexibility of
granting a performance pay increase that exceeds an established control
point. The determination to grant such an increase is allowable but is
dependent on the criteria upon which the control point for that pay
band is based. These criteria may include performance factors or market
values. For example, if the criteria for establishing a control point
are based on performance factors, conceivably an employee could exceed
the identified criteria and be provided a pay increase in excess of the
established control point based on the employee's performance. No
change has been made to the proposed regulation based on this comment.
A commenter requested clarification regarding whether an employee
would be eligible for a performance payout if they move out of NSPS on
a permanent move after the end of their rating cycle but move back into
an NSPS position before the effective date of the payout. Employees who
move out of NSPS after the end of the rating period are not eligible
for the NSPS payout for that performance cycle whether or not they
return to NSPS prior to the effective date of the payout. Such
employees would become entitled to the pay progression mechanisms of
the gaining personnel system. For example, if an employee moves to the
General Schedule, their time in NSPS following their last equivalent
increase would count toward the next General Schedule increase. If none
was due the employee during the period of time under the General
Schedule, the option to provide a WGI buy-in adjustment under Sec.
9901.351 may be applied upon their return to NSPS. Provided the service
performed under NSPS and the General Schedule was creditable for WGI
purposes, the service covered by the NSPS performance period would
become creditable toward the WGI adjustment upon return to NSPS.
Also, a commenter requested clarification regarding an employee's
entitlement to a performance payout in a situation when the employee
leaves one pay pool after the end of his or her rating cycle and moves
to another pay pool before the effective date of the payout. We agree
and have added clarifying language under Sec. 9901.342(g)(9). In
response to several comments requesting increased transparency in the
NSPS performance management system, Sec. 9901.342(g)(10) is added
requiring NSPS organizations to share average rating, ratings
distribution, share value (or average share value), and average payout
with NSPS employees. Organizations must ensure that the sharing of this
information does not compromise the identities of NSPS employees in
violation of the Privacy Act.
Another commenter suggested that an NSPS employee who earns a bonus
for the performance year but retires before the end of the calendar
year should still be able to receive a bonus payment. The regulation
clearly states that an employee who is no longer covered by NSPS on the
effective date of the payout is not entitled to a performance-based
payout, which includes a bonus. Such employees may be considered for an
incentive award action under 5 U.S.C. chapter 45 if performance during
the applicable period merits recognition.
Many commenters (both individual commenters and labor organization
representatives) expressed concern that, since bonus payouts are not
considered when calculating retirement benefits, retirement benefits
will be lower under NSPS than they would be under the GS system. As
stated previously, since existing grade-based systems such as the
General Schedule (GS) and the Federal Wage System (FWS) do not
calculate pay received as bonuses toward defined benefit retirement
plans, retirement benefits cannot be lower under NSPS than they would
be under the GS system. NSPS, in the aggregate, does not substitute
bonus payments for base salary increases. Performance-based bonuses are
funded in addition to payment of dollars that were previously spent on
base pay increases under the General Schedule and continue to be spent
on base salary increases under NSPS. Additionally, like NSPS, existing
GS and FWS systems do not permit pay increases beyond the limits of
established ceilings (maximum rate of grade levels). However, within
NSPS, those at the top of their control point or pay band must still
receive a payout, based on performance shares, in the form of a bonus,
which is a clear advantage for NSPS employees. No change has been made
to the proposed regulation based on these comments.
One commenter requested that the proposed regulation specify that
prorating of performance payouts is not mandatory. The proposed
regulation gives the Secretary the authority to issue implementing
issuances regarding prorating payouts for employees. The implementing
issuances give the Components discretion to determine whether prorating
is required during the performance cycle. We believe that the
Components can best make the determination of whether or not prorating
is warranted, such as when an employee is on extended unpaid leave. No
change has been made to the proposed regulation based on this comment.
Additional commenters expressed concern that an employee returning
from uniformed service who does not have an NSPS rating of record may
not be eligible for a bonus or pay increase if the employee is at the
top of the control point or pay band. These commenters suggested that
the provisions of Sec. 9901.342(i) be changed to provide that
employees returning after performing uniformed military service are
eligible for performance-based pay pool bonuses if otherwise eligible
by share assignment and payout distribution. Adjustments for employees
returning from uniformed service are determined in accordance with
Sec. 9901.342(i). The purpose of this provision is to meet the intent
of the Uniformed Services Employment and Reemployment Rights Act
(USERRA) to preserve the earning power of uniformed service members by
ensuring that their salaries continue to progress at the same level
they would have if they had not served on military duty covered by that
law. This preservation of earning power is accomplished by granting
applicable raises in the pay schedule. The provision does not seek to
award pay for work not performed--that is, the intent is to adjust an
employee's pay rate similar to how it would have been adjusted had the
employee not left, not to entitle the employee to pay for periods he or
she was absent (other than that associated with a paid leave status).
Similarly, pay in the form of bonuses for periods of time during which
the employee did not perform work would not be paid if the employee is
not entitled to an NSPS rating of record, since this would constitute
money not earned. No change has been made to the
[[Page 56373]]
proposed regulation based on these comments.
One commenter suggested that Sec. 9901.342(i) and (j) clarify when
performance payouts are ``effective'' and/or ``paid.'' These sections
have been revised to add clarification to the effective dates in each
of these circumstances.
A commenter recommended that Sec. 9901.342(i) through (l) be
changed to reflect that when an employee, who does not have an NSPS
rating of record for an appraisal period, has his or her base salary
increase determined on an average base salary granted to other
employees with the same rating or a modal rating that the average
should be based upon all employees in the same pay pool as opposed to
including only those employees in the same pay schedule and pay band.
The commenter noted that inclusion of this broader group in the
calculations will prevent inappropriate and inequitable salary
determinations. Paragraphs (i) through (l) of this section have been
revised to use the average salary increase of the entire pay pool.
One commenter questioned whether, in Sec. 9901.342(k), it was an
oversight or intentional that employees working on ``official time''
(union officials) and those on extended paid leave do not receive the
general pay increase. The employees identified in this section are in a
pay status and are therefore covered by the provisions of Sec.
9901.323 and will receive the applicable general pay increase at the
same time as employees who do not meet the criteria for specially
situated employees. No change has been made to the proposed regulation
based on this comment.
Commenters also expressed concern regarding Sec. 9901.342(k) which
calls for a payout and share distribution based on the ``modal rating''
as using an ``assumed rating'' of a sort that is outlawed by OPM. The
comments reflect confusion regarding the use of modal ratings under
this section. Modal ratings as identified in this section are used only
to determine a performance pay increase and not for the purpose of
assigning a rating of record. Once the performance pay increase is
determined, the modal rating serves no other purpose. No change has
been made to the proposed regulation based on these comments.
Labor organization representatives sought clarification in the
proposed regulation regarding exactly who--the Secretary, the
Components, or another delegate--has the authority to set rules to
determine performance payouts and the distribution of payouts between
salary increases and bonuses. The Pay Pool Manager, as defined in Sec.
9901.103, is designated to manage the pay pool to include approving
recommended share assignments and payout distributions. However, these
determinations must be made consistent with the organization's business
rules. Such rules may be determined at the Component level or lower if
delegated by the component. No change has been made to the proposed
rule based on these comments.
One commenter suggested that pay increases or bonuses based on 100
percent union duties would seem to pay union officials for not
performing any work for the agency. Providing salary increases to full-
time union officials is consistent with Governmentwide practices
regarding full-time union officials under 5 U.S.C. chapter 71. However,
consistent with other Governmentwide systems, bonuses are not paid
under NSPS. No change has been made to the proposed regulation based on
this comment.
Finally, labor organization representatives expressed concern that
DoD will not be able to adequately fund a pay-for-performance system
because it does not control its budgets. They further state that DoD,
like other Federal agencies, depends on Congress for its
appropriations, and today's Congress cannot bind future Congresses to
adequately fund a pay-for-performance system. In establishing the NSPS
statute, Congress provided in section 9902(e)(4) of title 5, U.S. Code,
that, through FY 2012, to the maximum extent practicable, the aggregate
amount allocated for compensation of DoD civilian employees under NSPS
will not be less than if employees had not been converted to NSPS.
Section 9902(e)(5) additionally provides that after FY 2012 the
Department will develop a formula that ensures that, in the aggregate
and to the maximum extent possible, employees are not disadvantaged in
the overall amount of pay available as a result of conversion to NSPS,
while providing flexibility to accommodate changes in the function of
the organization, changes in the mix of employees performing those
functions, and other changed circumstances that may affect pay levels.
We therefore believe that NSPS will be properly funded and have made no
change to the proposed regulation based on these comments.
Section 9901.343--Pay Reduction Based on Unacceptable Performance and/
or Conduct
This section outlines parameters for reducing employee pay based on
unacceptable performance and/or conduct.
Representatives of several labor organizations objected to the
change in the proposed regulation that limits the range of a pay
reduction under the circumstances described in this section to 5-10
percent of base salary (rather than 1-10 percent), expressing concern
that the new language limits the ability of managers to choose a lesser
penalty for unacceptable performance/conduct when warranted. Pay
reductions based on unacceptable performance and/or conduct are not
required in all cases and are in fact discretionary. However, to the
extent that a manager determines that unacceptable performance and/or
conduct warrants a pay reduction, a pay reduction of at least 5 percent
is necessary to achieve and retain a high-performing workforce. No
change has been made to the proposed regulation based on these
comments. However, we have made minor editorial changes to the language
in Sec. 9901.343 for enhanced clarity and for consistency with
language in related provisions in Sec. Sec. 9901.353(f) and
9901.355(b)(4).
Several commenters requested clarification concerning the
``applicable adverse action procedures'' that must be applied before
reducing an employee's pay due to unacceptable performance and/or
conduct. The language in the proposed regulation is meant to highlight
that adverse action procedures must be followed when reducing an
employee's pay. For employees under NSPS, procedures provided under 5
U.S.C. chapter 75 apply whether or not the regulation specifically
cites chapter 75. No change has been made to the proposed regulation
based on these comments.
Section 9901.344--Other Performance Payments
This section describes who has authority to grant other performance
payments, reasons for awarding these types of payments, employee
eligibility requirements, and limits on other performance payments.
Labor organization representatives commented that this section
actually addresses bonuses and quality step increases and attempts to
override existing collective bargaining agreements, which often include
pre-existing negotiated award programs. We disagree. This paragraph
does not address quality step increases because they do not exist under
NSPS. Under 5 U.S.C. chapter 71, Governmentwide regulations cannot
override pre-existing agreements that conflict with the regulations.
However, these agreements would have to be brought into compliance with
the regulations when the agreements expire or are up for
[[Page 56374]]
renegotiation. No change has been made to the proposed regulation based
on these comments.
Commenters also inquired about the source of funds for ``Other
Performance Payments'' and wondered whether these payments might lower
the amount of funds for the pay pools for performance payouts for other
employees. Additionally, one commenter wanted assurance that the
Extraordinary Pay Recognition (EPR) and Organizational Achievement
Recognition (OAR) will not be used to give preference to certain
workers over others. These achievement recognition awards are funded
from a source outside of the pay pool. As indicated in the proposed
regulations, EPR and OAR are awarded based on performance and
restricted to specific criteria for each recognition award. In the case
of the EPR, an employee must have a rating of record of at least a
Level 5 in order to be eligible for the award; in the case of the OAR,
when awarded, it applies to all employees in the organization who have
a rating of record of at least a Level 3. However, distinctions in OAR
awards may vary based on the rating of record. These criteria alone
serve to mitigate against favoritism, cronyism, and other actions that
violate merit system principles. No change has been made to the
proposed regulation based on these comments.
Finally, one commenter objected to language in Sec. 9901.344(b)(1)
stating that ``the future performance and contribution level exhibited
by the employee will be expected to continue at an extraordinarily high
level.'' The commenter pointed out that no one can continuously perform
at an extraordinary level, for then what had been extraordinary would
become ``ordinary'' performance for that employee. The purpose of the
EPR is to reward exceptionally high-performing employees whose
performance and contributions to the organization are of an exceedingly
high value based on an individualized assessment. There is the
expectation that this or a higher level of performance will continue in
future years. Although the increase granted by the EPR is permanent and
does not require future revalidation, the performance objectives upon
which the employee will be evaluated in the future will reflect the
higher level of expectation. We did however, modify this section to
clarify that the expectation of higher-level performance in the future
is associated with an EPR paid out as an increase to base salary as
opposed to a bonus. We believe that the EPR is an important flexibility
and have made no additional change to the proposed regulation based on
this comment.
Section 9901.345--Accelerated Compensation for Developmental Positions
(ACDP)
This section describes how ACDP payments may be awarded and under
what circumstances.
This change to the proposed regulation generated several positive
comments from individuals who applauded the expansion of ACDP payments.
However, some commenters representing labor organizations suggested
amending this provision to allow collective bargaining of this issue.
Concerns about collective bargaining rights have been addressed in
``Collective Bargaining and Labor Relations'' located under ``Major
Issues.''
Representatives of labor organizations also questioned the
implication in this section that Components have the authority to
choose whether or not to provide ACDP increases. These representatives
suggested the institution of procedures governing the advancement of
employees in developmental positions. The Department determined that
such matters should be governed by Component policies, within the
parameters provided by the proposed regulation. No change has been made
to the proposed regulation based on this comment.
Another labor organization representative indicated that the
proposed regulation is unclear regarding whether there is any limit on
the number of ACDP increases that may be given or whether there is a
specific interval between them. The inquiry also seemed to imply that
these increases are ``promotions.'' Although ACDP increases are
designed to provide accelerated pay progression for entry/developmental
positions, these increases are not promotions, and this terminology
should not be used in order to avoid conflict and confusion with the
meaning of that term under NSPS. Section 9901.103 provides a definition
of promotion under NSPS; Sec. 9901.354 describes how to set pay upon
promotion. We did not prescribe any limit on the number of ACDP
increases eligible employees may receive, nor the interval(s) at which
they could occur. Such parameters, if any, would be linked to the
specifics of Component training programs or developmental activities.
Components choosing to provide ACDP increases must establish and
document growth and development criteria by which additional pay
increases will be determined.
Several commenters inquired whether or not the ACDP applied to
student programs. In response to these comments, the proposed
regulations have been changed to include positions assigned to the
Student Career Experience Program.
Commenters suggested expanding the ACDP concept to engineers/
technicians and employees in pay band 2 to make NSPS more comparable to
the grade progression available within the GS system. This suggestion
does not mirror the intent of NSPS to achieve pay progression beyond
the trainee levels primarily through performance-based pay increases.
The cost of providing increases similar to GS grade progression
increases would offset the ability to award pay pool base salary
increases, thus jeopardizing the linking of pay and performance as
intended by the enabling legislation for NSPS. This is because pay
pools are funded, in part, by money that previously was applied to GS
promotion increases to grades that no longer exist under NSPS. No
change has been made to the proposed regulation based on these
comments.
Other commenters asked that the pay-setting guidance for employees
in developmental positions under the GS scale (example: GS-12/13 or GS-
13/14) also apply to those who applied but were not selected until
after their agencies transitioned to NSPS. Again, we reiterate that the
intent of NSPS is not to replicate the GS pay system but rather to
redirect pay progression to a performance-based pay system as opposed
to a pay progression based on position moves. ACDP provides for
accelerated pay progression for the lowest ranges of journey level work
in recognition of the inability to match market-based pay progression
trends via performance-based payouts alone. For this reason, ACDP is
limited to Pay Band 1 and employees in the Student Career Experience
Program. No change has been made to the proposed regulation based on
these comments.
One commenter questioned why accelerated awards are given to
employees with a rating of record of Level 3, suggesting that this
award should be given only to those achieving a rating of Level 4 or
better. The implication by the commenter is that a Level 3 rating
reflects less than the expected performance. In contrast, Level 3 is
seen as recognizing those employees who performed their identified
responsibilities and in doing so effectively met all of their
performance expectations. The regulations clearly state that Components
choosing to provide these increases must develop criteria by which the
additional pay
[[Page 56375]]
increases will be determined. If an employee meets the identified
criteria, and has met his or her performance expectations, the employee
should be entitled to be considered for the pay increase. No change has
been made to the proposed regulation based on this comment.
Pay Administration
Section 9901.351--General
This section outlines general provisions of pay administration
including geographic recalculation, within-grade increase (WGI)
adjustment, general pay-setting rules, pay periods and hourly rates,
rate comparisons upon movement to an NSPS position, and setting of pay
based on annual rates received by an employee as a teacher.
Several commenters questioned why the within-grade increase (WGI)
adjustment equivalent applies to GS employees moving to NSPS, but does
not apply to Federal Wage System (FWS) employees and other employees in
step-type programs. In response to these comments, the use of this
authority has been expanded to include moves from FWS to NSPS.
Another commenter noted that it appears that an employee may
receive both a prorated WGI and up to a 5 percent increase upon
reassignment, though it is not explicitly stated, and recommended this
be clarified. We agree and have clarified this point in the
regulations.
One commenter suggested adding the following sentence to the end of
Sec. 9901.351(b): ``This adjustment may be made prospectively for NSPS
covered employees whose pay was not set in this manner prior to the
effective date of this regulation.'' According to the commenter, this
addition would allow Components to make employees ``whole'' who lost
their targeted LMS when they were a ``willing accession'' to NSPS and
not converted to NSPS with their organization. Another commenter
suggested that we make a WGI buy-in for management directed
reassignments retroactive to previous legislation to ensure all
personnel are treated fairly. There is no provision that allows for
regulations to apply retroactively unless an administrative error had
occurred. There was no administrative error made in the pay setting for
these employees; the regulations in effect at that time did not allow
for this type of adjustment. These employees will have the opportunity
to be fairly compensated for the work they perform under the NSPS
structure of pay-for-performance.
Another commenter cited Sec. 9901.351(c), saying that normally you
would not receive any type of pay increase on an individual realignment
action and there does not appear to be a way that you could currently
process something like this. In response to this comment, if an
employee is realigned by management from a GS or FWS position into an
NSPS position, he or she will be eligible for this provision. The
personnel system will be updated to allow for this type of action to be
processed.
Section 9901.352--Setting an Employee's Starting Pay
This section describes the Secretary's authority to set the
starting base salary for individuals newly appointed or reappointed to
the Federal service.
One commenter questioned what an employee's current rate of pay has
to do with the value of a prospective employee. ``Current salary'' is
identified under this section as one of many factors to be considered
in setting an employee's starting pay. Other factors include labor
market considerations; the skills, knowledge, and/or education
possessed by the candidate; critical mission or business requirements;
and salaries of other employees in the organization performing similar
work. ``Current salary'' is considered a factor in setting salary in
that it helps the manager to establish a salary level high enough to
attract a candidate, but moderate enough to permit salary growth over a
period of time. A manager should look at all of the factors listed
under this section, when considering the setting of starting pay for a
new employee, including ``current salary.''
Another commenter recommended adding additional considerations to
Sec. 9901.352(a) such as fiscal constraints of the organization, the
total remuneration being provided to employees, and historical
recruitment and retention data for hard-to-fill positions. We don't
feel that it is necessary to add these factors, as they can be
considered under the current factors listed such as availability of
candidates and business requirements of their respective organizations.
Another commenter recommended that the rules in this section be
used for current Federal employees who move to NSPS from other pay
systems through competitive procedures. The rules addressed in this
section permit setting of salaries anywhere within a pay band for
employees newly hired within the Federal Government. The competitive
selections of current Federal employees are most appropriately
processed as promotions, reassignments, or reduction in band actions
under the NSPS pay setting regulations. This allows these selectees to
be fairly treated without disadvantaging current NSPS employees. NSPS
strives to function in a manner that sustains fair competition with
other Federal agencies. Changing the regulation to allow setting of
salaries anywhere within the pay band for current Federal employees
would create an unfair competitive advantage for DoD when it comes to
the employees of other Federal agencies.
In a related comment, a commenter pointed out that the break-in-
service requirement for reappointed individuals appears to create a
loophole for employees in the NSPS pay-setting process and is also
inconsistent with other break-in-service rules under the GS system.
Specifically, they expressed concern that the proposed rule ``on break
in service for at least 1 full day'' creates a situation where an
employee who resigns for a one-day period can have his or her pay set
anywhere within a rate range as opposed to being subjected to internal
pay-setting rules for other employees (e.g., the 5 percent cap on
reassignments). The commenter also notes that our proposed rule is
inconsistent with definitions previously released in processing
guidance for NSPS personnel actions. The requirement for a break in
service was added to the regulation to create uniformity and
consistency in application of pay-setting rules for new appointments
and reappointments. As a condition for permitting use of pay-setting
rules for reappointments, the 2005 regulation required an employee to
have been separated and subsequently reemployed. This language resulted
in inconsistent application of the rule and a request that we clarify
our language.
We are aware that different break-in-service rules are used for
different reasons (e.g., 90 days for superior qualification
appointments under 5 CFR 531.212(a)(ii)(2) and (3); break-in-service
definitions also affect creditable service for benefits and are used to
determine conversions to new appointments). We also note that the
current definitions in DoD processing guidance are based on OPM's
definitions of break-in-service for specific purposes. Our rule does
not affect either of these definitions--its purpose is solely to
determine the application of pay-setting rules.
For clarification, we note that our proposed rule states that a
break in service is one full workday. Generally, this will mean an
individual will be off the rolls for three full days (i.e., if the
employee resigns on Friday, the break in service must include Saturday,
Sunday, and Monday). Because such a break could affect the staffing
processes of the
[[Page 56376]]
position (to include the requirement for competitive staffing
processes), we expect that Components will be careful not to use this
definition in a manner that would circumvent pay-setting rules for
internal placement actions or merit system principles.
Finally, one commenter suggested that NSPS must offer the same
salary (GS grade and step) to individuals who might otherwise go to
other branches of Government that hire similar skills if it wants to
get the best of the best. One of the primary advantages provided by
NSPS is that it allows supervisors and managers great latitude in
offering starting salaries across the range of a band based on
conditions such as the labor market, special skills, and mission
requirements. This market based system allows hiring officials to
immediately react to market conditions and offer starting salaries that
are not tied to a specific GS grade and step.
Section 9901.353--Setting Pay Upon Reassignment
This section outlines the specific rules to be applied in setting
salary under a reassignment action.
Labor organization representatives suggested amending this section
to include language that ensures labor unions' ability to collectively
bargain the issues of setting pay upon reassignment. As previously
stated, DoD is committed to fulfilling its obligations to bargain in
good faith on negotiable conditions of employment related to these
regulations, consistent with 5 U.S.C. chapter 71 and the requirements
in 5 U.S.C. 9902 and section 1106(b) of Public Law 110-181.
Several commenters requested that the number of management-directed
reassignments be limited. Other commenters expressed concern that
salary increases were limited to 5 percent for reassignments. Some
commenters felt that this cap was unfair, especially considering that
individuals just entering Government service can negotiate up to a 20
percent increase in pay. Another commenter, while expressing confidence
that the proposed regulation provides the necessary foundation for a
contemporary and flexible personnel system, echoed concern about the 5
percent cap on reassignments. According to the commenter, this policy
hinders the organization's ability to promote from within and retain
top performers. To address this problem, the commenter recommends
splitting pay band 2 to improve recruitment and retention and increase
employee morale, as well as alleviate problems that the large pay band
creates for the Priority Placement Program and for establishing
representative rates for reductions in force. Alternatively, the
commenter proposes eliminating the 5 percent cap to allow management
the needed flexibility to compensate current Federal employees for
their performance and competencies. Another commenter suggested that a
reassignment to a supervisory position should require that the maximum
reassignment rate be given or, that the regulations be changed so that
movement to the YC pay band is considered a promotion even if the
employee is coming from a comparable band.
This regulation does not define pay bands including pay band 2. The
classification architecture, to include pay schedules and pay bands,
will be described in implementing issuances. Therefore, no change has
been made to the proposed regulation with regard to recommendations to
split pay band 2. In response to comments concerning adjusting the 5
percent cap on reassignments, we believe that the cap on a reassignment
action is reasonable given the pay flexibilities that are available for
movements within or across comparable pay bands. It is also a greater
flexibility than provided on a reassignment in the GS pay system. In
addition to performance payouts, employees may progress through a pay
band through reassignments. A reassignment occurs when an employee
moves voluntarily or involuntarily to a different position or set of
duties within a pay band or to a position in a comparable pay band.
There are no limits to the number of times an NSPS employee may
reassign on voluntary moves. However, an employee may only receive a
total of a 5 percent cumulative increase to base salary in any 12-month
period unless an authorized management official approves an exception.
On a management-directed reassignment, an employee may receive a base
salary increase of up to 5 percent each time that management reassigns
the employee. An increase associated with a management-directed
reassignment does not count toward the 12-month limit associated with
voluntary reassignments.
Another flexibility that provides for faster pay progression is the
Accelerated Compensation for Developmental Positions (ACDP) provision,
which applies to employees in developmental or trainee level positions
in Pay Band 1 of the professional and analytical pay schedules. ACDP
allows management to increase the base salary of eligible employees at
rates that are less than, match, or exceed career ladder promotion
rates under the GS pay system. The accelerated compensation available
under ACDP recognizes the acquisition of job-related competencies that
are documented in a formal training plan. The amount of the ACDP
increase generally will not exceed 20 percent of an employee's base
salary unless management approves a higher amount.
NSPS also recognizes that GS employees in career ladder positions
below their target level at the time of conversion generally will have
served some time towards the next higher grade now encompassed within
the NSPS pay band to which converted. Therefore, during the first 12
months following conversion, employees who are not eligible for ACDP
are eligible to receive a one-time band increase equivalent to the GS
promotion increase they would have received had they not been converted
into NSPS.
NSPS gives individual pay pools the flexibility to determine how
employee performance ratings translate into base salary increases,
bonuses, or both. Where determined appropriate, management has the
authority to place a category of positions in a separate pay pool to
provide employees a performance payout with a higher value on share
assignments. In this manner, it is possible to offset and reduce part
of the pay progression requirement for interns under ACDP via
performance pay progression. It is also possible for the pay of interns
to progress at different rates based on performance.
All of these pay-for-performance flexibilities provide employees
with an opportunity to receive an increase to base salary based on
their job performance as well as providing management the ability to
progress pay consistent with labor markets.
In addition, representatives from labor organizations were
concerned that supervisors have the ability under this section to
reassign an employee to a higher level of duties and authorize a 5
percent pay increase with no competition for the new position. It is
true that NSPS is designed to permit noncompetitive movement for
reassignments including those that involve increases to base salary.
The use of broad pay bands and noncompetitive movement within the bands
enhances the flexibility and agility of the organization to respond to
staffing requirements. At the same time, the cap on the amount of a
reassignment increase preserves the intent of the merit principles by
ensuring that moves involving increases similar to those associated
with promotions (6 percent or more increase to base salary) remain
subject to merit promotion rules.
[[Page 56377]]
Another commenter noted that Sec. 9901.353(a)(2) appears to
prevent an increase in base salary of an employee reassigned due to a
reduction in force and suggests that this is not right if the position
to which the employee was reassigned carries more responsibility. We
have revised the proposed regulation to clearly state that an employee
reassigned through reduction in force procedures is not eligible for an
increase in base salary under these provisions, but may be eligible for
a within-grade increase adjustment under Sec. 9901.351(c)(1).
One commenter suggested that consideration should be given to
describing reassignment increases under this section as ``temporary pay
adjustments'' so that they may be used for details as well as temporary
reassignments. We have not changed the proposed regulation in response
to this comment because on a detail the pay should remain unchanged. On
a detail, an employee is still assigned to their permanent position. If
an increase is warranted in this type of movement, then management
should make it a temporary reassignment as opposed to a detail.
However, we did review the issue of a temporary reassignment and have
made some clarifications to it. We had previously stated that if a
temporary reassignment was later made permanent that the employee could
not receive any additional increase. We have changed the proposed
regulations so that this restriction will no longer apply.
One commenter objected to the wording of Sec. 9901.353(a)(3)(vi),
which states that one of the factors on which a reassignment increase
may be based is an employee's ``past and anticipated performance and
contribution.'' The commenter suggested that it is improper to base pay
on anticipated performance and contributions. We disagree. Performance
projections based on knowledge, skills, education, duties to be
performed and/or past performance is an entirely appropriate
consideration in setting salaries as well as a widely employed business
practice. Reassignment increase determinations are best arrived at when
considering all of the factors described in this section, including any
business rules the organization has established concerning the
application of these factors.
Finally, we have made minor editorial changes in Sec. 9901.353(f)
for enhanced clarity and for consistency with the language in related
provisions in Sec. Sec. 9901.343 and 9901.355(b)(4).
Section 9901.354--Setting Pay Upon Promotion
This section outlines the specific rules to be applied in setting
salary under a promotion action.
Several commenters suggested that the range of 6-12 percent for pay
increases for promotions is insufficient to recruit new talent for
occupational specialties such as engineering. No change has been made
based on this comment. When justified, promotion increases above 12
percent can be granted with higher-level approval. Therefore, the rule
retains sufficient flexibility to respond to market forces.
One commenter recommended adding an additional factor to be
considered when determining the amount of a promotion increase: The
long-term costs of the promotion increase and the resulting multi-year
budget implications. We have not added this factor, as it can be
considered under a current factor such as the business requirements of
their respective organizations.
Other commenters recommended that, when an employee is promoted
from a non-NSPS position, an authorized management official should set
the employee's new adjusted salary at no less than the employee's
adjusted salary (including any applicable locality pay, special rate
supplement, or equivalent supplement) plus any physicians'
comparability allowance payable for the position held prior to the
reassignment, provided the resulting base salary does not exceed the
maximum rate of the new pay band. In response to these comments, we
have revised the proposed regulation to require consideration of such
factors prior to processing a promotion action. Additionally, we have
incorporated language requiring use of a geographic conversion formula
for such moves.
One commenter recommended that employees promoted from targeted
local market supplements to lower targeted local market supplements
should also have their pay set based on comparison of ``adjusted salary
rates.'' If adjusted salary rates are used, according to the commenter,
geographic conversion rates should also be applied similar to
application under Sec. Sec. 9901.353 and 9901.355. Another commenter
recommended modification of Sec. 9901.354 to require that pay for
employees promoted from non-NSPS to NSPS positions be set using
adjusted salary rather than base salary to prevent increased
compensation costs when FWS employees are promoted to NSPS positions.
In response to these comments, we have revised the proposed regulation
to require consideration of adjusted salary prior to processing a
promotion action, use of geographic calculation formula, and the
apportionment of the adjusted salary between base salary and local
market supplement or targeted local market supplement after the pay
setting has been completed, when applicable.
Commenting on criteria that may be considered in determining the
amount of a promotion increase, as outlined in Sec. 9901.354(b), one
commenter suggested that pay should not be based on anticipated
performance, other employees' pay, or location (which is already
accounted for in the local market supplement). These factors are used
only to determine the amount above 6 percent (if warranted), and should
be used in combination with all the factors to determine any amount of
a promotion increase above 6 percent.
Regarding employees on pay retention who are re-promoted to the pay
band from which they had been reduced [Sec. 9901.354(d)(1)], one
commenter suggested that employees who have a minimum satisfactory
performance rating should automatically be reinstated to the pay they
otherwise would have attained, including any performance payouts and/or
band adjustments. This should not be needed, as the employee is already
being compensated at the higher level of work while on pay retention,
without having to perform at that higher level of work.
Section 9901.355--Setting Pay Upon Reduction in Band
This section outlines the specific rules to be applied in setting
salary under a reduction in band action.
Labor organization representatives objected to reductions in pay
based on conduct without more information about the criteria, rules,
and procedures to be used by management in making these decisions.
These rules are stated under the procedures in 5 U.S.C. chapter 75.
Consequently, they are not stated in this regulation.
One commenter pointed out a perceived inconsistency in language
between Sec. 9901.355(b)(4) and Sec. 9901.353(f). When referring to
setting pay upon a reduction in band in Sec. 9901.355(b)(4), the
paragraph states that, when an employee is reduced in band
involuntarily as a result of adverse action, he or she may have his or
her base salary reduced, and if reduced, the reduction must be between
5 percent and 10 percent. However, when referring to setting pay upon
reassignment in Sec. 9901.353(f), the language states that an employee
involuntarily reduced in pay via
[[Page 56378]]
reassignment as a result of adverse action must have his or her base
salary reduced by at least 5 percent, and may have it reduced by up to
10 percent. The commenter wonders whether the difference is
intentional. Yes, the difference is intentional. In the first instance
(Sec. 9901.355(b)(4)), a decision to reduce an employee's salary has
not been made. Rather, only the decision to reduce the employee's pay
band has been decided. Since a decrease in salary is discretionary upon
reduction in pay band, the permissive may is used to indicate the
amount of pay by which salary may be reduced. In the second instance
(Sec. 9901.353(f)), the language indicates a decision has been made to
reduce the salary of the employee (``When an employee is involuntarily
reduced in pay * * *''). Under NSPS, when a decision has been made to
reduce the salary of an employee, it must be in an amount no less that
5 percent and no more than 10 percent of base salary. Therefore, the
proposed language in Sec. 9901.355(b)(4) has been retained except for
some minor editorial revisions.
Finally, regarding factors upon which an increase in pay due to
reduction in band may be based, one commenter expressed a preference
for the term ``performance-based considerations'' in Sec.
9901.355(c)(3) to references to ``past and anticipated performance and
contribution'' in earlier sections. Additionally, the commenter
wondered why location and the base salary of other employees factored
into the determination of pay upon reduction in band. In response to
this comment, since an employee can get an increase similar to a
reassignment increase, the factors should be the same. These are only
some of the factors to be considered in determining whether an increase
is warranted on a reduction in band, and if warranted, the amount of
that increase. A manager should look at all of the factors in
combination, as well as any business rules, when determining if and
when an increase is warranted on a reduction in band.
Section 9901.356--Pay Retention
This section describes the rules to be applied in determining an
employee's entitlement to pay retention and the factors in terminating
pay retention.
One commenter, noting that local market supplements are paid on top
of a retained rate, while GS locality pay is included in retained
rates, suggests the NSPS proposed rules should be consistent with GS
system rules. While there are many similarities between NSPS and other
title 5 pay policies, they are neither required to be, nor intended to
be, identical. The NSPS system of retaining base salaries supports the
overall goals of the pay system while ensuring retained pay provisions
like title 5. It should be noted that title 5 does not provide more
protection by retaining a locality rate than NSPS, because both systems
have geographic conversion procedures established to control movements
between locality areas and local market supplement areas when employees
are on retained pay.
Representatives of one large labor organization expressed support
for the provision included in Sec. 9901.356(m), which ``grandfathers''
in workers to keep people on indefinite pay retention who were already
on pay retention when they converted to NSPS.
Several commenters recommended extending pay retention beyond the
104 weeks cited in the proposed regulation for various reasons.
Commenters also suggested that Sec. 9901.356(f) and (g) be amended to
reflect that workers should remain on pay retention until the pay band
rate range grows to encompass the retained rate. With respect to both
of these comments, we believe the 104-week limitation is a fair balance
between protecting an employee with pay retention to provide time to
find comparably valued and compensated work while not encumbering the
agency with an indefinite additional cost that compensates for work
that is no longer being performed. Whereas the pay rate that may be
retained under the General Schedule is capped at 150 percent of the top
salary of the lower grade, NSPS does not limit pay retention salaries
in this manner. Additionally, the broader NSPS pay bands accommodate
more salaries, thereby reducing the number of employees required to be
covered by pay retention. In recognition, however, that there may be
some unique situations where a longer pay retention period is
warranted, we have provided that the Secretary may issue implementing
issuances describing exceptions to the 104-week pay retention limit.
One commenter, responding to language in Sec. 9901.356(d)
regarding situations triggering eligibility for pay retention,
questions why an organizational realignment or reduction is cited,
since reduction in force is now handled through Governmentwide rules.
Governmentwide reduction in force regulations do not address pay
retention. Rather, those regulations describe retention, displacement,
and separation procedures.
Another commenter recommended that we clarify the language in
9901.356(f) by adding ``under this authority'' in recognition of the
fact that pay retention could continue under some other non-NSPS
authority. We agree and have made the change to the proposed
regulation.
Other commenters suggested that Sec. 9901.356(j) be amended to
ensure that employees on retained pay receive 100 percent of the GS
general pay increase (GPI) during the two years they are entitled to
pay retention as opposed to 60 percent of the GPI. No change has been
made in response to this recommendation. Continuing to grow the salary
of an employee on pay retention is not congruent with achieving a
salary that fits within the assigned pay band.
Finally, one commenter suggested deleting paragraph (3) from Sec.
9901.356(i), related to movement from a non-DoD position to an NSPS-
covered position. According to the commenter, this provision impacts
the organization's ability to hire quality employees from other Federal
agencies and conflicts with Component discretion in Sec.
9901.356(d)(4)(iv) to grant pay retention in situations considered
appropriate. On a similar note, another commenter suggested considering
allowing for extension of the pay retention time limit beyond 104 weeks
for employees who are reduced in band when accepting an overseas
position. The tour of duty for an overseas position is generally 2-5
years. The commenter asserted that employees are less inclined to
accept overseas positions if pay retention will be terminated after 2
years. We agree that providing pay retention to someone who voluntarily
applied for a position in NSPS that is lower-paying, with less
responsibility, should be compensated appropriately and not retain a
higher salary. Allowing pay retention in these situations would be
inconsistent with the underlying concept of a pay-for-performance
system.
Premium Pay
Section 9901.361--General Provisions
This section explains general areas relating to premium pay that
have been waived or modified from 5 U.S.C. chapter 55, subchapter V, as
well as those areas not waived or modified from the U.S. Code. A
representative from the Federal Physicians Association recommends that
we delete Sec. 9901.361(e), which prohibits the payment of premium pay
to physicians and dentists and include them in the definition of health
care professional so that they would be eligible to receive certain
premium pay. We have not adopted this suggestion.
[[Page 56379]]
Generally, NSPS employees may not be paid, in the aggregate, more
than the annual rate of pay for Executive Level I in a given calendar
year. However, NSPS physicians and dentists enjoy a higher aggregate
compensation cap that is equal to the salary of the President of the
United States. Moreover, NSPS has designed broader pay bands for
physicians and dentists with significantly higher salary ranges than
that provided under the General Schedule ($87,742 to $225,000 plus
targeted local market supplements for medical specialties ranging from
4.45 percent to 45 percent of base salary). This enables DoD to
competitively set pay for new hires and to reward valued performers
through performance payouts. The higher salary structure for physicians
and dentists is in recognition that premium pay will not be available
and that physicians and dentists work significant overtime hours. This
practice reflects compensation practices in competitive labor markets
where salary structures are set at a higher level.
Section 9901.362--Modification of Standard Provisions
This section describes provisions related to premium pay, overtime
pay, night pay, Sunday pay, holiday pay, law enforcement availability
pay, hazardous duty pay, compensatory time off for travel, compensatory
time off for religious observance, and the air traffic controller
differential. A commenter suggested that FLSA-exempt employees be
credited for overtime work in increments of 6 minutes or 15 minutes,
depending on the agency's payroll system. We have not adopted this
suggestion. Unlike the GS pay system which has separate rules to credit
regularly scheduled overtime work and irregular or occasional overtime
work, NSPS does not make this distinction. Rather, to establish a
contemporary and flexible system of human resources management for DoD
employees, NSPS has simplified the scheduling, crediting, and payment
of overtime work. Under NSPS, an FLSA-exempt employee is compensated
for overtime work using a quarter of an hour as the smallest fraction
of an hour, with minutes rounded to the nearest full fraction of an
hour.
A commenter recommended that all employees working a flexible work
schedule (including FLSA-exempt employee) should have a choice to earn
compensatory time off or overtime pay. We do not agree. While non-
exempt NSPS employees may request compensatory time off, FLSA-exempt
employees may be required to accept compensatory time off for any
overtime work, regardless of pay level. We believe this provision
provides management the flexibility and the ability to manage its
workforce to meet critical mission requirements.
Regarding language in Sec. 9901.362(c) related to night pay and
when it is and is not payable, one commenter pointed out that annual
and sick leave must be paid at the appropriate shift differential. A GS
employee receives night pay for a period of paid leave only when the
leave totals less than 8 hours in a pay period. Therefore, if a GS
employee takes 8 hours or more of leave in the pay period, the employee
does not receive a night pay differential for those hours of paid
leave. We have not adopted a similar rule. Under NSPS, employees having
a tour of duty that includes night hours are not entitled to a night
pay differential when on annual or sick leave. Except for a period of
court leave, military leave, time off awarded under 5 U.S.C. 4502(e),
compensatory time off during religious observances, or when excused
from duty on a holiday, night pay is not payable during paid absences.
However, NSPS employees receive night pay for each hour of work
performed at night that is scheduled or ordered or approved by
management between the hours of 6 p.m. and 6 a.m. Unlike the GS pay
system, NSPS employees receive night pay whether the night work is
scheduled before or after the administrative workweek begins. We
believe that this provision is fair, equitable, and understandable to
employees and that the changes we have made in night pay eases the
administration of this premium pay.
One commenter asked that the administratively uncontrollable
overtime (AUO) pay provision in 5 U.S.C. 5545(c)(2) be applied to NSPS
employees. Pay for AUO work is a substitute form of pay for irregular,
unscheduled overtime work that is paid on an annual basis instead of an
hourly basis. The basis for determining positions for which AUO is
payable is that a position must be one in which the hours of duty
cannot be controlled administratively, which is inherent in the nature
of the work assigned to the position and that the employee is generally
responsible for recognizing, without supervision, circumstances that
require the employee to remain on duty. Typically, a criminal
investigator received AUO pay until availability pay replaced AUO in
1994. Given the specific position requirements for AUO pay, NSPS waived
the administratively uncontrollable overtime pay provision in 5 U.S.C.
5545(c)(2). We believe our rationale continues to be valid and that
NSPS employees who perform substantial amounts of overtime work are
properly compensated through the NSPS overtime pay provisions.
One commenter pointed out inconsistency in claims for compensatory
time off for travel (currently claims must be filed within 10 days of
travel for NSPS, but within 5 days of travel for non-NSPS employees).
We have not changed the proposed regulation in response to this comment
because the proposed NSPS rule more favorably responds to the national
security mission performed within DoD and the likelihood that employees
may need additional time to file such requests due to the exigency of
the mission. The goal of NSPS is not to be fully consistent with the GS
system but to improve upon it where possible. Allowing employees more
time to file claims for compensatory time off for travel is just one
such instance.
One commenter believes that using the term ``related regulations''
in Sec. 9901.362(i) is confusing for third party adjudicators. We
disagree inasmuch as Sec. 9901.362(i)(1) explains that NSPS employees
are covered by 5 U.S.C. 5545(d) and the related regulations in 5 CFR
part 550, subpart I, subject to the requirements and modifications
delineated in Sec. 9901.362(i)(2) through (i)(6). Thus, both the law
and related regulations must be read together to determine an
employee's entitlement to hazardous duty pay.
Another commenter recommended that engineering technicians be
eligible for hazardous duty pay. We have not made a change based on
this comment because the hazardous work involved in a position such as
an engineering technician is considered in the classification process
as part of determining the appropriate grade or band level.
A commenter asked for clarification of Sec. 9901.362(j)(3) because
we did not fully address the crediting of time spent commuting between
home and a transportation terminal. We agree and have added a new
paragraph (j)(4) to clarify that if an employee is required to travel
directly between his or her home and a transportation terminal, the
travel time is creditable as time in a travel status. Such travel time
outside regular working hours is creditable as time in a travel status.
However, normal commuting time must be deducted if the travel occurs on
a day the employee is regularly scheduled to work.
Several commenters noted that the prohibition on the payment for
unused compensatory time off for religious observances appears
discriminatory because it applies only to those whose personal
religious beliefs require the
[[Page 56380]]
abstention. We disagree. Section 5550a of title 5, United States Code,
affords all Federal employees the opportunity to earn and use
compensatory time off for religious observances without losing pay or
using annual leave. However, an employee should be allowed to
accumulate only the number of hours of work needed to make up for past
or future absences for religious observances. If self-regulated
properly, an employee should only have the appropriate number of hours
needed to fulfill religious obligations and not require payment in lieu
of use.
A representative of a labor organization contended that
compensatory time is actually reimbursement for services provided and,
as such, should not be defined as ``premium pay.'' We have not changed
the proposed regulation based on this comment. Compensatory time earned
under 5 U.S.C. 5543 is considered to be premium pay and is paid out at
the overtime rate that was earned, when applicable. In contrast,
compensatory time off for religious observances and compensatory time
off for travel are listed separately because they represent an
accommodation or flexibility provided to an employee to respond to a
personal need. Consequently, they are not paid out under NSPS. They are
additional time and attendance flexibilities available to an employee
and are not considered to be covered under the overtime provisions.
Commenters suggested that provisions related to Sunday pay,
overtime pay, and compensatory time off for travel should mirror
provisions of the GS system. We have chosen not to change this section
of the regulation because it is not our intent to achieve full
consistency with the GS system; rather, our goal is to preserve
flexibility within NSPS to establish provisions that best meet the
Department's national security mission.
Section 9901.363--Premium Pay for Healthcare Personnel
This section addresses treatment of premium pay for healthcare
personnel to include on-call premium pay, night pay, and pay for
weekend duty. Commenters questioned why, if on-call premium pay is
going to be authorized for NSPS employees in covered occupations, all
employees (including those in graded positions) are not covered. These
commenters viewed the difference as disparate treatment between NSPS
and graded systems. NSPS enabling legislation provides authority to
waive certain title 5 laws and regulations for employees covered by the
NSPS system. This enables DoD to, among other things, tailor a
personnel system to its unique national security mission. The law does
not provide authority to waive laws or regulations for employees or
positions covered by other pay systems. Therefore, no authority exists
to modify the General Schedule under this regulation.
Other commenters recommended that on-call premium pay be extended
to other occupations that have similar on-call requirements. The
Department has this flexibility and, if needed to address its critical
mission requirements, it may amend the NSPS regulations at a later
time.
Section 9901.364--Foreign Language Proficiency Pay
This section outlines the provisions for a foreign language
proficiency pay (FLPP) for those certified in languages identified as
necessary for national security interests. One union official requested
amplification of the last factor listed under ``Other considerations
authorized by the Secretary.'' We have not amplified this provision, as
this leaves the Department some flexibility to address future mission
requirements or needs. Increased foreign language skills within the
Department are necessary for building internal relationships for
coalition/multi-national operations, peacekeeping and civil/military
affairs. Having a cadre of skilled language speakers will allow the
Department to respond quickly to crisis requirements. For example, in
the aftermath of a disaster in a foreign area where the Department is
distributing food and medical supplies, it is imperative to have
someone readily available who can speak the language or dialect in
order to explain to the affected population the food distribution
process. In this case, an employee who is being paid FLPP for the
required language could provide that explanation. The last factor of
the payment criteria gives an authorized management official discretion
in considering the unique attributes of a specific job or assignment in
determining the level of payment for a covered employee.
Conversion Provisions
Section 9901.371--Conversion Into NSPS Pay System
This section prescribes policies and procedures for converting DoD
employees into NSPS. One commenter noted that information under Sec.
9901.371(j)(7) stating that the WGI adjustment is a one-time adjustment
which may not be provided on any subsequent conversions into NSPS is
inconsistent with current NSPS policy, which actually permits an
adjustment each time an employee converts into NSPS, provided he or she
meets the conditions for such payment. We agree and have revised this
paragraph accordingly.
Another commenter responded to language in Sec. 9901.371(l)(2),
which describes how ``an employee who is selected for a non-NSPS
position that subsequently becomes covered by NSPS before the effective
date of the employee's placement in the position is eligible to receive
(at the discretion of an authorized management official) a one-time
base salary increase equivalent to the increase the employee would have
received had the placement been effected prior to the position becoming
covered by NSPS.'' In the commenter's view, this employee should
receive a mandatory increase rather than be subject to the discretion
of the authorized management official. Unlike the GS system, NSPS
requires supervisors and managers to take responsibility for, and be
held accountable for, determining the appropriate pay for their
employees. Those determinations are made based on many variables. For
example, an employee's pay may reflect factors such as critical mission
or business requirements, the employee's past and anticipated
performance and contributions, specialized skills or knowledge
possessed by the employee, labor market conditions, base salary rates
paid to other employees in similar positions, and the location of the
position. Further, NSPS emphasizes increases in pay based on
performance, not so much the up-front pay-setting when an employee is
placed in a position. We do not agree that mandating pay under this
provision is the right thing to do because we want supervisors and
managers to have the flexibility and the tools they need to make
decisions necessary to perform their work and meet the strategic
missions and objectives of the Department. Therefore, we have not
revised this paragraph. We note that two labor organizations agreed
with the provisions that employees will not experience a pay reduction
upon conversion to NSPS.
Other commenters expressed concerns regarding Sec. 9901.371(m).
According to these commenters, the physicians' comparability allowance
(PCA) is not paid consistently across all DoD installations, which
means that those physicians and dentists who are not receiving this
payment at the time of conversion will have a lower base
[[Page 56381]]
salary than those who do receive this payment. They assert that this
makes the Department less competitive with other agencies such as the
Department of Veterans Affairs, results in continuing pay inequities,
and doesn't comport with the stated objective of NSPS to set and adjust
salaries based on factors such as labor market conditions. The proposed
regulation provides flexibility for the Component to decide at the
point of conversion whether to incorporate this payment in whole or in
part into the employee's NSPS base salary if the employee was regularly
receiving the allowance prior to conversion. In making this
determination, the Component may take several things into
consideration, e.g., access to a greater rate of pay than under the GS
system, any applicable targeted local market supplement, retention of
the employee, etc. We do not agree that mandating the inclusion of this
allowance in the employee's NSPS base salary is desirable or prudent
and have not changed this provision.
One commenter suggested that when an employee is transferred or
reassigned from a non-covered position to a position already covered by
the NSPS system, that employee should be provided with a copy of the
new classification, position or series description, occupational group
or subgroup, pay schedule, and any other relevant documentation before
entering service in the position. DoD Human Resources Offices already
have procedures in place to provide transferred and reassigned
employees with a copy of the Notice of Personnel Action (SF-50) which
includes the career group, band, series, official title, FLSA status,
and salary. A copy of the position description is also available and
all pay schedules are published and available on line. For these
reasons we believe that including this type of information in this
regulation would be redundant and unnecessary.
Section 9901.372--Conversion or Movement Out of NSPS Pay System
This section addresses pay setting when employees convert to or
move out of the NSPS pay system and are placed in another Federal pay
system.
Commenters objected to the provisions of the conversion-out process
allowing employees who were at or near the top step in GS grade, and
converted to NSPS, to be converted out from NSPS at a higher grade than
the grade that they previously held, even if there have been no changes
in duties and responsibilities. The procedures described in this
section are similar to conversion-out procedures provided in many of
our demonstration projects. We would expect that employees who are
converted out of NSPS within a few years after conversion into NSPS
will typically be converted out to a virtual grade consistent with
their grade at the time of conversion. However, we do acknowledge that
because NSPS offers the opportunity for greater salary advancement for
many employees, it is possible that their adjusted salary at the time
of conversion out could result in a higher virtual GS grade. This will
be particularly true for employees who have been covered for a long
period under NSPS. We have not revised these procedures in response to
these comments.
Another commenter suggested that the entire section should be
deleted, since the receiving agency, not DoD, should establish the GS
equivalent rate for their employees. We do not agree. This section was
added in direct response to requests from DoD Components and many DoD
employees. Initially, we designed NSPS with the goal of covering the
vast majority of DoD employees in a relatively short period of time.
That has not materialized at this time and, instead, there is
considerable movement within the Department back and forth between NSPS
and non-NSPS positions. A major impact of this situation has been that
NSPS employees are often disadvantaged when they are promoted to a GS
position because the rules of that system apply to the action. Because
we presently have no conversion out procedure, these employees must
have their pay set in accordance with the GS highest previous rate rule
rather than the two-step promotion rule that applies to GS employees
who move from one GS grade to a higher GS grade. This results in the
NSPS employee receiving a smaller promotion increase.
Other commenters requested that this section include provisions
allowing civilian employees the option to transfer back into the GS
system. We have not revised this section in response to these comments.
DoD civilians complement and support the military around the world and
to meet the interests of the United States in today's national security
environment, DoD needs an integrated, flexible, and responsive team. To
meet today's challenges, DoD needs a workforce whose performance and
contributions are linked to strategic mission objectives and who can be
more fully recognized and rewarded. DoD needs a classification and pay
system that allows us to attract and retain employees. At the same
time, DoD needs a system that protects the fundamental rights of its
employees. The GS system cannot adequately address the 21st century
national security environment and, although it is based on important
core principles, those principles are operated in an inflexible, one-
size-fits-all system. This inherent weakness makes supporting the DoD's
mission complex, costly, and ultimately risky. With NSPS, we've
designed a modern, contemporary, and flexible system that will generate
more opportunities for DoD civilians by easing the administrative
burden routinely required by the GS system. While DoD employees may
move back and forth between the NSPS and GS systems, as well as other
personnel systems within the Department, the objective is to cover as
many positions and employees under NSPS as possible and to fully allow
and encourage DoD employees to take advantage of the opportunities
available under the new system.
One commenter observed that Sec. 9901.372(a) should be revised to
say that when a GS virtual grade and rate are established, they ``will
be'' (rather than ``may be'') used to apply GS pay-setting rules. We
agree and have revised this paragraph accordingly. Another commenter
suggested that Sec. 9901.372(d)(1) should be revised to state that
intervening (unused) grades for two-grade interval occupations should
be considered when determining the GS virtual grade of an employee who
is converting or moving from an NSPS position to a GS position. For
example, in the case of the YA-2 pay band that covers grades GS-9
through GS-13, the commenter believed that GS-10 should be considered
in setting the GS virtual grade even if that grade was not actually
available to the position in the GS pay system because the position was
in a GS two-grade interval occupation that used only grades GS-9, GS-
11, GS-12, and GS-13. As a result of this comment, we carefully
reviewed this matter and determined that intervening grades in two-
grade interval occupations should not be considered in setting a GS
virtual grade. We identified certain anomalies that would result if the
intervening grade were considered. For example, if a GS occupation had
special rates at the GS-9 and 11 levels, setting the GS virtual grade
at GS-10 would require the GS virtual rate be set within the GS-10 rate
range, but there would be no established special rate for that grade.
This would produce inappropriate results in applying the maximum
payable rate rule or the promotion rule. Furthermore, we determined
that the established policy of various pay-
[[Page 56382]]
banding demonstration projects (including several DoD demonstration
projects) was to exclude unused intervening grades in determining GS
converted grades when employees leave the system. Accordingly, we have
revised Sec. 9901.372(d)(1)(i) to expressly provide that an
intervening grade for two-grade interval occupations may not be
considered in setting the GS virtual grade.
Another commenter expressed concern that the requirement in Sec.
9901.372(d)(2) that, when an employee's adjusted salary falls between
two GS steps, his or her virtual rate must be set at the next higher
step, may prove unnecessarily costly, because if the employee's actual
rate (based on the virtual rate) later also falls between steps, pay
will have to again be set at the next higher step if he or she is
promoted to a GS position and the 2-step rule is applied. The commenter
suggests that DoD set the virtual rate at the employee's existing
actual adjusted salary under NSPS so that the 2-step rule can be
applied directly to that rate. This is consistent with OPM's own rule
at 5 CFR 531.243(c) relating to the promotion of a GM employee to a GS
position. We have revised this paragraph accordingly.
A commenter asked that we change Sec. 9901.372(d)(2)(iii) or add
another paragraph to reflect grade retention upon movement out of NSPS
to be consistent with the GS system. They stated that if the movement
out results from a RIF or a realignment, the NSPS employee deserves the
same pay protection as his or her GS counterparts. We understand this
concern; however, upon movement or conversion out of NSPS it is the pay
administration rules of the gaining system which determine how pay is
set and whether or not an employee is entitled to or eligible to
receive grade and/or pay retention. Because NSPS employees are not in a
``covered pay system,'' they are not eligible for grade retention when
they move from NSPS to the GS system in accordance with 5 CFR
536.102(d). When an NSPS employee is placed in a GS position as a
result of a RIF, he or she may be entitled to indefinite pay retention.
Finally, we have made a few minor edits to Sec. 9901.372 either to
conform to publishing requirements for the Federal Register or to add
clarity to the proposed rule.
4. Subpart D--Performance Management
General Comments
Subpart D regulates performance management for NSPS employees.
This subpart inspired a large number of comments during the public
comment period. Since many of the comments related to both subparts C
and D, we addressed them under the heading ``Major Issues.'' However,
one general comment remains. Many commenters expressed concern that the
linking of pay to performance would dampen discourse between supervisor
and employee. These commenters were inclined to believe that employees
seeking favor with their leadership, as well as larger increases, would
censor or inappropriately alter any dissenting opinions they held
concerning work processes or products, which would result in less than
desirable outcomes. Such behavior, however, may exist whether or not
performance and pay are directly linked. No changes have been made
based on these comments.
Comments on Specific Sections of Subpart D
Section 9901.403--Waivers
Section 9901.403 specifies the waiver of 5 U.S.C. chapter 43 with
regard to that employee or category of employees covered by this
subpart.
One commenter expressed concern that waiver of chapter 43 will lead
to greater uncertainty among DoD employees about what their supervisor
and management in general expect, which will result in workplace
disruptions, confusion, lowered employee morale, organizational
inefficiencies, and performance deficiencies. We have concluded that
the waiver of 5 U.S.C. chapter 43 is appropriate and necessary to
implement NSPS performance management. No change has been made to the
proposed regulation based on this comment.
Section 9901.404--Definitions
This section contains definitions for the performance management
process under NSPS.
Commenters suggested a change to the definition of unacceptable
performance. Commenters objected to requiring an unacceptable rating
for failure to meet a single performance expectation. Similar to other
performance management systems in the Federal Government, NSPS applies
a generally accepted practice of identifying unacceptable performance
as failure to meet one or more performance expectations. In recognition
of the consequences of unacceptable performance, the regulation
stresses the need for clear communication of performance expectations,
monitoring performance, and addressing performance that does not meet
expectations (see Sec. Sec. 9901.406(b), 9901.409, and 9901.410). No
change has been made to the proposed regulation based on these
comments.
Several commenters also expressed concern that requirements related
to the definition in Sec. 9901.103 of performance as it relates to
demeanor, conduct, and behavior are irrelevant to accomplishing
performance objectives unless management establishes a direct link
between the required demeanor and accomplishment of the assignment.
Performance assessments would not be complete without considering
many factors, including employees' behaviors in carrying out assigned
work. Employee behaviors can be objectively observed and evaluated
against established performance expectations. Supervisors also may
consider how underlying misconduct negatively impacts the execution of
an employee's duties, that of the team, and/or that of the organization
under NSPS. All applications of performance management under NSPS
continue to provide employees with protection against prohibited
personnel practices, whistleblower protections, and appeal rights. Any
disagreement with the assessment of an employee's professionalism,
conduct, or respect, to the extent it impacts his or her rating, is
subject to the reconsideration process as defined in Sec. 9901.413. No
change has been made to the proposed regulation based on this comment.
One commenter requested that a definition of ``rating official'' be
added to Sec. 9901.404. We agreed and revised the section to include
this definition. In addition, we made a small revision to the
definition of minimum period to specify that only performance under an
approved NSPS performance plan qualifies for completion of the minimum
period.
Section 9901.405--Performance Management System Requirements
Section 9901.405 specifies that NSPS regulations establish the
performance management system required under 5 U.S.C. 9902 and that
this subpart contains mandatory requirements for all employees covered
by NSPS. It also provides that the Secretary has the authority to
further define the system through implementing issuances.
Several members of labor organizations objected to the summary
rating levels included under Sec. 9901.405 and suggested that we
revise the proposed regulation to include specific language indicating
the impact of ratings on job retention. The regulation identifies the
summary rating levels that will be used in NSPS. We explained the
[[Page 56383]]
rating level descriptors in the implementing issuances currently in
use. The descriptors are not the exclusive means of determining a
rating but rather serve as a guide when supervisors determine the
ratings for each job objective. NSPS, like all performance management
systems, assesses employee performance upon which management may base
decisions for employee retention. This is consistent with the merit
system principles described under 5 U.S.C. 2301. No change was made to
the proposed regulation based on these comments.
A commenter expressed concern that NSPS is ignoring the value of
experience in the performance management system. Under NSPS, an
employee is rated based on his or her demonstrated performance, which
generally is directly impacted by his or her experience and which is
assessed on what the employee has accomplished and how well he or she
has met performance expectations. This assessment is measured in terms
of the quality of the employee's experience, as reflected in his or her
performance. No change was made to the proposed regulation based on
this comment.
A few commenters expressed concern at the limited scale available
for rating an employee's performance. While one commenter suggested
using a 10-point scale instead of the current 5-point scale, most
commenters found no issue with the rating scale. During the past 2
years, DoD has tested the NSPS 5-level rating system and found it to
adequately enable distinctions in levels of performance. There is no
indication that the scale unfairly restricts a supervisor's ability to
rate an employee's performance accurately. No change has been made to
the proposed regulation based on these comments.
Two commenters suggested that, to achieve uniformity in rules used
for rounding raw performance scores to derive adjective ratings of
record, the rules should be included in the regulation. Another
commenter asserted that organizations rounded down performance scores
in an attempt to lower employee ratings. Standardized rounding rules
specific to NSPS performance ratings were developed to support
distinctions in performance and ensure uniformity of rating practices
across NSPS. Under NSPS, higher-level performance has been determined
to be performance above an even split between two rating levels (i.e.,
above the rounded score of ``x.50''). To ensure uniformity and
consistency regarding the application of rounding rules and in response
to the above comment, we added Sec. 9901.405(b)(6) to specify these
rounding rules.
One commenter indicated that the proposed regulation did not permit
an accurate evaluation of job performance based on objective job-
related criteria. NSPS uses a multi-level system that makes
distinctions in levels of employee performance and links employee
achievements, contributions, knowledge, and skills to organization
results. The system ensures that performance expectations are clearly
communicated to employees and that they are linked to the
organization's strategic goals and objectives. This provides the
ability to evaluate employees based on these objective job-related
criteria, recognize valid distinctions in performance, and reward
employees based on those distinctions. No change was made to the
proposed regulation based on this comment.
One commenter indicated that if he had identified fewer job
objectives his rating would have been higher and thus he would have
received a higher share. Job objectives can be identified based only on
the requirements of the position and reflect the responsibilities and
expectations associated with the position. Ratings are assigned in
accordance with the summary rating levels provided in the regulation
and the implementing issuances. However, these rating level descriptors
are not the exclusive means for determining a rating, but rather serve
as a guide when supervisors determine the ratings for each job
objective. The rating and the resultant share assignment are a product
of an evaluation of an employee's overall performance based on criteria
defined for each rating level that are clearly identified in the
regulation and implementing issuances. No change has been made to the
proposed regulation based on this comment.
Finally, a commenter indicated that some military supervisors with
NSPS responsibilities are not of sufficient rank to supervise civilians
and do not have the required knowledge to perform their NSPS duties.
The commenter suggested that NSPS establish a crosswalk to identify
equivalent military and civilian ranks to determine who can supervise
Federal employees. It is not within the scope of this regulation to
determine which military ranks can supervise which NSPS pay bands.
However, the regulation clearly identifies supervisory responsibilities
and specifies that supervisors and managers will be held accountable
for effectively managing the performance of employees under their
supervision. Further, DoD is committed to training managers and
supervisors, including military members, on how to establish and
communicate performance expectations, how to assess employee
performance, and how to appropriately translate that assessment into
pay adjustments. No change has been made to the proposed regulation
based on this comment.
Section 9901.406--Setting and Communicating Performance Expectations
Section 9901.406 provides the requirements and guidelines for
communicating with employees regarding their performance through the
use of ``performance expectations.''
One commenter suggested simplifying the definition of performance
expectations while several other commenters indicated a need to
safeguard against imposition of impossible performance expectations. We
believe the existing definition and the requirements identified in this
section clearly describe the parameters for setting performance
expectations. In addition, the regulation specifies that employees will
be involved in the development of performance expectations, which
provides an opportunity for dialog between the supervisor and the
employee during the development process. Further, safeguards are in
place to preclude the imposition of impossible expectations since
performance expectations are subject to higher or second-level review
to ensure consistency and fairness within and across the organization.
Additionally, NSPS job-objective training for supervisors and managers
stresses the use of ``SMART'' objectives. ``SMART'' is an acronym for
the following criteria: Specific--means observable action, behavior, or
achievement is described; Measurable--means the method or procedure
must exist to measure the quality of the outcomes; Aligned--means
linking (or drawing a line of sight from) objectives to organizational
mission and goals; Realistic and Relevant--means the objective is
achievable and relevant means important to the organization; and
Timed--means there is a point in time when the objective (or
assignments covered by the objective) will start or when it will be
completed. These measures ensure employees will not be expected to
accomplish ``impossible expectations.'' We have made no change to the
proposed regulation based on these comments.
One commenter suggested revising Sec. 9901.406(b) to state that a
performance expectation must be communicated to an employee in writing
before the employee is expected to accomplish a related work
assignment. Section
[[Page 56384]]
9901.406(b) already states that an employee will receive performance
expectations in writing before being held accountable for them. No
change has been made to the proposed regulation based on this comment.
Another commenter requested clarification regarding Sec.
9901.406(b)(1), which refers to performance expectations that will be
communicated to the employee in writing ``including those that may
affect an employee's retention in the job.'' The commenter indicates
that this seems to imply that there are expectations that may not
affect an employee's job retention. Like all performance management
systems, NSPS assesses an employee's performance based on an evaluation
of the performance expectations communicated to the employee in writing
and amplified verbally as described in Sec. 9901.406(f). This
assessment of an employee's performance is the basis upon which
management may make decisions regarding employee retention. We agree
with the commenter that this phrase does not clearly portray our intent
and it has therefore been removed.
Commenters suggested that Sec. 9901.406(c) be deleted from the
proposed regulation, as it holds employees accountable for subjective
standards of professionalism and conduct but does not hold supervisors
accountable for the same professionalism and conduct standards. These
comments indicate a lack of understanding that the term ``employee''
also pertains to supervisors and managers. We believe the
misunderstanding occurs because a paragraph addressing criteria
pertaining only to supervisors and managers is preceded by a paragraph
addressing criteria for all employees, which includes supervisors and
managers. To avoid the potential for such a misunderstanding, we added
language to Sec. 9901.406(d) to clearly indicate that the requirements
specific to supervisors and managers are in addition to those in Sec.
9901.406(c).
One commenter suggested adding to Sec. 9901.406(e) a requirement
for supervisors and managers to meet with employees they supervise at
the beginning of the appraisal period and at scheduled times
thereafter. The regulation clearly states in Sec. 9901.405 that
supervisors and managers are held accountable for effectively managing
the performance of their employees. This responsibility includes
setting and communicating performance expectations, monitoring
performance and providing feedback. We believe the regulation defines
supervisor and manager responsibilities in this area without being
overly prescriptive in the manner and number of times they should meet
with employees. The regulation preserves a certain amount of discretion
in recognition of the breadth of work and variety of work situations
(including varied levels of independence and geographic dispersion)
prevalent in DoD. No change has been made to the proposed regulation
based on this comment.
One commenter suggested specifically including occupational peer
involvement in the factors to be considered when developing performance
expectations. Peer involvement, however, is normally part of a process
rather than a factor. Section 9901.406(e) indicates that performance
expectations should include organizational, occupational, or other work
requirements as well as competencies that an employee is expected to
demonstrate or contributions that he/she is expected to make. We
believe this description allows the flexibility to include necessary
occupational requirements when developing performance expectations. No
change was made to the proposed regulation based on this comment.
Several commenters noted that the option for supervisors to amplify
performance expectations via oral instructions under Sec. 9901.406(f)
is especially problematic as this could likely lead to a number of
misunderstandings and disputes between supervisors and employees over
how the expectation is expressed or understood, or whether it is even
expressed as a performance expectation on which an employee may be
appraised. Others noted that this section may conflict with the
requirement for clear communication in Sec. 9901.405(c)(1). We believe
that the regulations sufficiently address concerns about communication
of performance expectations. The language in Sec. 9901.406(b) clearly
requires the communication of performance expectations to employees in
writing prior to holding them accountable for these expectations. It is
neither feasible nor functional to require the written communication of
every assignment and instruction used to amplify performance
expectations. Non-written communication can still be considered clear
and can be accomplished through dialog regarding performance
expectations. The attributes identified in Sec. 9901.406(f) relate to
the day-to-day communication between supervisors and employees
regarding work assignments, including specific goals or metrics that
are a project-specific extension of already established performance
expectations. No change has been made to the proposed regulation based
on these comments.
Commenters expressed concern over the establishment of performance
expectations by supervisors. Many commenters stated that performance
expectations should be subject to an appeals process by the employee,
and not simply set by the supervisor according to the process in Sec.
9901.406. Insofar as practical, employees are to be involved and their
participation sought in the development of performance expectations as
stated in Sec. 9901.406(g). However, similar to performance management
systems under 5 U.S.C. chapter 43, managers need to retain the sole and
exclusive authority to define the work to be performed via performance
expectations. The regulations do require the safeguard that all
performance expectations receive a higher-level review as specified in
Sec. 9901.406(h) and thus secondary review is already part of the
expectation setting process. No change has been made to the proposed
regulation based on these comments.
Other commenters specifically requested that the term ``insofar as
practicable'' be deleted from Sec. 9901.406(g) as 5 U.S.C.
9902(b)(7)(D) requires the Department of Defense to ``provide a means''
for ensuring employee participation in the implementation of the
system. While we believe the importance of involving employees in the
setting of performance expectations is paramount, we acknowledge that
there may be cases when an employee is not involved to the fullest
extent (e.g., development of standardized objectives for a group of
employees performing similar work). Mandating complete and uniform
involvement would unnecessarily hinder the development and
administration of uniform expectations, where appropriate. No change
has been made to the proposed regulation based on these comments.
Finally, one commenter suggested substituting ``pay pools'' for
``organizations'' in Sec. 9901.406(h). Such a change would require
higher- or second-level reviews to reconcile performance expectations
across a pay pool rather than an organization. This section
appropriately addresses the higher-level review of performance
expectations from a broader organizational perspective. However, to the
extent a majority of pay pools are structured along organizational
lines, this review often has the effect of reconciling expectations
across pay pool structures.
[[Page 56385]]
No change has been made to the proposed regulation based on this
comment.
Section 9901.407--Minimum Period of Performance
Section 9901.407 addresses the minimum performance period and
eligibility for conducting appraisals leading to performance payouts.
It describes the requirements for the minimum period of performance
under an NSPS performance plan to qualify for an NSPS rating of record.
One commenter suggested that the language included in Sec.
9901.407 is misleading. The commenter believes that the language could
be interpreted erroneously to mean that an employee with NSPS-covered
service related to Sec. 9901.342(i) through (l) may be credited with
service performed prior to breaks in service and meet the minimum
performance period even if the breaks were not related to a reason
expressed in Sec. 9901.342(i) through (l). In response to this
comment, we have modified the language to clarify that only service
performed prior to a Sec. 9901.342(i) through (l) break in service may
be counted towards a minimum period.
One commenter recommended changing Sec. 9901.407(b)(1) to indicate
only periods of unpaid leave may not be applied toward the 90-day
minimum. The proposed regulation intended that paid leave as well as
unpaid leave would not be credited toward meeting the requirements of
the minimum performance period. NSPS provides for using the modal
rating within a pay pool to ensure payouts for employees who do not
meet the minimum period due to approved paid leave. While we made no
change to the proposed regulation based on this comment, we modified
Sec. 9901.342(k) to cover any employee who did not meet the minimum
period of performance as a result of approved paid leave. The former
language in Sec. 9901.432(k) limited special payouts to employees on
``extended leave.'' The qualifying language, ``extended leave'', was
removed. We also note that under Sec. 9901.411, performance periods
can be extended to permit an employee who is close to meeting the 90-
day minimum to meet that requirement.
Another commenter suggested adding that the minimum period of
performance must be 90 consecutive calendar days. The regulation
accurately provides for allowable breaks (such as leave) and provides
credit for nonconsecutive service toward meeting the minimum period. No
change has been made to the proposed regulation based on this comment.
Section 9901.408--Employees on Time-Limited Appointments
Section 9901.408 allows evaluation and thereby coverage of NSPS
employees in time-limited appointments not expected to exceed 90 days.
It permits supervisors to issue performance plans and performance
expectations to employees on time-limited assignments appointed for
less than 90 days when these plans and expectations are linked to the
assigned organization's mission. Supervisors are expected to engage
these employees in a dialog relative to performance expectations for
the appointment and conduct an evaluation of employees at the end of
their appointment consisting of a narrative description of their
performance, accomplishments, and contributions. This narrative may
serve as documentation and justification for recognition under 5 U.S.C.
chapter 45, consistent with and subject to applicable criteria and
approval procedures.
One commenter requested clarification of the distinction between
yearly evaluations and time-limited appointment evaluations that can
occur in the same year. The commenter questioned how management would
treat the two in relation to pay for performance. Section 9901.408
clearly indicates that a supervisor may give an evaluation to an
employee on a time-limited appointment of less than 90 days. Any
recognition for performance would be under 5 U.S.C. chapter 45. These
employees, for the most part, would not be eligible for pay pool
payouts. Section 9901.407 provides the requirement to meet the minimum
period of performance of 90 days to be eligible for a rating of record
and possible performance payout. Conceivably, an individual could gain
eligibility for an NSPS rating of record and pay pool payout by moving
to a time-limited appointment of longer duration. However, there is no
conflict or overlap between the two processes as they involve different
eligibility requirements. No change has been made to the proposed
regulation based on this comment.
Section 9901.409--Monitoring and Developing Performance
Section 9901.409 establishes the basic responsibility for
supervisors to monitor employee and organizational performance and
inform employees of their progress in meeting their performance
expectations. Comments on this section were generally favorable, with
most commending the section's inclusion.
One commenter suggested adding to Sec. 9901.409(a)(3) a
requirement for an interim performance review during periods of
performance of less than 180 days if it is determined that an employee
is not meeting performance expectations. Section 9901.410 provides
requirements and criteria for addressing performance that does not meet
expectations. That section clearly requires identification and
communication of specific performance deficiencies whenever an
employee's performance is not meeting expectations. This guidance is
applicable without regard to the length of the appointment. Since a
requirement for similar communication is already provided, no change
has been made to the proposed regulation based on this comment.
One commenter requested clarification as to how the developmental
process detailed in Sec. 9901.409(b) can be a shared responsibility
between management and employees. While we recognize that Sec.
9901.409 has a management focus as it pertains to performance
development, all identified processes require dialog between both the
supervisor and the employee. Both parties must apply and be receptive
to constructive collaboration. In addition, it is incumbent on
employees to initiate conversation with their supervisors to pursue
development options when needed to improve their performance, as well
as to independently pursue education and training that may help them
advance. In recognition of these employee-initiated actions for
developing performance, the proposed regulation has been modified to
reflect that performance development options are ``not limited to''
those described in this section of the regulation.
Another commenter requested revised language requiring ongoing
feedback to employees, in addition to the one required by the interim
review, to be in writing. This commenter indicated the purpose of
requiring all feedback occur in writing was to ensure employee
participation in his/her own performance development and avoid
confusion that may result from only oral feedback. Face-to-face and
oral communications serve to enhance supervisor/employee relationships
as well as minimize misunderstanding as the give-and-take in oral
communication allows for immediate feedback and clarification of
confusing points. Feedback might be as simple as ``good job on the
briefing.'' These short feedback communications may periodically occur
in writing, but to require all such feedback to be written
[[Page 56386]]
diminishes the opportunity for the kind of face-to-face communication
that helps clarify communication and enhance the supervisor/employee
relationships. No change has been made to the proposed regulation based
on this comment.
Section 9901.410--Addressing Performance That Does Not Meet
Expectations
Section 9901.410 establishes the process for addressing poor
performance under NSPS and the responsibility of the supervisor to
address such situations.
Comments on this section criticized the perceived focus on negative
alternatives available to a supervisor for addressing performance that
does not meet performance expectations. Suggestions include adding a
list that details the developmental options available to the
supervisor. The proposed regulation provides positive alternatives for
developing performance as identified in Sec. 9901.409. These are
viable options for managers to consider but may not be appropriate in
all situations. Additionally, among the options described in Sec.
9901.410 are such positive steps as training, improvement periods and
reassignments. No change has been made to the proposed regulation based
on this comment.
Another commenter suggested that there is not enough distinction
between addressing poor performance and taking outright adverse action
against an employee. The commenter noted that language should be added
stating that employees will be provided a reasonable opportunity to
improve performance prior to initiation of an adverse action. The
commenter suggested adding a section regarding periods for employee
improvement. Section 9901.410(a)(2) lists the range of options
available to a supervisor, among which adverse action is but one option
available. Because this section already lists an employee improvement
period among the options available to a supervisor, we feel that NSPS
provides sufficient options alongside the developmental alternatives in
Sec. 9901.409 to give the supervisor appropriate tools with which to
address poor performance. No change has been made to the proposed
regulation based on this comment.
Section 9901.411--Appraisal Period
Section 9901.411 sets forth the dates to be associated with annual
appraisal periods and ratings of record.
One commenter requested the inclusion in Sec. 9901.411(a)(3) of
applicable circumstances when an employee can receive an early annual
recommended rating. We agree with this recommendation and have added
Sec. 9901.412(l) to identify situations when an early annual
recommendation rating of record will be issued.
In addition, a commenter recommended using July 3 rather than July
1 as the beginning of the time period for early annual recommended
ratings, since July 3 is the exact beginning of the 90-day minimum
period prior to the end of the appraisal period. We agree and have
modified Sec. 9901.411(a)(3) to make this change.
Another commenter expressed concern regarding the circumstances for
extending the appraisal period. In particular, the commenter questioned
whether the extension could be used to give favored employees an unfair
amount of time to improve performance, and whether the funds to pay the
affected employee alter the pay pool funds available for the following
year. The language in Sec. 9901.411 clearly outlines the requirements
for using an extended appraisal period. These criteria limit the
extension of an appraisal period to the purpose of allowing an employee
to meet the minimum period. Further, the regulation specifies that an
extension of the appraisal period cannot delay the payout for the
applicable pay pool. Therefore, current year funding will be used for
payouts provided to employees who complete extended appraisal periods
and receive ratings of record. No change has been made to the proposed
regulation based on this comment. However, to ensure a clear
understanding of the effective date for this type of action, we added
Sec. 9901.411(d) to the regulation.
Section 9901.412--Rating and Rewarding Performance
Section 9901.412 identifies responsibilities of the rating official
and the Pay Pool Panel and specifies the requirements associated with
accomplishing employee ratings of record to reward employee
performance.
Many commenters felt that the authority granted to the Pay Pool
Manager and the Pay Pool Panel to adjust recommended ratings of record
is inappropriate and that the authority for an employee's rating of
record should rest solely with individuals directly aware of the
employee's performance. Many expressed concern that the proposed
regulations do not require pay pool authorities to have any exposure to
the employee being rated, which could result in changing ratings to
ease the organizational payout structure without providing
justification for such changes. Another commenter suggested that Pay
Pool Manager authority may violate the system requirement for a fair,
credible, and transparent employee performance system. One commenter
specifically suggested revising Sec. 9901.412(e) so that a Pay Pool
Manager must afford the rating official and the employee due process to
review any proposed change in rating, and that the Pay Pool Manager
must base any subsequent change on review of written documentation from
both the official and the employee.
The Pay Pool Manager is given final authority to assign ratings of
records to employees in NSPS in accordance with merit system
principles. Per the discussion under Major Issues, the ability of Pay
Pool Panels and Pay Pool Managers to adjust recommended ratings of
record reinforces equity across and within pay pools and is a necessary
safeguard when rewarding performance from a shared performance fund
(i.e. pay pool). Because the nature of NSPS jobs necessitates use of
narrative performance standards, it is possible for supervisors to
interpret the performance criteria differently, to the advantage or
disadvantage of others in the pay pool. Using a multi-member Pay Pool
Panel to reconcile ratings ensures a common understanding of criteria
across the pay pool and ensures equity and fairness of ratings within
the pay pool. Any employee who disagrees with the Pay Pool Manager's
determination may request reconsideration of the rating or job
objective rating in accordance with Sec. 9901.413. If an employee
disagrees with the reconsideration decision of the Pay Pool Manager,
the Performance Review Authority provides an extra level of review and
will make the final decision on all reconsideration requests pertaining
to job objective ratings or ratings of record. The Performance Review
Authority only applies performance-related criteria, in a manner
consistent with its application throughout the rest of the pay pool, in
making decisions on reconsideration requests. Requiring criteria be
applied in the same manner across the pay pool ensures that employees
working at the same level are rated equitably. In response to comments
to ensure the level of management in the best position to observe an
employee's work is ``heard'' before a recommended rating is changed, we
added a new paragraph at Sec. 9901.412(f) to specify the Pay Pool
Panel responsibility for affording the rating official an opportunity
to justify a recommended rating of record before it is changed by the
Pay Pool Panel.
Some commenters questioned the absence of an independent review
authority to identify and remedy
[[Page 56387]]
malfeasance by the applying agency. The commenter expressed concern
that a review will go to the same people making the initial rating. The
Performance Review Authority provides an additional level of review
beyond those involved in making the initial rating, functions as the
ultimate administrative review authority, and makes the final decisions
in the rating process. No change has been made to the proposed
regulation based on this comment.
Some commenters lauded the inclusion of Sec. 9901.412(a) as needed
protection for NSPS employees. Others, however, felt that the rating
process encouraged the forced distribution of ratings as employees are
advised that most will receive a Level 3 rating of record. While NSPS
designs performance criteria to make distinctions in performance, the
regulations and agency practice prohibit requiring any specified number
of ratings at a particular rating level. Rather, the distribution of
ratings has shifted as a result of standards that challenge employees
and set a higher bar for higher-level performance. These standards
enable more meaningful distinctions among performers. The past 2 years
have demonstrated that the NSPS criteria successfully distinguish and
reward multiple levels of performance. Identified performance
indicators, upon which rating determinations are based, define and
provide further amplification of performance levels. The change in the
distribution of ratings as a result of the new criteria, however, does
not equate to the concept of ``forced rating distribution''. Forced
rating distribution occurs when management requires a certain percent
of the population to be placed in a certain rating level regardless of
how employee performance compares to performance criteria. This is not
how NSPS functions. No change has been made to the proposed regulation
based on these comments.
While the implication by at least one commenter was that a Level 3
rating of record reflects average performance, in fact, Level 3
performance recognizes those employees who performed their identified
responsibilities in a ``valued'' manner and in doing so effectively met
all of their performance expectations. NSPS reserves higher-level
ratings for employees who have significantly exceeded performance
expectations. No change has been made to the proposed regulation based
on these comments.
Some commenters requested more guidance in Sec. 9901.412(d),
renumbered as Sec. 9901.412(e). The concern was that the current
guidance led supervisors to believe they did not need to connect a
committed misconduct to the employee's ability to perform up to
expectations in order to use it to affect an employee's rating of
record. Such an understanding is inconsistent with the Department's own
guidance on the matter. Another commenter stated that after-the-fact
determinations that other conduct had an adverse ``impact on the
execution'' of an employee's duties is not a proper basis for reducing
a rating of record below that warranted by the extent to which the
employee met or exceeded the written performance expectations, and that
if the conduct could be classified as misconduct it should be handled
as a disciplinary matter.
Under NSPS, to consider the impact of employee misconduct on
performance, there must be a nexus between the impact of the misconduct
and the execution of the employee's duties or those of the team or
organization. While the supervisor will not reference the misconduct on
the employee's rating of record, the supervisor may consider how the
underlying misconduct negatively impacts the employee's performance,
that of his or her co-workers, or the organization's productivity. In
response to these comments, and to provide clarity, we revised the
regulation at Sec. 9901.412(d), renumbered as Sec. 9901.412(e), to
capture essentially what occurs today when considering the impact of
work-related misconduct on an employees' job performance in any
performance management system.
One commenter suggested revising Sec. 9901.412(f), renumbered as
Sec. 9901.412(h), requiring the rating official to communicate the
payout distribution to the employee along with the final rating of
record and number of shares. The commenter also requested adding a
sentence to this section indicating that this information will not be
communicated to the employee until the final rating of record has been
approved by the Pay Pool Manager. We agree with part of the
recommendation and revised Sec. 9901.412(f), renumbered as Sec.
9901.412 (h), to add payout distribution to the information
communicated to the employee by the rating official. However, we
believe the regulation is clear that a rating is only a recommendation
until it becomes final upon completion of all appropriate review and
signatures and have made no change to the proposed regulation based on
this comment.
A commenter indicated confusion between language not allowing leave
to be credited toward meeting the minimum period and the requirement
that the rating of record cannot be lowered based on approved absence
from work. To avoid such confusion, we modified Sec. 9901.412(g),
renumbered as Sec. 9901.412(i) to clarify that this requirement only
pertains after the minimum period has been met.
One commenter suggested the inclusion of language prohibiting the
use of roll-over ratings from preceding reviews for subsequent review
periods. Similar to other Governmentwide performance management
systems, the definitions of ``performance'' and ``rating of record''
reflect that a rating of record involves evaluation of an employee's
performance of assigned duties. Roll-over ratings are inappropriate as
they provide employees ratings of record for work not performed during
the period being evaluated. We revised Sec. 9901.412(h), renumbered as
Sec. 9901.412(j), to add that ratings of record prepared for a
previous appraisal period will not be carried over to subsequent
appraisal periods without an actual evaluation of the employee's
performance during the subsequent appraisal period.
A few commenters noted that Sec. 9901.412(h)(3)(iii), renumbered
as Sec. 9901.412(j)(3)(iii), gives leeway to the Secretary to use
ratings of record for unspecified purposes in the future. The
commenters requested that the Department either delete these
authorities or specify these purposes in the regulation as opposed to
implementing issuances. The Secretary will identify these purposes as
the Department develops future programs and policies. These purposes
will be identified in implementing issuances. No change was made to the
proposed regulations based on these comments.
Finally, a commenter suggested that Sec. 9901.412(j), renumbered
as Sec. 9901.412(m), needed clarification to show how the ratings
discussed in this section differed from a close-out rating. This
section permits a supervisor or rating official to prepare an
assessment for an employee at any time after the employee has completed
the minimum period. An example of such an assessment would be the
close-out assessment developed for informational purposes by a
supervisor or rating official when they leave a position for which they
had rating responsibility for an employee. This assessment is provided
to the new supervisor as input for use in determining the employee's
rating of record at the end of the appraisal period. We agree with the
comment and revised this paragraph to clarify our intent.
[[Page 56388]]
One commenter noted that, at present, the proposed regulation does
not list specific guidance for those employees in environments where
supervisor turnover is frequent. The commenter expresses concern that
an NSPS employee would not be given a fair rating by an interim
supervisor and that a new permanent supervisor, once appointed, would
not have adequate information to rate the employee correctly. DoD is
committed to extensive training for managers, supervisors, and
employees so that they understand the requirements of the performance
management system. Further, DoD is committed to training managers and
supervisors, including military members, on how to establish and
communicate performance expectations, how to assess employee
performance, and how to appropriately translate that assessment into
pay adjustments. In addition, under Sec. 9901.412(j), renumbered as
Sec. 9901.412(m), we added the requirement that supervisors and rating
officials may prepare a performance assessment to provide continuity of
ratings upon transfer of a supervisor or employee, which helps to
ensure that the new supervisor has a clear understanding of employee
performance and contributions.
Section 9901.413--Reconsideration of Ratings
Section 9901.413 specifies the roles and responsibilities of the
officials with authority to make reconsideration decisions.
One commenter suggested that a fair appeals process be established
for employees to appeal their payout or lack of payout. Another
commenter indicated a concern that employees have no appeal or
grievance rights. Also a commenter suggested revising Sec. 9901.413(a)
to give MSPB jurisdiction and stated that MSPB must be given the
authority to review performance rating reconsideration requests and
grievances by employees who have a good reason to believe that their
employing organizations have violated merit system principles. This
section clearly states the process for an employee to challenge his or
her rating of record or job objective through the NSPS reconsideration
process. This reconsideration process does not preclude appropriate
challenges in statutory forums or exclude appeals through other
avenues. No changes have been made to the proposed regulation based on
these comments.
Commenters noted that Sec. 9901.413(b) indicates that bargaining
unit employees may only challenge a rating of record under negotiated
grievance procedures. One commenter noted that this condition was a
violation of the NDAA 2008 and that the language should be clarified to
not exclude appeals filed under Equal Employment Opportunity
Commission, Office of Special Counsel, or Federal Labor Relations
Authority domain. This section of the regulation recognizes the
requirements of 5 U.S.C. 7121(a)(1) and does not violate the NDAA 2008.
The other avenues mentioned are still open to employees. This provision
does not prevent an employee from using any statutory appeals
procedure, if appropriate, and does not prevent bargaining unit
employees from using the agency reconsideration process if these
matters are excluded in the negotiated grievance procedure. It simply
notes that the negotiated grievance procedure is the exclusive
``administrative'' procedure available to bargaining unit employees
where such procedures exist. No change has been made to the proposed
regulation based on these comments.
Another commenter requested that the language be amended to include
payouts under the jurisdiction of the negotiated grievance process.
This provision does not impact the ability of the parties to negotiate
on a negotiated grievance procedure. Payout decisions are not
explicitly excluded from, nor are they covered by, negotiated grievance
procedures because of any provision of the regulation. To the extent
that matters related to NSPS payout decisions can be covered by a
negotiated grievance procedure they are, but any grievance arbitration
decision must be consistent with these regulations and 5 U.S.C. 9902, a
requirement of 5 U.S.C. 7122. No change has been made to the proposed
regulation based on these comments.
A commenter requested clarification in Sec. 9901.413(c) regarding
whether a payout recalculation is based only on a change to the rating
of record. Another commenter expressed concern that the language in
Sec. 9901.413(c) does not state clearly that the payout will be
recalculated based on the share range for the rating of record assigned
upon reconsideration. We agree and revised this section to add language
clarifying that, in the event a reconsideration results in an adjusted
job objective rating or rating of record, the Pay Pool Manager will
recalculate the employee's performance payout amount and distribution;
and salary adjustments will be based on the share range appropriate for
the adjusted rating of record as identified in Sec. 9901.342(f).
Another commenter noted that this paragraph does not provide enough
information about the authority of the Pay Pool Manager. No change has
been made to the proposed regulation based on this comment since the
authority and responsibilities of the Pay Pool Manager do not vary
during the reconciliation process.
Finally, one commenter recommended adding a paragraph to Sec.
9901.413 suggesting the use of alternative dispute resolution
techniques to resolve disputes regarding reconsideration of ratings. We
agree and revised this section to add language clarifying the use of
alternative dispute resolution is permissible within the
reconsideration process.
VI. Next Steps
The National Defense Authorization Act for Fiscal Year 2008
requires that this rule be considered a major rule for the purpose of
section 801 of title 5, United States Code. As such, before it can take
effect, the Department will submit to each House of the Congress and to
the Comptroller General a report containing the rule, a general
statement relating to the rule, and the proposed effective date of the
rule. The rule may not be effective until the date occurring 60 days
after the later of (1) Congressional receipt of the report, or (2) the
date the rule is published in the Federal Register. Congress has the
opportunity to delay implementation of the rule based on the procedures
set forth in 5 U.S.C. 801-808.
DoD intends to continue implementing the new NSPS HR system in
phases or spirals. The Act provides that not more than 100,000
employees may be added to the System in any calendar year. As has been
the case from the beginning, NSPS continues to be an event-driven
system, and no decisions have been made at this time regarding when or
whether additional groups or organizations will be converted to NSPS
during calendar year 2009 and beyond. Such decisions will be based on
the best interests of the Department.
The Act also requires the Comptroller General to conduct annual
reviews in calendar years 2008, 2009, and 2010. The reviews will
address--
(1) Employee satisfaction with the National Security Personnel
System, and
(2) The extent to which the Department of Defense has effectively
implemented accountability mechanisms and internal safeguards.
DoD will fully support the Comptroller General in any review of the
System.
E.O. 12866, Regulatory Review
DoD and OPM have determined that this action is a significant
regulatory action within the meaning of Executive
[[Page 56389]]
Order 12866 because there is significant public interest in the
National Security Personnel System. DoD and OPM have analyzed the
expected costs and benefits of the revised HR system, and that analysis
is presented below.
Among the NSPS requirements is to maintain a system that is
competitive, cost effective, and fiscally sound, while also being
flexible, credible, and trusted. NSPS will allow DoD to move towards
market-sensitive pay, to continue pay increases based on performance,
and to have the flexibility to offer competitive salaries. While these
flexibilities will improve DoD's ability to attract and retain a high-
performing workforce, actual payroll costs under this system are
constrained by the amount budgeted for overall DoD payroll
expenditures, as is the case with the present GS pay system.
The continuing implementation of NSPS will result in some
additional program implementation costs. This includes delivering
training specifically for NSPS, conducting outreach to employees and
other parties, and improving automated systems associated with NSPS
performance management.
As has been the practice with implementing NSPS and other
alternative personnel systems, DoD expects to incur an initial payroll
cost related to the conversion of employees to the pay banding system.
This includes a within-grade increase (WGI) ``buyout,'' in which an
employee's basic pay, upon conversion, is adjusted by the amount of the
WGI earned to date. While this increase is paid earlier than scheduled,
it represents a cost that would have been incurred under the current
system at some point. However, under NSPS, WGIs no longer exist. Once
covered employees are under NSPS, such pay increases will be based on
performance. Accordingly, the total cost of the accelerated WGI
``buyout'' is not treated as a ``new'' cost attributed to
implementation of NSPS, since it is a cost that DoD would bear under
the current HR system. The portion of the WGI buyout cost attributable
to NSPS implementation is the marginal difference between paying out
the earned portion of a WGI upon conversion and the cost of paying the
same WGI according to the current schedule. The marginal cost of the
accelerated payment of earned WGIs is difficult to estimate, but is not
a significant factor in the cost benefit analysis for regulatory review
purposes.
DoD estimates the overall costs associated with continuing to
implement NSPS to all eligible employees will be approximately $143
million from Fiscal Years 2009 through 2011. If it is determined that a
category of eligible employees will not be converted to NSPS, these
costs will decrease significantly. Accordingly, these estimates are
based upon past experience, guidance from the Comptroller General, and
ensuring that implementation costs are determined in the same way
across the services and Defense Agencies and captured in official
accounting systems.
The primary benefit to the public of NSPS resides in the HR
flexibilities that will enable DoD to attract, build, and retain a
high-performing workforce focused on effective and efficient mission
accomplishment. A performance-based pay system that rewards excellent
performance will result in a more qualified and proficient workforce
and will generate a greater return on investment in terms of
productivity and effectiveness. Taken as a whole, the changes included
in these proposed regulations will improve upon the original NSPS
regulations and result in a contemporary, merit-based HR system that
focuses on performance, generates respect and trust, and supports the
primary mission of DoD.
This rule has been reviewed by the Office of Management and Budget
in accordance with E.O. 12866.
Regulatory Flexibility Act
DoD and OPM have determined that these regulations would not have a
significant economic impact on a substantial number of small entities
because they would apply only to Federal agencies and employees.
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35)
This proposed regulatory action will not impose any additional
reporting or recordkeeping requirements under the Paperwork Reduction
Act.
E.O. 12988, Civil Justice Reform
This proposed regulation is consistent with the requirements of
E.O. 12988. The regulation clearly specifies the effects on existing
Federal law or regulation; provides clear legal standards; has no
retroactive effects; specifies procedures for administrative and court
actions; defines key terms; and is drafted clearly.
E.O. 13132, Federalism
DoD and OPM have determined these proposed regulations would not
have Federalism implications because they would apply only to Federal
agencies and employees. The proposed regulations would not have
financial or other effects on States, the relationship between the
Federal Government and the States, or the distribution of power and
responsibilities among the various levels of government.
Unfunded Mandates
These proposed regulations would not result in the expenditure by
State, local, or tribal governments of more than $100 million annually.
Thus, no written assessment of unfunded mandates is required.
List of Subjects in 5 CFR Part 9901
Administrative practice and procedure, Government employees, Labor
management relations, Labor unions, Reporting and recordkeeping
requirements, Wages.
Office of Personnel Management.
Michael W. Hager,
Acting Director, Office of Personnel Management.
Department of Defense.
Gordon England,
Deputy Secretary of Defense.
0
Accordingly, under the authority of section 9902 of title 5, United
States Code, the Department of Defense and the Office of Personnel
Management are revising part 9901 of title 5, Code of Federal
Regulations to read as follows:
PART 9901--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM
(NSPS)
Subpart A--General Provisions
Sec.
9901.101 Purpose.
9901.102 Eligibility and coverage.
9901.103 Definitions.
9901.104 Scope of authority.
9901.105 OPM coordination and approval.
9901.106 Relationship to other provisions.
9901.107 Program evaluation.
Subpart B--Classification
General
9901.201 Purpose.
9901.202 Coverage.
9901.203 Waivers.
9901.204 Definitions.
Classification Structure
9901.211 Career groups.
9901.212 Pay schedules and pay bands.
Classification Process
9901.221 Classification requirements.
9901.222 Review of classification decisions.
9901.223 Appeal to DoD for review of classification decisions.
9901.224 Appeal to OPM for review of classification decisions.
Transitional Provisions
9901.231 Conversion of positions and employees to NSPS
classification system.
[[Page 56390]]
Subpart C--Pay and Pay Administration
General
9901.301 Purpose.
9901.302 Coverage.
9901.303 Waivers.
9901.304 Definitions.
9901.305 Rate of pay.
Overview of Pay System
9901.311 Major features.
9901.312 Maximum rates of base salary and adjusted salary.
9901.313 Aggregate compensation limitations.
9901.314 National security compensation comparability.
Rate Ranges and General Salary Increases
9901.321 Structure.
9901.322 Setting and adjusting rate ranges.
9901.323 Eligibility for general salary increase.
Local Market Supplements
9901.331 General.
9901.332 Standard and targeted local market supplements.
9901.333 Setting and adjusting local market supplements.
9901.334 Eligibility for pay increase associated with a supplement
adjustment.
Performance-Based Pay
9901.341 General.
9901.342 Performance payouts.
9901.343 Pay reduction based on unacceptable performance and/or
conduct.
9901.344 Other performance payments.
9901.345 Accelerated Compensation for Developmental Positions
(ACDP).
Pay Administration
9901.351 General.
9901.352 Setting an employee's starting pay.
9901.353 Setting pay upon reassignment.
9901.354 Setting pay upon promotion.
9901.355 Setting pay upon reduction in band.
9901.356 Pay retention.
Premium Pay
9901.361 General provisions.
9901.362 Modification of standard provisions.
9901.363 Premium pay for health care personnel.
9901.364 Foreign language proficiency pay.
Conversion Provisions
9901.371 Conversion into NSPS pay system.
9901.372 Conversion or movement out of NSPS pay system.
Subpart D--Performance Management
9901.401 Purpose.
9901.402 Coverage.
9901.403 Waivers.
9901.404 Definitions.
9901.405 Performance management system requirements.
9901.406 Setting and communicating performance expectations.
9901.407 Minimum period of performance.
9901.408 Employees on time-limited appointments.
9901.409 Monitoring and developing performance.
9901.410 Addressing performance that does not meet expectations.
9901.411 Appraisal period.
9901.412 Rating and rewarding performance.
9901.413 Reconsideration of ratings.
Authority: 5 U.S.C. 9902; sec. 1106(b), Pub. L. 110-181, 122
Stat. 3.
Subpart A--General Provisions
Sec. 9901.101 Purpose.
(a) This part contains regulations governing the National Security
Personnel System (NSPS) within the Department of Defense (DoD), as
authorized by 5 U.S.C. 9902. Consistent with 5 U.S.C. 9902, as amended
by section 1106 of the National Defense Authorization Act for Fiscal
Year 2008 (NDAA 2008), these regulations waive or modify various
statutory provisions that would otherwise be applicable to affected DoD
employees. These regulations are prescribed jointly by the Secretary of
Defense and the Director of the Office of Personnel Management (OPM).
The Secretary may establish implementing issuances to supplement any
matter covered by these regulations.
(b)(1) This part is designed to meet a number of essential
requirements for the implementation of a new human resources management
system for DoD. The guiding principles for establishing these
requirements are to put mission first; respect the individual; protect
rights guaranteed by law; support the statutory merit system principles
in 5 U.S.C. 2301; value talent, performance, leadership, and commitment
to public service; be flexible, understandable, credible, responsive,
and executable; ensure accountability at all levels; balance human
resources system interoperability with unique mission requirements; and
be competitive and cost effective.
(2) The key operational characteristics and requirements of NSPS,
which these regulations are designed to facilitate, are as follows:
High-Performing Workforce and Management--employees and supervisors are
compensated and retained based on their performance and contribution to
mission; Agile and Responsive Workforce and Management--workforce can
be easily sized, shaped, and deployed to meet changing mission
requirements; Credible and Trusted--system assures openness, clarity,
accountability, and adherence to the public employment principles of
merit and fitness; Fiscally Sound--aggregate increases in civilian
payroll, at the appropriations level, will conform to OMB fiscal
guidance; Supporting Infrastructure--information technology support,
and training and change management plans are available and funded; and
Schedule--NSPS will be operational and demonstrate success prior to
November 2009.
Sec. 9901.102 Eligibility and coverage.
(a) Pursuant to the provisions of 5 U.S.C. 9902, civilian employees
of DoD are eligible for coverage under one or more of subparts B
through D of this part, except to the extent specifically prohibited by
law.
(b) At his or her sole and exclusive discretion, the Secretary may
decide to apply subparts B through D to a specific category or
categories of eligible civilian employees in organizations and
functional units of the Department at any time in accordance with the
provisions of 5 U.S.C. 9902, except that no more than 100,000 employees
per year may be moved into NSPS. However, no category of employees may
be covered by subparts B or C of this part unless that category is also
covered by subpart D of this part. DoD will advise OPM in advance
regarding the extension of NSPS coverage to specific categories of DoD
employees under this paragraph. The Secretary will notify affected
employees and labor organizations in accordance with the requirements
of 5 U.S.C. chapter 71 regarding a decision to extend NSPS coverage to
any bargaining unit employees.
(c) Until the Secretary makes a determination under paragraph (b)
of this section to apply the provisions of one or more subparts of this
part to a particular category or categories of eligible employees in
organizations and functional units, those employees will continue to be
covered by the applicable Federal laws and regulations that would apply
to them in the absence of this part. All personnel actions affecting
DoD employees will be based on the Federal laws and regulations
applicable to them on the effective date of the action.
(d) Any new NSPS classification, pay, and performance management
system covering Senior Executive Service (SES) members will be
consistent with the policies and procedures established by the
Governmentwide SES pay-for-performance framework authorized by 5 U.S.C.
chapter 53, subchapter VIII, and applicable OPM regulations. If the
Secretary determines that SES members employed by DoD should be covered
by classification, pay, and performance management provisions that
differ substantially from the Governmentwide
[[Page 56391]]
SES pay-for-performance framework, the Secretary and the Director will
issue joint regulations consistent with all of the requirements of 5
U.S.C. 9902.
(e) At his or her sole and exclusive discretion, the Secretary may
decide to rescind the application of one or more subparts of this part
to a particular category of employees or an organization or functional
unit, subject to Sec. 9901.372 and any related implementing issuances.
The Secretary will notify affected employees and labor organizations in
advance of a decision to rescind the application of one or more
subparts of this part to them.
(f)(1) Notwithstanding any other provision of this part, but
subject to paragraphs (f)(2) and (3) of this section, the Secretary
may, at his or her sole and exclusive discretion, decide to apply one
or more subparts of this part as of a specified effective date to a
category of employees in organizational and functional units not
currently eligible for coverage because of coverage under a system
established by a provision of law outside the waivable or modifiable
chapters of title 5, U.S. Code.
(2) Paragraph (f)(1) of this section applies only if the provision
of law outside those waivable or modifiable title 5 chapters provides
discretionary authority to cover employees under a given waivable or
modifiable title 5 chapter or to cover them under a separate system
established by the Secretary.
(3) In applying paragraph (f)(1) of this section with respect to
coverage under subparts B and C of this part, the affected employees
will be converted directly to the NSPS pay system from their current
pay system. The conversion of such employees into NSPS will be governed
by the rules in Sec. Sec. 9901.231and 9901.371 and applicable
implementing issuances prescribed by the Secretary under Sec. Sec.
9901.231(b) and 9901.371(b).
Sec. 9901.103 Definitions.
In this part:
Appraisal period means the period of time for reviewing employee
performance (as described in Sec. 9901.411).
Band means pay band.
Basic pay means an employee's pay before any deductions and
exclusive of additional pay of any kind, except as expressly provided
by applicable law or regulation. For the specific purposes prescribed
in Sec. 9901.331(d) only, basic pay includes any local market
supplement. In subpart C, when basic pay is exclusive of any additional
pay, the term ``base salary'' is used, and when basic pay includes a
local market supplement, the term ``adjusted salary'' is used.
Career group means a grouping of one or more associated or related
occupations. A career group may include one or more pay schedules.
Comparable pay band or comparable level of work means pay bands
with the equivalent level of work, based on the NSPS classification
structure, within and across varying pay schedules and career groups,
regardless of the specific earning potential of the bands. When moving
from a non-NSPS position to NSPS, the band of the NSPS position is
determined to be at a comparable level of work to the grade or level of
the non-NSPS position based on application of the NSPS classification
structure, as described in implementing issuances.
Competencies means the measurable or observable knowledge, skills,
abilities, behaviors, and other characteristics that an individual
needs to perform a particular job or job function successfully.
Component means the Office of the Secretary of Defense (OSD), the
Military Departments, Office of the Chairman of the Joint Chiefs of
Staff and the Joint Staff, the Combatant Commands, the Office of the
Inspector General of the Department of Defense, the Defense Agencies,
the DoD Field Activities, and all other organizational entities in the
Department of Defense.
Contributing factor means attributes of job performance that are
significant to the accomplishment of individual job objectives.
Contribution means a work product, service, output, or result
provided or produced by an employee or group of employees that supports
the Departmental or organizational mission, goals, or objectives.
Day means a calendar day, unless expressly provided otherwise under
applicable law or regulations.
Department or DoD means the Department of Defense.
Director means the Director of the Office of Personnel Management.
Employee has the meaning given that term in 5 U.S.C. 2105.
General Schedule or GS means the General Schedule classification
and pay system established under chapter 51 and subchapter III of
chapter 53 of title 5, U.S. Code.
Higher pay band or higher level of work means a pay band designated
to be a higher level of work than an employee's currently assigned
band, based on the NSPS classification structure, either within or
across varying pay schedules and career groups, regardless of the
specific earning potential of the band. When moving from a non-NSPS
position to NSPS, the band of the NSPS position is determined to be at
a higher level of work than the grade or level of the non-NSPS position
based on application of the NSPS classification structure, as described
in implementing issuances.
Implementing issuance(s) means a document or documents issued by
the Secretary, Deputy Secretary, Principal Staff Assistants (as
authorized by the Secretary), or Secretaries and Under Secretaries of
the Military Departments to establish or carry out a policy or
procedure implementing this part. These issuances may apply Department-
wide or to any part of DoD as determined by the Secretary.
Job objective means an expression of performance expectations in
the performance plan that is aligned with the organization's goal(s)
and mission(s).
Lower pay band or lower level of work means a pay band designated
to be a lower level of work than an employee's currently assigned band,
based on the NSPS classification structure, either within or across
varying pay schedules and career groups, regardless of the specific
earning potential of the band. When moving from a non-NSPS position to
NSPS, the band of the NSPS position is determined to be at a lower
level of work than the grade or level of the non-NSPS position based on
application of the NSPS classification structure, as described in
implementing issuances.
Military Department means the Department of the Army, the
Department of the Navy, or the Department of the Air Force.
National Security Personnel System (NSPS) means the human resources
management system established under 5 U.S.C. 9902(a) and the
regulations in this part.
Occupational series means a group or family of positions performing
similar types of work. Occupational series are assigned a number for
workforce information purposes (e.g., 0110, Economist Series; 1410,
Librarian Series).
OPM means the Office of Personnel Management.
Pay band or band means a work level and associated pay range within
a pay schedule.
Pay pool means the organizational elements/units or other
categories of employees that are combined for the purpose of
determining performance payouts. Each employee is in only one pay pool
at a time. Pay pool also refers to the funds designated for performance
payouts to employees covered by a pay pool.
[[Page 56392]]
Pay Pool Manager means the management official designated to manage
the pay pool, resolve discrepancies, ensure consistency and equity
within the pay pool, and approve recommendations concerning employee
rating of record, share assignment, and payout distribution between
base salary increases and bonuses.
Pay Pool Panel means management officials of the organizations or
functions represented in the pay pool who assist the Pay Pool Manager
in the reconciliation of recommended ratings of record, share
assignments, and payout distribution. The Pay Pool Panel includes the
Pay Pool Manager.
Pay schedule means a set of related pay bands for a specified
category of employees within a career group.
Performance means accomplishment of work assignments or
responsibilities and contribution to achieving organizational goals,
including an employee's behavior and professional demeanor (actions,
attitude, and manner of performance), as demonstrated by his or her
approach to completing work assignments.
Performance Review Authority means one or more management officials
who manage and oversee the operation of one or more pay pools and
ensure procedural and funding consistency among pay pools under its
authority.
Principal Staff Assistants means senior officials of the Office of
the Secretary who report directly to the Secretary or Deputy Secretary
of Defense.
Promotion means the movement of an employee from one pay band to a
higher pay band while continuously employed. This includes movement of
an employee currently covered by a non-NSPS Federal personnel system to
an NSPS position determined to be at a higher level of work.
Rating of record means the final numerical rating and associated
narrative justification assigned to a performance appraisal by a Pay
Pool Manager--
(1) After completion of an appraisal period covering an employee's
performance of assigned duties against performance expectations over
the applicable period; or
(2) As needed following an unacceptable rating of record to reflect
a substantial and sustained change in the employee's performance since
the last rating of record.
Reassignment means the movement of an employee, either employee-
initiated or management-directed, to a different position or set of
duties in the same or a comparable pay band while continuously
employed. This includes the movement of an employee currently covered
by a non-NSPS Federal personnel system to an NSPS position determined
to be at a comparable level of work.
Reduction in band means the voluntary or involuntary movement of an
employee from one pay band to a lower pay band on a permanent basis
while continuously employed. This includes movement of an employee
currently covered by a non-NSPS Federal personnel system to an NSPS
position determined to be at a lower level of work.
Secretary means the Secretary of Defense, consistent with 10 U.S.C.
113.
SES means the Senior Executive Service established under 5 U.S.C.
chapter 31, subchapter II.
SL/ST refers to an employee serving in a senior-level position paid
under 5 U.S.C. 5376. The term ``SL'' identifies a senior-level employee
covered by 5 U.S.C. 3324 and 5108. The term ``ST'' identifies an
employee who is appointed under the special authority in 5 U.S.C. 3325
to a scientific or professional position established under 5 U.S.C.
3104.
Unacceptable performance means performance of an employee which
fails to meet one or more performance expectations, as amplified
through work assignments or other instructions, for which the employee
is held individually accountable.
Sec. 9901.104 Scope of authority.
The authority for this part is 5 U.S.C. 9902. The provisions in the
following chapters of title 5, U.S. Code, and any related regulations,
may be waived or modified in exercising the authority in 5 U.S.C. 9902:
(a) Chapter 43, dealing with performance appraisal systems;
(b) Chapter 51, dealing with General Schedule job classification;
(c) Chapter 53, dealing with pay for General Schedule employees,
and pay for certain other employees, except as provided in Sec.
9901.303; and
(d) Chapter 55, subchapter V, dealing with premium pay, except
sections 5544 and 5545b.
Sec. 9901.105 OPM coordination and approval.
(a) The Secretary will coordinate with or request approval from OPM
in advance, as applicable, regarding the proposed promulgation of
certain implementing issuances and certain other actions related to the
ongoing operation of the NSPS where such actions could have a
significant impact on other Federal agencies and the Federal civil
service as a whole. Pre-decisional coordination under paragraph (b) of
this section is intended as an internal DoD/OPM matter to recognize the
Secretary's special authority to direct the operations of DoD pursuant
to title 10, U.S. Code, as well as the Director's institutional
responsibility to oversee the Federal civil service system pursuant to
5 U.S.C. chapter 11. Approval from OPM is required in certain
circumstances, as provided in paragraph (c) of this section.
(b) DoD will coordinate with OPM prior to--
(1) Establishing or substantially revising career groups,
occupational pay schedules, and pay bands under Sec. Sec. 9901.211 and
9901.212(a);
(2) Establishing alternative or additional qualification standards
for a particular occupational series, career group, occupational pay
schedule, and/or pay band under Sec. 9901.212(d) that significantly
differ from Governmentwide standards;
(3) Establishing alternative or additional occupational series for
a particular career group or occupation under Sec. 9901.221(b)(1) that
differ from Governmentwide series and/or standards;
(4) Establishing alternative or additional classification criteria
for a particular career group or occupation under Sec. 9901.221(b)(1)
that differ from Governmentwide classification standards;
(5) Establishing maximum rates of base salary under Sec.
9901.312(a);
(6) Establishing a higher adjusted salary rate cap for a designated
category of positions under Sec. 9901.312(d);
(7) Approving waivers under Sec. 9901.313(a)(3) of the normally
applicable aggregate compensation limit;
(8) Establishing and adjusting pay ranges for occupational pay
schedules and pay bands under Sec. Sec. 9901.321(a) and 9901.322;
(9) Determining targeted general salary increases under Sec.
9901.323(a)(2); and
(10) Establishing and adjusting targeted local market supplements
under Sec. Sec. 9901.332(c) and 9901.333(b).
(c) The Secretary will request approval from the Director prior
to--
(1) Establishing policies regarding the student loan repayment
program under Sec. 9901.303(c) that differ from Governmentwide
policies with respect to repayment amounts and service commitments;
(2) Approving waivers of normally applicable premium pay
limitations, as authorized under Sec. 9901.362(a)(2);
[[Page 56393]]
(3) Determining pay bands for which an FLSA-exempt employee is paid
overtime at an hourly rate equal to the employee's adjusted base salary
hourly rate, as authorized under Sec. 9901.362(b)(6)(i); and
(4) Establishing new hazardous duty pay categories under Sec.
9901.362(i)(3).
(d) When a matter requiring OPM coordination is submitted to the
Secretary for decision, the Director will be provided an opportunity,
as part of the Department's normal coordination process, to review and
comment on the recommendations and officially concur or nonconcur with
all or part of them. The Secretary will take the Director's comments
and concurrence/nonconcurrence into account, advise the Director of his
or her determination, and provide the Director with reasonable advance
notice of the effective date of the matter. Thereafter, the Secretary
and the Director may take such action as they deem appropriate,
consistent with their respective statutory authorities and
responsibilities.
(e) The Secretary and the Director fully expect their staffs to
work closely together on the matters specified in this section, before
such matters are submitted for official OPM coordination or approval
and DoD decision, so as to maximize the opportunity for consensus and
agreement before an issue is so submitted.
Sec. 9901.106 Relationship to other provisions.
(a)(1) The provisions of title 5, U.S. Code, are waived, modified,
or replaced to the extent authorized by 5 U.S.C. 9902 to conform to the
provisions of this part.
(2) This part must be interpreted in a way that recognizes the
critical national security mission of the Department, and each
provision of this part must be construed to promote the swift,
flexible, effective day-to-day accomplishment of this mission, as
defined by the Secretary.
(b)(1) For the purpose of applying other provisions of law or
Governmentwide regulations that reference provisions under chapters 43,
51, 53, and 55 (subchapter V only), of title 5, U.S. Code, the
referenced provisions are not waived but are modified consistent with
the corresponding regulations in this part, except as otherwise
provided in this part (including paragraph (c) of this section) or in
implementing issuances.
(2) If another provision of law or Governmentwide regulations
require coverage under one of the chapters modified or waived under
this part (i.e., chapters 43, 51, 53, and 55 (subchapter V only) of
title 5, U.S. Code), DoD employees are deemed to be covered by the
applicable chapter notwithstanding coverage under a system established
under this part. Selected examples of provisions that continue to apply
to any DoD employees (notwithstanding coverage under subparts B through
D of this part) include, but are not limited to, the following:
(i) Foreign language awards for law enforcement officers under 5
U.S.C. 4521 through 4523;
(ii) Pay for firefighters under 5 U.S.C. 5545b; and
(iii) Recruitment, relocation, and retention payments under 5
U.S.C. 5753 through 5754.
(c)(1) Law enforcement officer special base rates under section 403
of the Federal Employees Pay Comparability Act of 1990 (section 529 of
Pub. L. 101-509) do not apply to employees who are covered by an NSPS
classification and pay system established under subparts B and C of
this part.
(2) Physicians' comparability allowances under 5 U.S.C. 5948 do not
apply to employees covered by an NSPS classification and pay system
established under subparts B and C of this part.
(d) Nothing in this part waives, modifies or otherwise affects the
employment discrimination laws that the Equal Employment Opportunity
Commission (EEOC) enforces under 42 U.S.C. 2000e et seq., 29 U.S.C. 621
et seq., 29 U.S.C. 791 et seq., and 29 U.S.C. 206(d).
Sec. 9901.107 Program evaluation.
The Secretary will evaluate the regulations in this part and their
implementation.
Subpart B--Classification
General
Sec. 9901.201 Purpose.
(a) This subpart establishes a classification structure and rules
for covered DoD employees and positions to replace the classification
structure and rules in 5 U.S.C. chapter 51, in accordance with the
merit system principle that equal pay should be provided for work of
equal value, with appropriate consideration of both national and local
rates paid by employers in the private sector, and with appropriate
incentives and recognition provided for excellence in performance.
(b) The basis for determining the appropriate classification under
NSPS is the primary duties and responsibilities of the position, level
of difficulty, occupational qualifications, competency requirements,
mission of the organization, and relationship of the position to other
positions or organizational levels.
(c) Any classification system prescribed under this subpart will be
established in conjunction with the pay system described in subpart C
of this part.
Sec. 9901.202 Coverage.
(a) This subpart applies to eligible DoD employees and positions
listed in paragraph (b) of this section, subject to a determination by
the Secretary under Sec. 9901.102(b) or (f).
(b) The following employees of, or positions in, DoD organizational
and functional units are eligible for coverage under this subpart:
(1) Employees and positions that would otherwise be covered by the
General Schedule classification system established under 5 U.S.C.
chapter 51;
(2) Employees in senior-level (SL) and scientific or professional
(ST) positions who would otherwise be covered by 5 U.S.C. 5376;
(3) Members of the Senior Executive Service (SES) who would
otherwise be covered by 5 U.S.C. chapter 53, subchapter VIII, subject
to Sec. 9901.102(d); and
(4) Such others designated by the Secretary as DoD may be
authorized to include under 5 U.S.C. 9902.
Sec. 9901.203 Waivers.
(a) When a specified category of employees is covered by a
classification system established under this subpart, the provisions of
5 U.S.C. chapter 51 are waived with respect to that category of
employees, except as provided in paragraph (b) of this section,
Sec. Sec. 9901.106, and 9901.222(d) (with respect to OPM's authority
to act on requests for classification decisions under 5 U.S.C. 5112(b)
and review of pay plans under 5 U.S.C. 5103).
(b) Section 5108 of title 5, U.S. Code, dealing with the
classification of positions above GS-15, is not waived for the purpose
of defining and allocating Senior Executive Service (SES) positions
under 5 U.S.C. 3132 and 3133 or applying provisions of law outside the
waivable and modifiable chapters of title 5, U.S. Code--e.g., 5 U.S.C.
4507 and 4507a (regarding Presidential rank awards), 5 U.S.C. 6303(f)
(regarding annual leave accrual for members of the SES and employees in
SL/ST positions), and 5 U.S.C. 6304(f) (regarding annual leave ceilings
for members of the SES and employees in SL/ST positions).
Sec. 9901.204 Definitions.
In this subpart:
[[Page 56394]]
Band has the meaning given that term in Sec. 9901.103.
Basic pay has the meaning given that term in Sec. 9901.103.
Career group has the meaning given that term in Sec. 9901.103.
Classification, also referred to as job evaluation, means the
process of analyzing and assigning a job or position to an occupational
series, official title, career group, pay schedule, and pay band for
pay and other related purposes.
Competencies has the meaning given that term in Sec. 9901.103.
Occupational series has the meaning given that term in Sec.
9901.103.
Official title means the position title prescribed in an NSPS
classification standard or by supplemental Component guidance.
Pay band or band has the meaning given that term in Sec. 9901.103.
Pay schedule has the meaning given that term in Sec. 9901.103.
Position or job means the duties, responsibilities, and related
competency requirements that are assigned to an employee.
Classification Structure
Sec. 9901.211 Career groups.
For the purpose of classifying positions, the Secretary may
establish career groups based on factors such as mission or function;
nature of work; qualifications or competencies; career or pay
progression patterns; relevant labor-market features; and other
characteristics of those occupations or positions. The Secretary will
document in implementing issuances the criteria and rationale for
grouping occupations or positions into career groups.
Sec. 9901.212 Pay schedules and pay bands.
(a) For purposes of identifying relative levels of work and
corresponding pay ranges, the Secretary may establish one or more pay
schedules within each career group.
(b) Each pay schedule may include one or more pay bands.
(c) The Secretary will document in implementing issuances the
definitions for each pay band which specify the type and range of
difficulty and responsibility, qualifications or competencies, or other
characteristics of the work encompassed by the pay band.
(d) The Secretary will--
(1) Use qualification standards established or approved by OPM, or
establish qualification standards for positions covered by NSPS,
subject to Sec. 9901.105(b)(2); and
(2) Designate qualification standards and requirements for each
career group, occupational series, pay schedule, and/or pay band.
Classification Process
Sec. 9901.221 Classification requirements.
(a) The Secretary will develop a methodology for describing and
documenting the duties, qualifications, and other requirements of
categories of jobs, and will make such descriptions and documentation
available to affected employees.
(b) The Secretary will--
(1) Assign occupational series to jobs consistent with occupational
series definitions established by OPM under 5 U.S.C. 5105, or by DoD;
and
(2) Apply the criteria and definitions required by Sec. Sec.
9901.211 and 9901.212 to assign jobs to an appropriate career group,
pay schedule, and pay band.
(c) The Secretary will establish procedures for classifying jobs
and may make such inquiries of the duties, responsibilities, and
qualification requirements of jobs as he or she considers necessary for
the purpose of this section.
(d) A classification action is implemented by a personnel action,
which, for encumbered positions, must be taken within a reasonable
period of time following the effective date of the position
classification action. For classification actions resulting from a DoD
appeal decision, the personnel action must occur within four pay
periods following the effective date of the decision, except when a
subsequent date is specifically provided in the decision. If a
classification action results in a reduction in an employee's pay band
or adjusted salary, the employee must be advised, in writing, of the
action and proposed effective date of the personnel action at least 7
days before the personnel action is taken. The written notice will
inform the employee of the reason for the reclassification, the right
to appeal the classification decision, and the time limitations in
Sec. 9901.223 within which the appeal must be filed to preserve
applicable retroactive benefits.
(e) Except as otherwise provided in this paragraph or required by
law, the effective date of a classification action is the date the
authorized management official certifies the classification decision
(i.e., signs or electronically validates the position description).
(1) A retroactive effective date for a classification action and
the implementing personnel action is permitted only if the action
resulted in a reduction in pay band or adjusted salary and if that
action is subsequently reversed on appeal.
(2) In order for a corrective action to be retroactive, the
employee must file an initial request for review of the classification
action with DoD or OPM not later than 15 calendar days after the
personnel action effective date for the reduction in pay band or
adjusted salary.
(3) A retroactive date may be established only if the appeal
reversal is based on the duties and responsibilities performed at the
time of reduction. Retroactive action is mandatory under these
circumstances.
Sec. 9901.222 Review of classification decisions.
(a) An individual employee may request that DoD or OPM review the
classification (i.e., pay system, career group, occupational series,
official title, pay schedule, or pay band) of his or her official
position of record at any time.
(b) Under this section, an employee may not appeal to either DoD or
OPM the issues designated as nonappealable to the Office of Personnel
Management in 5 CFR 511.607 or the accuracy of NSPS pay schedule and
pay band classification criteria. Additional nonappealable issues
covered under NSPS include--
(1) Classification of a proposed position or one to which the
employee is not officially assigned;
(2) Classification of a position to which an employee is detailed,
temporarily reassigned, or temporarily promoted, except for employees
serving under a time-limited promotion or reassignment for 2 years or
more;
(3) Accuracy of the official position description, including the
inclusion or exclusion of a duty (subject to paragraph (c) of this
section);
(4) Classification of a position based on position-to-position
comparisons rather than the NSPS classification criteria;
(5) Classification of a position for which a DoD or an OPM appeal
decision was previously rendered unless there is a later change in the
governing classification criteria or a material change in the
requirements of the position; and
(6) The accuracy of career group, pay band, or pay schedule
classification criteria or standards contained in DoD issuances.
(c) When the accuracy of the official position description is
questioned by the employee, the employee will be advised to raise this
issue informally with the employee's supervisor or file a grievance
using the applicable administrative or negotiated grievance procedure.
If the employee elects to first raise this issue with the employee's
[[Page 56395]]
supervisor and the employee and the supervisor cannot resolve this
issue, the accuracy of the position description may be determined using
the applicable administrative or negotiated grievance procedure. If,
after completing this procedure, the issue is not resolved, the
classification appeal, if any, will be decided on the basis of the
actual duties and responsibilities assigned by management and performed
by the employee.
(d) An employee may request that OPM review a DoD determination
made under paragraph (a) of this section. If an employee does not
request an OPM review, DoD's classification determination is final and
not subject to further review or appeal.
(e) Any determination made under this section will be based on
criteria issued by the Secretary.
Sec. 9901.223 Appeal to DoD for review of classification decisions.
(a) Employee representation. An employee may designate in writing a
representative of his or her choice to assist in the preparation and
presentation of an appeal. A management official may disallow an
employee's representative when--
(1) An individual's activities as a representative would cause a
conflict of interest or position;
(2) An employee cannot be released from his or her official duties
because of the priority needs of the Government; or
(3) An employee's release would give rise to unreasonable costs to
the Government.
(b) DoD classification appeal process. (1) Employee appeals to DoD
must be submitted through the employee's servicing Human Resources
Office.
(2) An employee may file a classification appeal at any time. When
the issue involves a classification action that resulted in a reduction
in band or adjusted salary, to preserve any entitlement to retroactive
pay, the employee must file any DoD classification appeal no later than
15 calendar days after the effective date of the personnel action. When
an employee shows that he or she did not receive notice of the
applicable time limit, or personnel action, or was prevented from
timely filing by circumstances beyond the employee's control, the
deciding official may grant an extension of the appeal period.
(3) An employee must provide the following documentation when
filing an appeal:
(i) The employee's name, mailing address, and office telephone and
fax numbers;
(ii) The employing Component and the exact location of the
employee's position within the Component (installation name, mailing
address, organization, division, branch, section, unit);
(iii) The name, address, and business telephone and fax numbers of
the employee's representative, if any;
(iv) A statement of the employee's requested pay system, official
position title, occupational series, pay schedule, and/or pay band; and
(v) Reasons why the employee believes the position is incorrectly
classified.
(4) The employee must refer to classification standards that
support the appeal and state specific points of disagreement with the
current classification. The employee may also include a statement of
facts that he or she thinks may affect the final classification
decision.
(c) Binding decisions. DoD appeal decisions constitute certificates
that are binding on all administrative, certifying, payroll,
disbursing, and accounting offices within DoD.
(d) Cancellation. (1) An employee or representative may cancel an
appeal at any time before DoD issues a decision by providing written
notification to the DoD deciding official.
(2) DoD may cancel an appeal if any of the following occur:
(i) The employee, or his or her representative, does not furnish
requested information within the required time period;
(ii) The employee is no longer officially assigned to, or is
removed from, the position and there is no entitlement to retroactive
benefits;
(iii) The duties and responsibilities of the position are
significantly changed while the case is pending and there is no
entitlement to retroactive benefits; or
(iv) The position is abolished and there is no entitlement to
retroactive benefits.
Sec. 9901.224 Appeal to OPM for review of classification decisions.
(a) An employee's request for OPM review of DoD classification
determination will follow the procedures in 5 CFR part 511, subpart F--
Classification Appeals.
(b) Effective dates of OPM classification appeal decisions will be
consistent with 5 CFR 511.702.
(c) Employee appeals to OPM may be submitted directly to OPM.
(d) OPM's final determination on an appeal made under this section
is not subject to further review or appeal.
Transitional Provisions
Sec. 9901.231 Conversion of positions and employees to NSPS
classification system.
(a) Introduction. This section describes the transitional
provisions that apply when DoD positions and employees initially are
converted to a classification system established under this subpart.
(See Sec. 9901.371 for conversion rules related to setting an
employee's pay.) Positions and employees in affected organizational or
functional units may convert from the GS system, the SL/ST system, the
SES system, or such other DoD systems as may be designated by the
Secretary, as provided in Sec. 9901.202. For the purpose of this part,
the terms ``convert,'' ``converted,'' ``converting,'' and
``conversion'' refer to positions and employees that become covered by
the NSPS classification system as a result of a coverage determination
made under Sec. 9901.102(b) and excludes employees who move from a
noncovered position to a position already covered by NSPS.
(b) Implementing issuances. The Secretary will issue implementing
issuances prescribing policies and procedures for converting DoD
employees to a pay band upon initial implementation of the NSPS
classification system. Those issuances will establish the work level
conversion tables used to place an employee in a pay band based on the
level of work of the employee's position in the formerly applicable pay
system.
(c) Temporary promotion prior to conversion. An employee on a
temporary promotion at the time of conversion will be returned to his
or her official position of record prior to processing the conversion.
That official position of record (including occupational series and
grade) is used in determining the employee's career group, pay
schedule, and band upon conversion.
(d) Grade retention prior to conversion. For an employee who is
entitled to grade retention immediately before conversion, the grade of
the actual position of record (not the grade being retained) is used in
determining the employee's band upon conversion.
Subpart C--Pay and Pay Administration
General
Sec. 9901.301 Purpose.
(a) This subpart contains regulations establishing pay structures
and pay administration rules for covered DoD employees to replace the
pay structures and pay administration rules established under 5 U.S.C.
chapter 53
[[Page 56396]]
and 5 U.S.C. chapter 55, subchapter V, as authorized by 5 U.S.C. 9902
(subject to the limitations on waivers in Sec. 9901.303). Various
features that link pay to employees' performance ratings are designed
to promote a high-performance culture within DoD.
(b) Any pay system prescribed under this subpart will be
established in conjunction with the classification system described in
subpart B of this part.
(c) Any pay system prescribed under this subpart will be
established in conjunction with the performance management system
described in subpart D of this part.
Sec. 9901.302 Coverage.
(a) This subpart applies to eligible DoD employees and positions in
the categories listed in paragraph (b) of this section, subject to a
determination by the Secretary under Sec. 9901.102(b) or (f).
(b) The following employees of, or positions in, DoD organizational
and functional units are eligible for coverage under this subpart:
(1) Employees and positions who would otherwise be covered by the
General Schedule pay system established under 5 U.S.C. chapter 53,
subchapter III;
(2) Employees in senior-level (SL) and scientific or professional
(ST) positions who would otherwise be covered by 5 U.S.C. 5376;
(3) Members of the Senior Executive Service (SES) who would
otherwise be covered by 5 U.S.C. chapter 53, subchapter VIII, subject
to Sec. 9901.102(d); and
(4) Such others designated by the Secretary as DoD may be
authorized to include under 5 U.S.C. 9902.
Sec. 9901.303 Waivers.
(a) When a specified category of employees is covered under this
subpart--
(1) The provisions of 5 U.S.C. chapter 53 are waived with respect
to that category of employees, except as provided in Sec. 9901.106 and
paragraphs (b) and (c) of this section; and
(2) The provisions of 5 U.S.C. chapter 55, subchapter V (except
sections 5544 and 5545b), are waived with respect to that category of
employees to the extent that those employees are covered by alternative
premium pay provisions established by the Secretary under Sec. Sec.
9901.361 through 9901.364 in lieu of the provisions in 5 U.S.C. chapter
55, subchapter V.
(b) The following provisions of 5 U.S.C. chapter 53 are not waived:
(1) Sections 5311 through 5318, dealing with Executive Schedule
positions;
(2) Sections 5341 through 5349, dealing with prevailing rate
systems;
(3) Section 5371, insofar as it authorizes OPM to apply the
provisions of 38 U.S.C. chapter 74 to DoD employees in health care
positions covered by section 5371 in lieu of any NSPS classification
and pay system established under this part or the following provisions
of title 5, U.S. Code: chapters 51, 53, and 61, and subchapter V of
chapter 55. The reference to ``chapter 51'' in section 5371(c) is
deemed to include a classification system established under subpart B
of this part; and
(4) Section 5377, dealing with the critical pay authority.
(c) Section 5379 continues to apply but is modified to allow the
Secretary to modify the minimum service period and the limitations on
the amount of student loan benefits in order to address critical hiring
needs, subject to Sec. 9901.105.
Sec. 9901.304 Definitions.
In this subpart:
Adjusted salary means an NSPS employee's base salary plus any local
market supplement paid to that employee. For an employee moving into
NSPS from a non-NSPS position, adjusted salary also refers to non-NSPS
base salary plus any applicable locality pay under 5 U.S.C. 5304,
special rate supplement under 5 U.S.C. 5305, or any equivalent
supplement.
Band has the meaning given that term in Sec. 9901.103.
Base salary means an NSPS employee's pay, as set by the authorized
management official, before deductions and exclusive of additional pay
of any kind (e.g., local market supplement). For an employee moving
into NSPS from a non-NSPS position, base salary also refers to non-NSPS
pay, before deductions and exclusive of additional pay of any kind
(e.g., locality pay or a special rate supplement).
Basic pay has the meaning given that term in Sec. 9901.103.
Bonus means an element of the performance payout that consists of a
one-time lump-sum payment made to employees. It is not part of basic
pay for any purpose.
Career group has the meaning given that term in Sec. 9901.103.
Comparable pay band or comparable level of work has the meaning
given in Sec. 9901.103.
Competencies has the meaning given that term in Sec. 9901.103.
Component has the meaning given that term in Sec. 9901.103.
Contributing factor has the meaning given that term in Sec.
9901.103.
Contribution has the meaning given that term in Sec. 9901.103.
Contribution assessment means the determination made by the Pay
Pool Manager as to the impact, extent, and scope of contribution that
the employee's performance made to the accomplishment of the
organization's mission and goals.
CONUS or Continental United States means the States of the United
States, excluding Alaska and Hawaii, but including the District of
Columbia.
Day has the meaning given that term in Sec. 9901.103.
Department or DoD has the meaning given in Sec. 9901.103.
Employee has the meaning given that term in Sec. 9901.103.
General Schedule or GS has the meaning given that term in Sec.
9901.103.
Implementing issuance(s) has the meaning given that term in Sec.
9901.103.
Local market supplement means a geographic- and occupation-based
supplement paid in addition to an employee's base salary, including a
standard local market supplement or a targeted local market supplement,
as described in Sec. 9901.332.
Modal rating means, for the purpose of pay administration, the most
frequent rating of record assigned to employees within a particular pay
pool for a particular rating cycle.
National Security Personnel System (NSPS) has the meaning given
that term in Sec. 9901.103.
Occupational series has the meaning given that term in Sec.
9901.103.
OPM has the meaning given that term in Sec. 9901.103.
Official worksite has the meaning given that term in 5 CFR 531.605.
Pay band or band has the meaning given that term in Sec. 9901.103.
Pay pool has the meaning given that term in Sec. 9901.103.
Pay Pool Manager has the meaning given that term in Sec. 9901.103.
Pay Pool Panel has the meaning given that term in Sec. 9901.103.
Pay schedule has the meaning given that term in Sec. 9901.103.
Performance has the meaning given that term in Sec. 9901.103.
Performance payout means the total monetary value of a performance
pay increase and bonus provided under Sec. 9901.342.
Performance Review Authority has the meaning given that term in
Sec. 9901.103.
Performance share means a unit of performance payout awarded to an
employee based on performance. Performance shares may be awarded in
multiples based on the employee's rating of record and specified
factors, as provided in Sec. 9901.342(f).
Performance share value means a calculated value for each
performance
[[Page 56397]]
share based on pay pool funds available and the distribution of
performance shares across employees within a pay pool, expressed as a
percentage of base salary.
Premium pay means payments for work performed under special
conditions or circumstances, as authorized under 5 U.S.C. chapter 55,
subchapter V, or Sec. Sec. 9901.361 through 9901.364 (including
compensatory time off).
Promotion has the meaning given that term in Sec. 9901.103.
Rate range means the range of base salary rates applicable to
employees in a particular pay band, as described in Sec. 9901.321.
Each rate range is defined by a minimum and maximum base salary rate.
Rating of record has the meaning given that term in Sec. 9901.103.
Reassignment has the meaning given that term in Sec. 9901.103.
Reduction in band has the meaning given that term in Sec.
9901.103.
Retained rate means a retained base salary rate (i.e., excluding
any local market supplement) above the applicable pay band maximum rate
as established for an NSPS employee under the pay retention provisions
in Sec. 9901.356. For GS employees, retained rate has the meaning
given that term in 5 CFR part 536.
Secretary has the meaning given that term in Sec. 9901.103.
Standard local market supplement means the local market supplement
that applies to employees in a given pay schedule or band who are
stationed within a specified local market area (the boundaries of which
are defined under Sec. 9901.332(b)), unless a targeted local market
supplement applies. Standard local market supplements are generally
administered for covered employees in the same manner as locality-based
comparability payments under 5 U.S.C. 5304 and 5304a.
Sub pay pool means a subset of a pay pool that is defined for the
purpose of reconciling ratings of record, share assignments, and payout
determinations.
Targeted local market supplement means a local market supplement
established to address recruitment or retention difficulties or for
other appropriate reasons and which applies to a defined category of
employees (based on occupation or other appropriate factors) in lieu of
any lower standard local market supplement that would otherwise apply.
Unacceptable performance has the meaning given that term in Sec.
9901.103.
Sec. 9901.305 Rate of pay.
(a) The term ``rate of pay'' in 5 U.S.C. 9902(e)(9) means--
(1) An individual employee's base salary rate, local market
supplement rate, and overtime and other premium pay rates (including
compensatory time off); and
(2) The rates comprising the structure of the pay system that
govern the setting and adjusting of the individual employee rates
identified in paragraph (a)(1) of this section, including, but not
limited to--
(i) Band rate range minimum and maximum rates;
(ii) Control points within a band rate range;
(iii) Local market supplement rates;
(iv) Maximum rates of base salary and adjusted salary;
(v) Premium pay rates; and
(vi) The percentage rate of total base salary payroll constituting
the portion of a pay pool applied to provide performance-based
increases in employees' base salary rates.
(b) For the purpose of 5 U.S.C. 9902(e)(9), the establishment or
adjustment of a rate of pay includes the establishment or adjustment of
the amount or level of the rate and of the eligibility requirements
associated with the type and level of pay in question. Illustrative
examples of actions that establish or adjust a rate of pay include, but
are not limited to, the following:
(1) Establishing the starting base salary rate for a newly hired
employee;
(2) Establishing a retained rate for an employee under Sec.
9901.356(e);
(3) Adjusting an employee's base salary rate through various pay
actions, including general salary increases, targeted general salary
increases, performance pay increases, extraordinary performance
recognition increases, organizational or team achievement recognition
increases, pay reductions for unacceptable performance or conduct,
reassignment increases and decreases, promotion increases, within-grade
increase adjustments, and accelerated compensation for developmental
positions (ACDP) increases;
(4) Establishing or adjusting the minimum or maximum rate of a band
rate range or control points within that range;
(5) Establishing or adjusting the percentage amount of a targeted
local market supplement, as well as the geographic area and other
coverage requirements associated with that supplement;
(6) Establishing a higher premium pay limit under Sec.
9901.362(a)(2);
(7) Establishing an overtime rate equal to an employee's adjusted
salary rate under Sec. 9901.362(b)(6)(i);
(8) Establishing a new hazardous duty premium rate under
9901.362(i)(3); and
(9) Establishing the percentage rate of total base salary payroll
constituting the portion of a pay pool applied to provide performance-
based increases in employees' base salary rates.
Overview of Pay System
Sec. 9901.311 Major features.
Through the issuance of implementing issuances, the Secretary will
further define a pay system that governs the setting and adjusting of
covered employees' rates of base salary and adjusted salary and the
setting of covered employees' rates of premium pay. The NSPS pay system
will include the following features:
(a) A structure of rate ranges linked to various pay bands for each
career group, in alignment with the classification structure described
in subpart B of this part;
(b) Policies regarding the setting and adjusting of band rate
ranges based on mission requirements, labor market conditions, and
other factors, as described in Sec. Sec. 9901.321 and 9901.322;
(c) Policies regarding the setting and adjusting of local market
supplements as described in Sec. Sec. 9901.331 through 9901.333;
(d) Policies regarding employees' eligibility for general salary
increases and adjustments in local market supplements, as described in
Sec. Sec. 9901.323 and 9901.334;
(e) Policies regarding performance-based pay, as described in
Sec. Sec. 9901.341 through 9901.345;
(f) Policies on base salary administration, including movement
between career groups, positions, pay schedules, and pay bands, as
described in Sec. Sec. 9901.351 through 9901.356;
(g) Linkages to employees' ratings of record, as described in
subpart D of this part; and
(h) Policies regarding the setting of and limitations on premium
payments, as described in Sec. Sec. 9901.361 through 9901.364.
Sec. 9901.312 Maximum rates of base salary and adjusted salary.
(a) Subject to Sec. 9901.105, the Secretary may establish a
limitation on the maximum rate of base salary provided under authority
of this subpart.
(b) No employee may receive, under authority of this subpart, an
adjusted salary rate greater than the rate for level IV of the
Executive Schedule plus 5 percent. The payable local market
[[Page 56398]]
supplement for an employee must be reduced as necessary to comply with
this limitation.
(c) Paragraphs (a) and (b) of this section do not apply to
physicians and dentists (in occupational series 0602 and 0680,
respectively).
(d) Subject to Sec. 9901.105, the Secretary may establish a higher
adjusted salary rate limitation for a specified category of positions
in lieu of the limitation in paragraph (b) of this section based on
mission requirements, labor market conditions, availability of funds,
and any other relevant factors.
Sec. 9901.313 Aggregate compensation limitations.
(a) General. (1) Except as provided in paragraphs (a)(2) and (a)(3)
of this section, no additional payment (premium pay, allowance,
differential, bonus, award, or other similar cash payment) may be paid
to an employee in a calendar year if, or to the extent that, when added
to the adjusted salary paid to the employee for service performed as an
employee in the Department or in another Federal agency, the payment
would cause the total aggregate compensation to exceed the annual rate
for Executive Level I as in effect on the last day of that calendar
year.
(2) In the case of physicians and dentists (in occupational series
0602 and 0680, respectively) payment to the employee may not cause
aggregate compensation received in a calendar year to exceed the salary
of the President of the United States as in effect on the last day of
that calendar year.
(3) Subject to Sec. 9901.105, the Secretary may provide for a
higher aggregate compensation limitation equal to the annual rate
payable to the Vice President under 3 U.S.C. 104 as in effect on the
last day of the calendar year in the case of specified categories of
employees for whom a waiver has been authorized under Sec.
9901.362(a)(2).
(4) The limitation described in this paragraph (a) applies to the
total amount of aggregate compensation actually received by an employee
during the calendar year without regard to the period of service for
which such compensation is earned.
(b) Types of compensation. For the purpose of this section,
aggregate compensation is the total of--
(1) Adjusted salary received as an employee of the Department;
(2) Premium pay under 5 U.S.C. chapter 55, subchapter V, and this
subpart;
(3) Incentive awards and performance-based cash awards under 5
U.S.C. 4501-4523 and this part;
(4) Recruitment and relocation incentives under 5 U.S.C. 5753;
(5) Retention incentives under 5 U.S.C. 5754;
(6) Supervisory differentials under 5 U.S.C. 5755;
(7) Post differentials under 5 U.S.C. 5925;
(8) Danger pay allowances under 5 U.S.C. 5928;
(9) Extended assignment incentives under 5 U.S.C. 5757;
(10) Post differentials based on environmental conditions for
employees stationed outside the continental United States or in Alaska
under 5 U.S.C. 5941(a)(2);
(11) Foreign language proficiency pay under 10 U.S.C. 1596 and
1596a;
(12) Continuation of pay under 5 U.S.C. 8118;
(13) Other similar payments authorized under title 5, United States
Code, excluding--
(i) Back pay due to an unjustified personnel action under 5 U.S.C.
5596 (but only if the back payments were originally payable in a
previous calendar year);
(ii) Overtime pay under the Fair Labor Standards Act of 1938, as
amended (29 U.S.C. 201-219 and 5 CFR part 551);
(iii) Severance pay under 5 U.S.C. 5595;
(iv) Nonforeign area cost-of-living allowances under 5 U.S.C.
5941(a)(1); and
(v) Lump-sum payments for accumulated and accrued annual leave on
separation under 5 U.S.C. 5551 or 5552; and
(14) Payments received from another agency during the calendar
year, prior to employment with the Department, that are subject to 5
U.S.C. 5307.
(c) Administration of aggregate limitation. (1) At the time a
payment covered by paragraph (b) of this section (other than adjusted
salary) is authorized for an employee, the employee may not receive any
portion of such payment that, when added to the estimated aggregate
compensation the employee is projected to receive, would cause the
aggregate compensation actually received by the employee during the
calendar year to exceed the limitation applicable to the employee under
this section at the end of the calendar year.
(2) Payments that are creditable for retirement purposes (e.g., law
enforcement availability pay (LEAP) or standby premium pay) and that
are paid to an employee at a regular fixed rate each pay period may not
be deferred or discontinued for any period of time in order to make
another payment that would otherwise cause an employee's pay to exceed
any limitation described in or established by this section.
(3) Except for physicians and dentists (in occupational series 0602
and 0680, respectively), if the estimated aggregate compensation to
which an employee is entitled exceeds the applicable limitation under
this section for the calendar year, the Department must defer all
authorized payments (other than adjusted salary) at the time when
otherwise continuing such payments would cause the aggregate
compensation actually received by any employee during the calendar year
to exceed the applicable limitation. Any portion of a payment deferred
under this paragraph will become available for payment as provided in
paragraph (d) of this section. For physicians and dentists (in
occupational series 0602 and 0680, respectively), payments that exceed
the limitation under paragraph (a)(2) of this section may not be made
at any time.
(4) If the Department makes an incorrect estimate of aggregate
compensation at an earlier date in the calendar year, the sum of an
employee's remaining payments of adjusted salary (which may not be
deferred) may exceed the difference between the aggregate compensation
the employee has actually received to date in that calendar year and
the applicable limitation under this section. In this case, the
employee will become indebted to the Department for any amount paid in
excess of the aggregate limitation. To the extent that the excess
amount is attributable to amounts that should have been deferred and
would have been payable at the beginning of the next calendar year, the
debt must be nullified on January 1 of the next calendar year. As part
of the correction of the error, the excess amount will be deemed to
have been paid on January 1 of the next calendar year (when the debt
was extinguished) as if it were a deferred excess payment as described
in paragraph (c)(3) of this section and must be considered part of the
employee's aggregate compensation for the new calendar year.
(d) Payment of excess amounts. (1) Except for physicians and
dentists (in occupational series 0602 and 0680, respectively), any
amount that is not paid to an employee because of the annual aggregate
compensation limitation under this section must be paid in a lump-sum
payment at the beginning of the following calendar year. Any amount
paid the following calendar year will be taken into account for
purposes of applying the limitations with respect to such calendar
year. For
[[Page 56399]]
physicians and dentists (in occupational series 0602 and 0680,
respectively), payments that exceed the limitation under paragraph
(a)(2) of this section may not be made at any time.
(2) If a lump-sum payment causes an employee's estimated aggregate
compensation to exceed the applicable limitation under this section,
the Department must consider only the employee's adjusted salary and
payments that are creditable for retirement purposes (e.g., LEAP or
standby pay) in determining the extent to which the lump-sum payment
may be paid and will defer all other payments, in order to pay as much
of the excess amount as possible. Any payments deferred under this
paragraph, including any portion of the excess amount that was not
payable, will become payable at the beginning of the next calendar
year.
(3) If an employee moves to another Federal agency or to another
position within the Department not covered by NSPS, and, at the time of
the move, the employee has received payments in excess of the aggregate
limitation under 5 U.S.C. 5307, the employee's indebtedness for the
excess amount received will be deferred from the effective date of the
transfer until the beginning of the next calendar year. Effective
January 1 of the new calendar year, the debt will be nullified and the
excess amount will be considered in applying that year's aggregate
limitation.
(4) If an employee transfers to another agency and, at the time of
transfer, the employee has excess payments deferred to the next
calendar year, the provisions of 5 U.S.C. 5307 are applicable.
(5) The following conditions permit payment of excess aggregate
compensation without regard to the calendar year limitation:
(i) If an employee dies, the excess amount is payable immediately
as part of the settlement of accounts, in accordance with 5 U.S.C.
5582.
(ii) If an employee separates from Federal service, the entire
excess amount is payable following a 30-day break in service. If the
individual is reemployed in the Department under NSPS in the same
calendar year as separation, any previous payment of an excess amount
will be considered part of that year's aggregate compensation for the
purpose of applying the limitations described in this section for the
remainder of the calendar year.
Sec. 9901.314 National security compensation comparability.
(a) To the maximum extent practicable, for fiscal years 2004
through 2012, the overall amount allocated for compensation of the DoD
civilian employees who are included in the NSPS may not be less than
the amount that would have been allocated for compensation of such
employees for such fiscal years if they had not been converted to the
NSPS, based on, at a minimum--
(1) The number and mix of employees in such organizational or
functional units prior to conversion of such employees to the NSPS; and
(2) Adjustments for normal step increases and rates of promotion
that would have been expected, had such employees remained in their
previous pay schedule.
(b) To the maximum extent practicable, implementing issuances will
provide a formula for calculating the overall amount to be allocated
for fiscal years beyond fiscal year 2012 for compensation of the
civilian employees included in the NSPS. The formula will ensure that,
in the aggregate, employees are not disadvantaged in terms of the
overall amount of compensation available as a result of conversion to
the NSPS, while providing flexibility to accommodate changes in the
function of the organization and other changed circumstances that might
impact compensation levels.
(c) For the purpose of this section, ``compensation'' for civilian
employees means adjusted salary, taking into account any applicable
locality payment under 5 U.S.C. 5304, special rate supplement under 5
U.S.C. 5305, local market supplement under Sec. 9901.332, or
equivalent supplement under other legal authority.
Rate Ranges and General Salary Increases
Sec. 9901.321 Structure.
(a) Subject to Sec. 9901.105, the Secretary will establish ranges
of base salary rates for pay bands, with minimum and maximum rates set
and adjusted as provided in Sec. 9901.322.
(b) For each pay band within a career group, the Secretary will
establish a common rate range that applies in all locations.
(c) The Secretary may establish and adjust control points within a
pay band to manage compensation (e.g., limitations on pay setting and
pay progression within a pay band that apply to specified positions).
The Secretary may consider only the following factors in developing
control points: mission requirements, labor market conditions, and
benchmarks against duties, responsibilities, competencies,
qualifications, and performance.
Sec. 9901.322 Setting and adjusting rate ranges.
(a) Subject to Sec. 9901.105, the Secretary may set and adjust the
rate ranges (i.e., range minimums and maximums) established under Sec.
9901.321. In determining the rate ranges, the Secretary may consider
mission requirements, labor market conditions, availability of funds,
pay adjustments received by employees of other Federal agencies, and
any other relevant factors.
(b) The Secretary may determine the effective date of newly set or
adjusted band rate ranges. Established rate ranges will be reviewed for
possible adjustment at least annually.
(c) The Secretary may establish different rate ranges and provide
different rate range adjustments for different pay bands.
(d) The Secretary may adjust the minimum and maximum rates of a pay
band by different percentages.
(e) The maximum rate of each band must be adjusted at the time of a
general salary increase under Sec. 9901.323(a)(1) by no less than the
percentage amount of the General Schedule annual adjustment under 5
U.S.C. 5303.
Sec. 9901.323 Eligibility for general salary increase.
(a) Employees with a current rating of record above
``unacceptable'' (Level 1) and employees who do not have a current
rating of record for the most recently completed appraisal period are
eligible to receive an approved general salary increase in their base
salary rate subject to the following requirements:
(1) A general salary increase must be provided to eligible
employees in all NSPS pay bands at the same time that a General
Schedule annual adjustment takes effect under 5 U.S.C. 5303. The amount
of such general salary increase is determined by the Secretary but may
not be less than 60 percent of the General Schedule annual adjustment
under 5 U.S.C. 5303 (unless a lesser percentage is allowed by law).
Such general salary increase must be the same percentage amount for all
eligible employees under NSPS, except that the increase for employees
receiving a retained rate is limited to the lowest permitted amount
(i.e., 60 percent of the General Schedule annual adjustment under 5
U.S.C. 5303 unless a lesser percentage is allowed by law).
(2) In addition to the general salary increase under paragraph
(a)(1) of this section, and subject to Sec. 9901.105, a targeted
general salary increase may be provided to all eligible employees
(excluding employees receiving a retained rate under Sec. 9901.356) in
a
[[Page 56400]]
designated occupational series or specialty in a pay band if the
Secretary determines that such an increase is necessary considering
only labor market conditions, staffing difficulties, cost, and mission
priorities. Different targeted general salary increases may be provided
under this paragraph (a)(2) to employees in different occupational
series, specialties, and/or pay bands.
(b) Employees with a current rating of record of ``unacceptable''
will not receive a general salary increase under this section. If such
an employee receives a rating of record above unacceptable for a
subsequent appraisal period, the employee is eligible for any general
salary increase taking effect on or after the date the employee is
given a rating of record above unacceptable.
(c)(1) The Secretary may provide an additional increase in the base
salary rate equal to the difference between the percent of the General
Schedule annual adjustment under 5 U.S.C. 5303 and the amount of the
NSPS general salary increase under paragraph (a)(1) of this section to
employees ineligible for performance payout under Sec. 9901.342. This
increase is effective at the same time as the NSPS general salary
increase.
(2) The increase under paragraph (c)(1) of this section does not
apply to employees who--
(i) Are ineligible for a performance payout due to an NSPS rating
of record of Level 1 or Level 2;
(ii) Move from a non-NSPS to an NSPS position, or who are newly
hired or reappointed to an NSPS position, on the effective date of the
performance payment; or
(iii) Are receiving a retained rate under Sec. 9901.356.
(d) A general salary increase under paragraph (a)(2) or paragraph
(c) of this section may be applied only to the extent that it does not
cause an employee's base salary rate to exceed the maximum rate of the
employee's band or applicable control point.
(e) If the adjustment of a pay band minimum rate causes the base
salary of an employee with a rating of record above unacceptable (Level
1) to fall below such minimum rate, the employee's salary will be set
at the pay band minimum rate.
Local Market Supplements
Sec. 9901.331 General.
(a) Introduction. The base salary ranges established under
Sec. Sec. 9901.321 through 9901.322 may be supplemented in appropriate
circumstances by local market supplements, as described in this
section. These supplements are set and adjusted as described in Sec.
9901.333. The sum of an employee's base salary plus any applicable
local market supplement constitutes the employee's adjusted salary.
(b) Computation. Standard local market supplements are computed by
multiplying the applicable supplement percentage rate times the
employee's base salary rate and rounding the result to the nearest
whole dollar. Targeted local market supplements are computed by
multiplying the applicable supplement percentage rate times the
employee's base salary rate and rounding the result to the nearest
whole dollar, or by inclusion of the applicable supplement constant
whole dollar amount for eligible employees. A local market supplement
is payable only to the extent that it does not cause an employee's
adjusted salary rate to exceed the rate limitation described in Sec.
9901.312(b).
(c) Official worksite. When a local market supplement is linked to
a geographic area, the employee's entitlement to the local market
supplement is contingent on the employee's official worksite (as
defined in 5 CFR 531.605) being located in that geographic area.
(d) Treatment as basic pay. Local market supplements are considered
basic pay only for the following purposes:
(1) Retirement deductions, contributions, and benefits under 5
U.S.C. chapter 83 or 84;
(2) Life insurance premiums and benefits under 5 U.S.C. chapter 87;
(3) Premium pay under 5 U.S.C. chapter 55, subchapter V, or similar
payments under other legal authority, including this subpart;
(4) Severance pay under 5 U.S.C. 5595;
(5) Cost-of-living allowances and post differentials under 5 U.S.C.
5941;
(6) Overseas allowances and differentials under 5 U.S.C. chapter
59, subchapter III, to the extent authorized by the Department of
State;
(7) Recruitment, relocation, and retention incentives, supervisory
differentials, and extended assignment incentives under 5 U.S.C.
chapter 57, subchapter IV, and 5 CFR part 575;
(8) Lump-sum payments for accumulated and accrued annual leave
under 5 CFR 550, subpart L;
(9) Determining whether an employee's rate of basic pay is reduced
at the point of conversion or movement into or out of the NSPS pay
system for the purpose of applying 5 U.S.C. chapter 75, subchapter II
(dealing with adverse actions), consistent with Sec. Sec. 9901.351(g),
9901.371(d), and 9901.372(f);
(10) Other payments and adjustments under other statutory or
regulatory authority for which locality-based comparability payments
under 5 U.S.C. 5304 are considered part of basic pay; and
(11) Any other provisions for which DoD local market supplements
are expressly treated as basic pay by law or under this part.
Sec. 9901.332 Standard and targeted local market supplements.
(a) General. NSPS employees may receive standard or targeted local
market supplements as described in paragraphs (b) and (c) of this
section. Consistent with 5 U.S.C. 9902(e)(8), the full amount of
standard and targeted local market supplements must be provided to
employees who receive a rating of record above unacceptable (Level 1)
or who do not have a rating of record for the most recently completed
appraisal period. As provided in Sec. 9901.334, an employee with an
unacceptable rating of record may not receive an increase in a standard
or targeted local market supplement. Standard local market supplements
are designed to satisfy the requirements of 5 U.S.C. 9902(e)(8)(A),
while targeted local market supplements are the ``other local market
supplements'' referenced in 5 U.S.C. 9902(e)(8)(B).
(b) Standard local market supplements. Employees are entitled to
standard local market supplements that are generally equivalent to
locality payments under 5 U.S.C. 5304 and 5304a, subject to the
following requirements:
(1) The percentage values of standard local market supplements must
be identical to the percentage values of locality payments established
under 5 U.S.C. 5304 and 5304a, except as provided in Sec. 9901.334
with respect to employees with an unacceptable rating of record;
(2) The geographic areas in which standard local market supplements
apply must be identical to the corresponding geographic areas
established for locality payments under 5 U.S.C. 5304;
(3) An employee's entitlement to a standard local market supplement
is based on whether the employee's official worksite (defined
consistent with the requirements in 5 CFR 531.605) is located in the
given local market area;
(4) The applicable standard local market supplement is paid on top
of a retained rate (consistent with the NSPS modification of the pay
retention rules);
(5) The cap on an adjusted salary rate that includes a standard
local market supplement is the rate for level IV of the
[[Page 56401]]
Executive Schedule plus 5 percent (consistent with the NSPS extension
of the highest band base rate ranges by 5 percent), as provided in
Sec. 9901.312(b), except as otherwise provided under Sec.
9901.312(d);
(6) A standard local market supplement does not apply if an
employee is entitled to a higher targeted local market supplement; and
(7) Standard local market supplements are not applicable to
physicians and dentists (in occupational series 0602 and 0680,
respectively), since they receive higher base salary and adjusted
salary rates (including any applicable targeted local market
supplements) to achieve comparability with physicians and dentists paid
under 38 U.S.C. chapter 74 and since their adjusted salary rates apply
on a worldwide basis.
(c) Targeted local market supplements. Subject to Sec. 9901.105,
the Secretary may establish targeted local market supplements for
specifically defined categories of employees in order to address
significant recruitment or retention problems. This authority is
subject to the following:
(1) The conditions for coverage under a targeted local market
supplement may be based on occupation, band, organizational unit,
geographic location of official worksite, specializations, special
skills or qualifications, or other appropriate factors;
(2) A targeted local market supplement applies to an employee
eligible for a standard local market supplement only if the targeted
local market supplement is a larger amount; and
(3) Except for physicians and dentists (in occupational series 0602
and 0680, respectively) or as otherwise provided under Sec.
9901.312(d), an employee's adjusted salary that includes an applicable
targeted local market supplement may not exceed the rate cap equal to
the rate for Executive Level IV plus 5 percent, as provided in Sec.
9901.312(b).
Sec. 9901.333 Setting and adjusting local market supplements.
(a) Standard local market supplements are set and adjusted
consistent with the setting and adjusting of corresponding General
Schedule locality payments under 5 U.S.C. 5304 and 5304a.
(b) Subject to Sec. 9901.105, the Secretary may set and adjust
targeted local market supplements. In determining the amounts of the
supplements, the Secretary will consider mission requirements, labor
market conditions, cost, and pay adjustments received by employees of
other Federal agencies, allowances and differentials under 5 U.S.C.
chapter 59, and any other relevant factors. The Secretary may determine
the effective date of newly set or adjusted targeted local market
supplements. Established supplements will be reviewed for possible
adjustment at least annually in conjunction with rate range adjustments
under Sec. 9901.322.
Sec. 9901.334 Eligibility for pay increase associated with a
supplement adjustment.
(a) When a local market supplement is adjusted under Sec.
9901.333, employees to whom the supplement applies with current ratings
of record above ``unacceptable'' (Level 1), and employees who do not
have current ratings of record for the most recently completed
appraisal period, are eligible to receive any pay increase resulting
from that adjustment.
(b) An employee with a current rating of record of ``unacceptable''
will not receive a pay increase under this section (i.e., the
employee's local market supplement percentage will not be increased).
Once such an employee has a new rating of record above
``unacceptable,'' the employee is entitled to the full amount of any
applicable local market supplement effective on the date of the first
adjustment in that local market supplement occurring on or after the
effective date of the new rating of record as specified in Sec.
9901.411(d), or, if earlier, the effective date of an applicable
general salary increase as described in Sec. 9901.323(b).
Performance-Based Pay
Sec. 9901.341 General.
Sections 9901.342 through 9901.345 describe the performance-based
pay that is part of the pay system established under this subpart.
These provisions authorize payments to employees based on individual
performance or contribution, or team or organizational performance, as
a means of fostering a high-performance culture that supports mission
accomplishment.
Sec. 9901.342 Performance payouts.
(a) Overview. (1) The NSPS pay system will be a performance-based
pay system and will result in a distribution of available performance
pay funds based upon individual performance, individual contribution,
team or organizational performance, or a combination of those elements.
The NSPS pay system will use a pay pool concept to manage, control, and
distribute performance-based pay increases and bonuses. The performance
payout is a function of the amount of money in the performance pay pool
and the number of shares assigned to individual employees.
(2) The rating of record used as the basis for a performance payout
is the one assigned for the most recently completed appraisal period.
Unless otherwise provided in this section, if an employee is not
eligible to have a rating of record for the current rating cycle for
reasons other than those identified in paragraphs (i) through (l) of
this section, such employee will not be eligible for a performance
payout under this part.
(b) Performance pay pools. (1) Pay pools and pay pool oversight
will be established and managed in accordance with implementing
issuances published by the Secretary, in such a manner as to ensure
employees are treated fairly and consistently, and in accordance with
merit system principles.
(2) Consistent with paragraph (b)(1) of this section, pay pool
composition will be based on organization structure, classification
structure, function of work, location, and/or organization mission. The
decision on pay pool composition will be reviewed and approved by an
official who is at a higher level than the official who made the
initial decision, as determined by a Component, unless there is no
official at a higher level in the organization.
(3) Where determined appropriate, management may establish one or
more subsets of a pay pool population (i.e., sub pay pools) for the
purpose of reconciling ratings of record, share assignments, and payout
determinations. Sub pay pools share in the common fund of the overall
pay pool and operate within the requirements and guidelines established
for the pay pool to which they belong.
(4) The Secretary may determine a percentage of pay to be included
in pay pools and paid out, in accordance with accompanying implementing
issuances, as--
(i) A performance-based pay increase;
(ii) A performance-based bonus; or
(iii) A combination of a performance-based pay increase and a
performance-based bonus.
(5) The decision to apply a funding floor or ceiling to a pay pool,
including the amount of such floor or ceiling, will be reviewed and
approved by an official who is at a higher level than the official who
made the initial decision, as determined by a Component, unless there
is no official at a higher level in the organization.
(c) Pay Pool Panel. (1) Consistent with this section, the Pay Pool
Panel--
[[Page 56402]]
(i) Reviews rating of record, share assignment, and payout
distribution recommendations;
(ii) Makes adjustments, which in the Panel's view would result in
equity and consistency across the pay pool; and
(iii) Elevates any disagreement between the Pay Pool Panel and the
employee's supervisory chain to the Pay Pool Manager as applicable, for
resolution.
(2) The Pay Pool Panel members may not participate in payout
deliberations or decisions that directly impact their own ratings of
record or pay.
(d) Pay Pool Manager. The Pay Pool Manager--
(1) Provides oversight of the Pay Pool Panel;
(2) Consistent with this section, is the final approving authority
for performance ratings; and
(3) May not participate in payout deliberations or decisions that
directly impact his or her own rating of record or pay.
(e) Performance Review Authority (PRA). Consistent with this
section, the PRA--
(1) Oversees the operation of pay pools established under NSPS;
(2) Ensures procedural and funding consistency among pay pools
under NSPS; and
(3) May not participate in payout deliberations or decisions that
directly impact his or her own rating of record or pay.
(f) Performance shares. (1) Performance shares will be used to
determine performance pay increases and/or bonuses. The range of shares
which may be assigned for each rating level is as follows:
Performance Share Ranges Table
------------------------------------------------------------------------
Share range available for
Rating of record assignment
------------------------------------------------------------------------
Level 5................................... 5 or 6 shares.
Level 4................................... 3 or 4 shares.
Level 3................................... 1 or 2 shares.
Level 2................................... No shares.
Level 1................................... No shares.
------------------------------------------------------------------------
(2) The only factors that may be used in determining share
assignment are complexity of the work, level of responsibility,
compensation (e.g., recent salary increases, current salary in relation
to control points or pay band maximum, current salary in relation to
labor market), overall contribution to the mission of the organization,
organizational success, and raw performance scores. Pay Pool Managers
and/or Pay Pool Panels will review share assignment recommendations to
ensure that factors are applied consistently across the pay pool and in
accordance with the merit system principles.
(g) Performance payout. (1) A performance share is expressed as a
percentage of an employee's rate of base salary and is a common value
throughout the pay pool. The percent value of a performance share is
calculated by dividing the pay pool fund (expressed in dollars) by the
summation of the products of multiplying each employee's base salary
times the number of shares earned by the employee.
[Share Value(%) = Pay Pool Fund($)/[Sigma](base salary of each pay pool
member x shares assigned each pay pool member)]
(2) An employee's performance payout is calculated by multiplying
the employee's base salary as of the end of the pay pool's appraisal
period times the number of shares earned by the employee times the
share value.
[Employee Performance Payout = Base Salary x Shares x Share Value]
(3) A performance payout may be an increase in base salary, a
bonus, or a combination of the two. An increase in base salary may not
cause the employee's rate of base salary to exceed the maximum rate or
applicable control point of the employee's band rate range. The
decision to pay a bonus, including the amount of such bonus, will be
reviewed and approved by an official who is at a higher level than the
official who made the initial decision, as determined by a Component,
unless there is no official at a higher level in the organization.
(4) The factors management may consider in determining the amount
to be paid out as a bonus versus an increase in the rate of base salary
are limited to the following:
(i) Current base salary in relation to appropriate rate range;
(ii) Current base salary, level of responsibility and complexity of
work performed in comparison with others in similar work assignments;
(iii) Performance-based compensation received during the rating
cycle associated with promotions, reassignments, or awards;
(iv) Salary levels of occupations in comparable labor markets;
(v) Attrition and retention rates of critical shortage skill
personnel;
(vi) Expectation of continued performance at that level;
(vii) Overall contribution to the mission of the organization; and
(viii) Composition of the pay pool fund.
(5) When an employee's base salary is not increased because the
employee's base salary has reached the maximum of the pay band or an
applicable control point, any remaining performance payout will be paid
as a bonus in lieu of the increase to base salary.
(6) The effective date of an increase in base salary made under
this section will be the first day of the first pay period beginning on
or after January 1 of each year.
(7) Unless otherwise specified in this section, employees who are
no longer covered by NSPS on the effective date of the payout, or who
moved out of NSPS on a permanent move after the end of their rating
cycle but before the effective date of the payout, are not entitled to
a performance-based payout.
(8) For employees receiving a retained rate above the applicable
pay band maximum, the entire performance payout must be in the form of
a bonus payment. Any performance payout in the form of a bonus for a
retained rate employee will be computed based on the maximum rate of
the assigned pay band.
(9)(i) NSPS employees shall be evaluated and assigned a rating of
record by the appropriate official associated with the pay pool of
record on the last day (normally September 30) of the appraisal period
when the employee--
(A) Changes jobs within NSPS after the last day of the appraisal
period and before the effective date of the payout;
(B) Is eligible for a rating of record; and
(C) Moves to a position that falls under the authority of a
different NSPS pay pool.
(ii) For an employee covered by paragraph (g)(9)(i) of this
section, the payout will be calculated and paid based on the pay pool
funding and share valuation of the gaining pay pool except when the
employee transfers to an NSPS position that does not have a fully
constituted pay pool in which case the payout is based on the share
valuation of the losing pay pool. In all cases, the gaining pay pool
will determine the share assignment and payout distribution between
salary increase and bonus.
(10) To the extent permitted by law, NSPS organizations will share
the results of the performance management process with NSPS employees.
At a minimum, these pay pool results will include the following:
Average rating, ratings distribution, share value (or average share
value), and average payout (expressed as a percentage). Organizations
will ensure that the sharing of these or any other pay pool results
will be presented in a manner that does not violate the Privacy Act.
[[Page 56403]]
(h) Proration of performance payouts. The Secretary will issue
implementing issuances regarding prorating of performance payouts for
employees who, during the appraisal period, are--
(1) Hired, transferred, reassigned, or promoted into NSPS;
(2) In a leave-without-pay status (except as provided in paragraphs
(i) and (j) of this section); or
(3) In other circumstances where prorating is considered
appropriate.
(i) Adjustments for employees returning after performing honorable
service in the uniformed services--(1) General. The rate of base salary
for an employee who is absent from an NSPS position to perform service
in the uniformed services (in accordance with 38 U.S.C. 4301 et seq.
and 5 CFR 353.102) and who has the right to be reemployed or restored
to duty by law, Executive order, or regulation under which accrual of
service for seniority-related benefits is protected (e.g., 38 U.S.C.
4316) will be set in accordance with this paragraph (i) and
supplementary instructions in applicable implementing issuances.
(2) Periods for which employee is eligible for a rating of record.
When an employee is eligible for an NSPS rating of record for an
appraisal period, the employee will be credited with base salary rate
increases as provided under Sec. 9901.323 and under this section based
on the employee's NSPS rating of record for that appraisal period.
These rate adjustments are effective on the normal date for each
adjustment (in accordance with Sec. Sec. 9901.323 and 9901.342(g)(6));
however, if an employee is separated as opposed to in a leave status at
the time of the adjustments, no adjustment will be processed until the
employee is reemployed through the exercise of a reemployment right. An
employee covered by this paragraph (i)(2) is eligible for a
performance-based pay pool bonus if otherwise eligible by share
assignment and payout distribution.
(3) Periods for which employee is not eligible for a rating of
record. If an employee does not have an NSPS rating of record for the
appraisal period serving as a basis for increases to base salary under
this section, rate adjustments will be made based on the average base
salary increase (expressed as a percentage) granted to other employees
in the same pay pool who received the same rating as the employee's
last NSPS rating of record or the average base salary increase
(expressed as a percentage) granted to employees who received the modal
rating for the pay pool, whichever is most advantageous to the
employee. The employee will also be credited with base salary rate
increases under Sec. 9901.323 consistent with the provisions of that
section. These rate adjustments are effective on the normal date for
each adjustment in accordance with Sec. Sec. 9901.323 and
9901.342(g)(6); however, if an employee is separated as opposed to in a
leave status at the time of the adjustments, no adjustment will be
processed until the employee is reemployed through the exercise of a
reemployment right. The employee is not eligible for bonus payments for
periods covered by this paragraph (i)(3), except as otherwise required
by law.
(4) Insufficient statistical information. In cases where
insufficient statistical information exists to determine the modal
rating, the Secretary may establish alternative procedures for
determining a base salary increase under this section.
(5) Proration prohibited. Proration of base salary rate adjustments
is prohibited in the case of employees covered by this paragraph (i).
(j) Adjustments for employees returning to duty after being in
workers' compensation status--(1) General. The rate of base salary for
an employee who is absent from an NSPS position while receiving injury
compensation under 5 U.S.C. chapter 81, subchapter I (in a leave-
without-pay status or as a separated employee), and who has rights
under 5 U.S.C. 8151 will be set in accordance with this paragraph (j)
and applicable implementing issuances.
(2) Periods for which employee is eligible for a rating of record.
When an employee is eligible for an NSPS rating of record for an
appraisal period, the employee will be credited with base salary rate
increases as provided under Sec. 9901.323 and under this section based
on the employee's NSPS rating of record for that appraisal period.
These rate adjustments are effective on the normal date for each
adjustment in accordance with Sec. Sec. 9901.323 and 9901.342(g)(6);
however, if an employee is separated at the time of the adjustments, no
adjustment will be processed until the employee is reemployed. An
employee covered by this paragraph (j)(2) is also eligible for a
performance-based pay pool bonus if otherwise eligible by share
assignment and payout distribution.
(3) Periods for which employee is not eligible for a rating of
record. If an employee does not have an NSPS rating of record for the
appraisal period serving as a basis for increases to base salary under
this section, rate adjustments will be made based on the average base
salary increase (expressed as a percentage) granted to other employees
in the same pay pool who received the same rating as the employee's
last NSPS rating of record or the average base salary increase
(expressed as a percentage) granted to employees who received the modal
rating for the pay pool, whichever is most advantageous to the
employee. The employee will also be credited with base salary rate
increases under Sec. 9901.323 consistent with the provisions of that
section. These rate adjustments are effective on the normal date for
each adjustment in accordance with Sec. Sec. 9901.323 and
9901.342(g)(6); however, if an employee is separated as opposed to in a
leave status at the time of the adjustments, no adjustment will be
processed until the employee is reemployed. The employee is not
eligible for bonus payments for periods covered by this paragraph
(j)(3).
(4) Insufficient statistical information. In cases where
insufficient statistical information exists to determine the modal
rating, the Secretary may establish alternative procedures for
determining a base salary increase under this section.
(5) Proration prohibited. Proration of base salary adjustments is
prohibited in the case of employees covered by this paragraph (j).
(k) Adjustments for employees in special circumstances--(1)
General. The Secretary will adjust the rate of base salary in
accordance with the provisions in this paragraph for an NSPS employee
who is in an NSPS covered position on the effective date of the payout
and who is unable to meet the minimum performance period during the
given appraisal period as a result of--
(i) Performing activities on ``official time'' (as defined in 5
U.S.C. 7131);
(ii) Serving on a long-term training assignment; or,
(iii) Approved paid leave.
(2) Base salary increases. If an employee does not have an NSPS
rating of record for the appraisal period serving as a basis for
increases to base salary under this section, such adjustments will be
based on the average base salary increase (expressed as a percentage)
granted to other employees in the same pay pool who received the same
rating as the employee's last NSPS rating of record or the average base
salary increase (expressed as a percentage) granted to employees who
received the modal rating for the pay pool, whichever is most
advantageous to the employee.
(3) Insufficient statistical information. In cases where
insufficient statistical information exists to determine the modal
rating, the Secretary may establish alternative procedures for
determining a base salary increase under this section.
[[Page 56404]]
(l) Adjustments for employees returning from temporary assignments
outside of NSPS for which no NSPS performance plan was assigned--(1)
General. The Secretary will set the rate of base salary prospectively
for an employee who returns from a temporary assignment (including a
supervisory probationary assignment) outside of NSPS for which no NSPS
performance plan was assigned in accordance with this paragraph (l).
(2) Periods for which employee is eligible for a rating of record.
When an employee is eligible for an NSPS rating of record for an
appraisal period, the employee will be credited with base salary
increases as provided under Sec. 9901.323 and this section based on
the employee's NSPS rating of record for that appraisal period. When an
employee returns to an NSPS position, these adjustments will be
processed in determining the employee's prospective base salary rate.
An employee covered by this paragraph (l)(2) is also eligible for a
performance-based pay pool bonus if otherwise eligible by share
assignment and payout distribution.
(3) Periods for which employee is not eligible for a rating of
record. If an employee does not have an NSPS rating of record for the
appraisal period serving as a basis for increases to base salary under
this section, the employee will be credited with base salary rate
adjustments based on the average base salary increase (expressed as a
percentage) granted to other employees in the same pay pool who
received the same rating as the employee's last NSPS rating of record
or the average base salary increase (expressed as a percentage) granted
to employees who received the modal rating for the pay pool, whichever
is most advantageous to the employee. The employee will also be
credited with base salary rate increases under Sec. 9901.323
consistent with the provisions of that section. The base salary rate
adjustments under this paragraph (l)(3) will be used solely in
determining the prospective NSPS base salary rate upon return to the
NSPS position. The employee is not eligible for bonus payments for
periods covered by this paragraph (l)(3).
(4) Insufficient statistical information. In cases where
insufficient statistical information exists to determine the modal
rating, the Secretary may establish alternative procedures for
determining a base salary increase under this section.
Sec. 9901.343 Pay reduction based on unacceptable performance and/or
conduct.
An employee's rate of base salary may be reduced based on a
determination of unacceptable performance, conduct, or both after
applying applicable adverse action procedures. Such a reduction will be
at least 5 percent of base salary and may not exceed 10 percent of base
salary. However, a reduction in base salary may be less than 5 percent
to prevent the employee's base salary from falling below the minimum
rate of the employee's pay band and may be more than 10 percent if a
larger reduction is needed to place the employee at the maximum rate of
the lower band. (See also Sec. Sec. 9901.353(f) and 9901.355(b)(4).)
An employee's rate of base salary may not be reduced more than once in
a 12-month period based on unacceptable performance, conduct, or both.
Sec. 9901.344 Other performance payments.
(a) The decision to grant other performance payouts, including the
amount of such payouts, will be reviewed and approved by an official of
the employee's Component who is at a higher level than the official who
made the initial decision, as determined by the Component, unless there
is no official at a higher level in the organization. In accordance
with implementing issuances, authorized officials may make other
performance payments to--
(1) Reward extraordinary individual performance, as described in
paragraph (b) of this section;
(2) Recognize organizational or team achievement, as described in
paragraph (c) of this section; and
(3) Provide for other special circumstances.
(b)(1) Extraordinary Performance Recognition (EPR) is an increase
to base salary, a bonus, or a combination of these intended to reward
employees when the payout formula does not adequately compensate them
for their extraordinary performance and results. The EPR payment is in
addition to performance payouts under Sec. 9901.342 and will usually
be made effective at the time of those payouts. When an EPR payout is
made in the form of an increase to base salary, the future performance
and contribution level exhibited by the employee will be expected to
continue at an extraordinarily high level.
(2) Only employees who have achieved a Level 5 NSPS rating of
record for the most recently completed appraisal period are eligible
for an EPR.
(3) The amount of an EPR awarded in the form of an increase to base
salary may not cause the employee's base salary to exceed the maximum
rate of the employee's pay band or any applicable control point, unless
the criteria for exceeding the control point are met.
(c)(1) Organizational/Team Achievement Recognition (OAR) payments
may be made in the form of an increase to base salary, a bonus, or a
combination of these in order to recognize the members of a team,
organization or branch whose performance and contributions have
successfully and directly advanced organizational goals. The OAR
payment is made in conjunction with the annual performance payout.
(2) To receive an OAR, an employee must have an NSPS rating of
record of Level 3 or higher for the most recently completed appraisal
period.
(3) The amount of the OAR payment provided in the form of an
increase to base salary may not cause the employee's base salary to
exceed the maximum rate of the employee's pay band or any applicable
control point, unless the criteria for exceeding the control point are
met.
Sec. 9901.345 Accelerated Compensation for Developmental Positions
(ACDP).
(a) Accelerated Compensation for Developmental Positions (ACDP) is
an increase to base salary that may be provided to employees
participating in Component training programs or in other developmental
capacities as determined by Component policy. ACDP recognizes growth
and development in the acquisition of job-related competencies combined
with successful performance of job objectives.
(b) The use of ACDP is limited to--
(1) Employees in the lowest pay band of a nonsupervisory pay
schedule who are in developmental or trainee level positions; and
(2) Employees in positions which are assigned to a Student Career
Experience Program and which are in a pay schedule established
exclusively for students.
(c) Components choosing to provide ACDP increases must establish
and document standards by which such employees will be identified and
growth and development criteria by which additional pay increases will
be determined.
(d) The amount of the ACDP increase generally will not exceed 20
percent of an employee's base salary. The decision to grant an ACDP
exceeding 20 percent of an employee's base salary must be made on a
case-by-case basis and approved by an official who is at a higher level
than the official who made the initial decision, as determined by the
Component, unless there is no
[[Page 56405]]
official at a higher level in the organization.
(e) The amount of the ACDP increase may not cause the employee's
base salary to exceed the top of the employee's pay band or any
applicable control point, unless the criteria for exceeding the control
point are met.
(f) To qualify for an ACDP, an employee must have a rating of
record of Level 3 (or equivalent non-NSPS rating of record) or higher,
consistent with Sec. 9901.405. An ACDP may be awarded to an employee
who does not have a rating of record if an authorizing official
conducts a performance assessment and determines that the employee is
performing at the equivalent of Level 3 or higher. This performance
assessment does not constitute a rating of record.
(g) An ACDP increase may not be granted unless the employee is in a
pay and duty status in an NSPS-covered position on the effective date
of the increase.
(h) The Secretary may provide adjustments under this section in
lieu of or in addition to adjustments under Sec. 9901.342.
Pay Administration
Sec. 9901.351 General.
(a) Introduction. The pay administration provisions in Sec. Sec.
9901.351 through 9901.356 are applied using base salary rates, except
when specifically otherwise provided.
(b) Geographic recalculation. When an employee covered by a
targeted local market supplement moves to a position in a new location
where a different local market supplement and/or pay schedule applies,
the employee's adjusted salary before the move will be recalculated to
reflect a local market supplement (standard or targeted, as
appropriate) for the employee's existing position--as if that position
were at the same location as the position to which the employee is
moving, consistent with the geographic conversion principle described
at 5 CFR 531.205. For employees moving from a non-NSPS position to an
NSPS position in a different location covered by a different salary
supplement, the employee's adjusted salary under the former system will
be recalculated as if the former position were located in the new
location, consistent with the geographic conversion principle described
at 5 CFR 531.205 or 5 CFR 536.303(b), as applicable.
(c) Within-grade increase (WGI) adjustment equivalent. (1) When an
employee is permanently placed (not by conversion under Sec. 9901.371
or by promotion under Sec. 9901.354) in an NSPS position from a GS or
FWS position through a management-directed action (except for actions
taken for misconduct or unacceptable performance), including a
management-directed reassignment or realignment, or any placement as a
result of a reduction in force (RIF), or placement via the Priority
Placement Program (PPP), Reemployment Priority List (RPL), or
Interagency Career Transition Assistance Plan (ICTAP), the employee
will receive an increase to base salary equivalent to the amount he or
she would have received as a WGI adjustment if the employee had
converted into NSPS with his or her organization, as provided in Sec.
9901.371.
(2) An employee who is placed in an NSPS position from a GS or FWS
position through an employee-initiated reassignment may, at the
discretion of the authorized management official, receive this same WGI
adjustment equivalent increase described in paragraph (c)(1) of this
section. The decision to grant this increase will be reviewed and
approved by an official who is at a higher level than the official who
made the initial decision, as determined by the Component. At a
minimum, the higher-level approval level may be no lower than one level
above the authorized management official who approved the reassignment
unless there is no official at a higher level in the organization.
(3) An increase provided under paragraphs (c)(1) and (c)(2) of this
section occurs before any other discretionary reassignment increases
provided under NSPS, may not cause the employee's base salary to exceed
the maximum rate of the assigned pay band, and is in addition to any
other discretionary reassignment increase the employee may be eligible
to receive.
(d) Minimum rate. Except in the case of an employee who does not
receive a pay increase under Sec. 9901.323 because of an unacceptable
rating of record, an employee's base salary may not be less than the
minimum rate of the employee's pay band.
(e) Maximum rate. Except as provided in Sec. 9901.356, an
employee's base salary may not exceed the maximum rate of the
employee's band rate range.
(f) Pay periods and hourly rates. The establishment of pay periods
and the computation of rates of pay will conform to 5 U.S.C. 5504 and
5505, as applicable. For employees covered by 5 U.S.C. 5504, annual
rates of base salary will be converted to hourly rates of base salary
in computing payments received by covered employees.
(g) Rate comparisons upon movement to an NSPS position. An employee
who moves to an NSPS position from a non-NSPS position by management-
directed action (excluding conversion under Sec. 9901.371) will
receive a rate of basic pay that is not less than the employee's rate
of basic pay immediately before movement (after making adjustments
consistent with those made under Sec. 9901.371(e) for employees who
convert to NSPS). For this purpose and for the purpose of applying 5
U.S.C. chapter 75, subchapter II (dealing with adverse actions), at the
point of movement into NSPS, an employee's rate of basic pay includes
any applicable locality payment under 5 U.S.C. 5304, special rate
supplement under 5 U.S.C. 5305, local market supplement under Sec.
9901.332, or equivalent payment under other legal authority.
(h) Adjustment of annual rates for employees leaving certain
teaching positions. When an individual leaves a teaching position as
defined in 20 U.S.C. 901 and moves to a position covered by NSPS, the
individual's existing annual base salary rate for the teaching position
may be adjusted for the purpose of setting pay under NSPS. The
adjustment will take into account the shorter work year applicable to
the teacher position. The adjustment may not exceed 20 percent of the
existing annual base salary rate of the teaching position.
Sec. 9901.352 Setting an employee's starting pay.
(a) Subject to the requirements of this section, the Secretary may
set the starting base salary rate for individuals who are newly
appointed or reappointed to the Federal service anywhere within the
rate range of the assigned pay band (subject to any applicable control
points). Pay will be set based upon the following considerations:
(1) Labor market considerations (i.e., availability of candidates
and labor market rates);
(2) Specialized skills, knowledge, and/or education possessed by
the employee in relation to the requirements of the position;
(3) Critical mission or business requirement(s);
(4) Salaries of other employees in the organization performing
similar work; and
(5) Current salary of the candidate.
(b) For the purposes of this section, ``newly appointed'' means
those individuals who have not previously been employed in the Federal
service--i.e., this is their first Federal appointment. The term
``reappointed''
[[Page 56406]]
means those individuals who have been previously employed in the
Federal service and have been separated from the Federal service for at
least 1 full workday immediately before employment in an NSPS position.
The term ``Federal service'' includes civilian service as an employee
of any entity of the Federal Government, including the judicial branch,
legislative branch, and executive branch (including Government
corporations, the Postal Regulatory Commission, the U.S. Postal Service
and any nonappropriated fund (NAF) instrumentality described in 5
U.S.C. 2105(c)).
Sec. 9901.353 Setting pay upon reassignment.
(a)(1) A reassignment occurs when an employee moves, voluntarily or
involuntarily, to a different position or set of duties within his/her
pay band or to a position in a comparable pay band, or from a non-NSPS
position to an NSPS position at a comparable level of work, on either a
temporary or permanent basis. In NSPS, employees may be eligible for an
increase or decrease to base salary upon temporary or permanent
reassignment as described in this section.
(2) An employee who is reassigned through reduction-in-force (RIF)
procedures is not eligible for an increase to base salary under this
section (except as necessary to set the employee's rate at the band
minimum), but is eligible for an increase under Sec. 9901.351(c)(1).
An employee's base salary will be protected by applying pay retention
under Sec. 9901.356, if applicable.
(3) A decision to increase an employee's pay under this section
will be based on one or more of the following factors:
(i) A determination that an employee's responsibilities will
significantly increase;
(ii) Critical mission or business requirements;
(iii) Need to advance multi-functional competencies;
(iv) Labor market conditions (i.e., availability of candidates and
labor market rates);
(v) Reassignment from nonsupervisory to supervisory position;
(vi) Employee's past and anticipated performance and contribution;
(vii) Location of position;
(viii) Specialized skills, knowledge, or education possessed by the
employee in relation to those required by the position; and
(ix) Salaries of other employees in the organization performing
similar work.
(b)(1) Except as otherwise provided in paragraph (c) of this
section, when an employee is voluntarily reassigned within his/her pay
band or to a comparable pay band, an authorized management official may
reduce the employee's base salary in any amount determined prior to the
reassignment with the employee's agreement, as long as the employee's
base salary does not drop below the minimum of the assigned rate range.
In appropriate circumstances, an authorized management official may
make approval of a reassignment contingent on the employee's acceptance
of a reduced rate. Subject to paragraph (b)(2) of this section, an
authorized management official may also increase the employee's current
base salary by up to 5 percent (not to exceed the rate range maximum).
(2) The decision to grant a decrease or increase, including the
amount of such decrease or increase, as applicable under paragraph
(b)(1) of this section, will be reviewed and approved by an official
who is at a higher level than the official who made the initial
decision, as determined by the Component. At a minimum, the higher-
level approval may be no lower than one level above the authorized
management official who approved the reassignment unless there is no
official at the higher level in the organization. There are no limits
to the number of times an employee may be reassigned; however, an
employee may only receive up to a total of a 5 percent cumulative
increase to base salary in any 12-month period as the result of an
employee-initiated action, unless an exception to the 12-month
limitation is approved by an authorized management official. The
increase will be calculated as a percentage of the employee's base
salary at the time the increase takes effect.
(c)(1) Subject to paragraphs (b)(2) and (c)(2) through (c)(5) of
this section, as applicable, when an employee is voluntarily reassigned
from a position with a targeted local market supplement or from a non-
NSPS position (e.g., General Schedule, Federal Wage System,
Nonappropriated Fund), an authorized management official will set pay
considering the employee's adjusted salary (including any applicable
locality pay, special rate supplement, or other equivalent supplement)
and any physicians' comparability allowance payable for the position
held prior to the reassignment.
(2) An authorized management official may--
(i) Set the employee's new adjusted salary equal to the employee's
current adjusted salary plus any physicians' comparability allowance,
if applicable, received prior to the reassignment;
(ii) Decrease the employee's adjusted salary by any amount
determined prior to the reassignment with the employee's agreement, as
long as the employee's base salary does not drop below the minimum of
the assigned rate range; or
(iii) Increase the employee's current adjusted salary plus any
physicians' comparability allowance, if applicable, by up to 5 percent
(subject to the limitation that the resulting base salary may not
exceed the rate range maximum).
(3) After setting the employee's NSPS adjusted salary, the adjusted
salary will be apportioned between the employee's base salary and the
appropriate local market supplement or targeted local market
supplement.
(4) If the NSPS adjusted salary is increased beyond the amount of
the employee's current adjusted salary plus any physicians'
comparability allowance, the percentage of the increase is counted
toward the 12-month limitation under paragraph (b) of this section.
(5) When an employee covered by paragraph (c)(1) of this section
moves geographically in conjunction with a voluntary reassignment, the
employee's current adjusted salary must be recalculated in accordance
with the rules at Sec. 9901.351(b) before setting pay under paragraph
(c)(2) of this section.
(d)(1) Except as otherwise provided in paragraphs (e) or (f) of
this section, when an employee is reassigned via management-directed
action within his/her current pay band or to a comparable pay band, an
authorized management official will set pay at an amount no less than
the employee's current base salary and may increase the employee's
current base salary by up to 5 percent. (If the employee's current base
salary exceeds the maximum of the new pay band, no increase is
provided, and the employee's rate will be set at that maximum rate, or
if the employee is eligible, converted to a retained rate as provided
in Sec. 9901.356.)
(2) The decision to grant an increase under paragraph (d)(1) of
this section, including the amount of such increase, is discretionary
and will be reviewed and approved by an official who is at a higher
level than the official who made the initial decision, as determined by
a Component, unless there is no official at a higher level in the
organization. There is no limit to the number of times an employee may
be reassigned by management, and the employee is eligible for an
increase of up to 5 percent with each reassignment. Any increase
associated with a management-directed reassignment does not count
toward the 12-month limitation
[[Page 56407]]
described in paragraph (b) of this section.
(e)(1) Subject to paragraphs (d)(2), (e)(2), (e)(3), and (f) of
this section, as applicable, when an employee is reassigned via
management-directed action from a position with a targeted local market
supplement or from a non-NSPS position (e.g., General Schedule, Federal
Wage System, Nonappropriated Fund), an authorized management official
will set the employee's new adjusted salary at no less than the
employee's adjusted salary (including any applicable locality pay,
special rate supplement, or equivalent supplement) plus any physicians'
comparability allowance payable for the position held prior to the
reassignment, provided the resulting base salary does not exceed the
maximum rate of the new pay band. Subject to the same maximum
limitation, an authorized management official may also increase the
employee's adjusted salary by up to 5 percent.
(2) After setting the employee's NSPS adjusted salary, the adjusted
salary will be apportioned between the employee's base salary and the
appropriate local market supplement or targeted local market
supplement.
(3) When an employee covered by paragraph (e)(1) of this section
moves geographically in conjunction with a management-directed
reassignment, the employee's current adjusted salary must be
recalculated in accordance with the rules in Sec. 9901.351(b) before
setting pay under such paragraph (e)(1).
(4) For the purpose of determining whether an employee experienced
a reduction in pay under 5 U.S.C. chapter 75 when reassigned from a
non-NSPS position under paragraph (e)(1) of this section, Sec.
9901.351(g) applies.
(f) When an employee is involuntarily reduced in pay via
reassignment to a comparable pay band through adverse action procedures
(as a result of unacceptable performance and/or conduct), the pay
reduction must be at least 5 percent, but no more than 10 percent, of
an employee's base salary. However, a reduction may be less than 5
percent to prevent the employee's base salary from falling below the
minimum rate of the employee's pay band and may be more than 10 percent
if a larger reduction is needed to place the employee at the maximum
rate of the lower band. An employee's base salary may not be reduced
more than once in a 12-month period based on unacceptable performance,
conduct, or both. (See also Sec. 9901.343.)
(g) When an employee returns to an NSPS position from a temporary
reassignment to another NSPS position, the employee's current base
salary rate must be reconstructed as if the employee had not been
temporarily reassigned. For this purpose, the employee will be deemed
to have received performance pay increases under Sec. 9901.342 and
other increases in base salary under Sec. Sec. 9901.344 and 9901.345
equal to the percentage value of such increases actually received by
the employee during the temporary reassignment. However, any such
increases must be applied as if the employee were in the position and
band held immediately before the temporary reassignment (i.e., using
the rate range and any applicable control points for that band). The
employee will also be credited with any general salary increases
provided during the temporary reassignment that would have been applied
to the employee if he or she had continued to hold the position held
immediately before that temporary reassignment. A reassignment increase
is not authorized when the employee returns to the position from which
temporarily reassigned. (See Sec. 9901.342(l) for rules governing pay
setting for an employee who returns to an NSPS position after being
temporarily assigned to a non-NSPS position.)
(h) If an employee's temporary reassignment is made permanent, the
permanent reassignment is treated as a new reassignment for purposes of
applying this section.
(i) When an employee is reassigned to an NSPS supervisory position
but later returns to the NSPS position held before that reassignment
(or comparable position) because of failure to complete a supervisory
probationary period, the employee's base salary rate must be
reconstructed as if the employee had not been reassigned. For this
purpose, the employee will be deemed to have received performance pay
increases under Sec. 9901.342 and other increases in base salary under
Sec. Sec. 9901.344 and 9901.345 equal to the percentage value of such
increases actually received by the employee during the reassignment.
However, any such increases must be applied as if the employee were in
the position and band held immediately before the reassignment (i.e.,
using the rate range and any applicable control points for that band).
The employee will also be credited with any general salary increases
provided during the reassignment that would have been applied to the
employee if he or she had continued to hold the position held
immediately before that reassignment. A reassignment increase upon
return to the previous position (or comparable position) under this
paragraph is not authorized. (See Sec. 9901.342(l) for rules governing
pay setting for an employee who returns to an NSPS position after
failure to complete a supervisory probationary period for a non-NSPS
supervisory position.)
Sec. 9901.354 Setting pay upon promotion.
(a)(1) Except as otherwise provided in this section, upon an
employee's promotion, the employee will receive an increase in his or
her base salary equal to at least 6 percent, but the resulting base
salary rate may not be lower than the minimum rate or higher than the
maximum rate of the new pay band. The decision to grant a promotion
increase exceeding 12 percent must be reviewed and approved by an
official who is at a higher level than the official who made the
initial decision, as determined by the Component, unless a higher
increase is necessary to reach the minimum rate of the new pay band or
there is no official at a higher level in the organization.
(2) When an employee from a non-NSPS position is promoted to an
NSPS position, the authorized management official shall first apply
Sec. 9901.353(e)(1) through (e)(3) to determine the employee's
adjusted salary rate as if reassigned without a discretionary increase
or decrease in pay. After apportioning the employee's adjusted salary
between base salary and local market supplement or targeted local
market supplement, the authorized management official will then
increase the employee's salary rate as provided in Sec.
9901.354(a)(1).
(b) The authorized management official may consider only the
following criteria in determining the amount of the promotion increase:
(1) Critical mission or business requirements;
(2) Employee's past and anticipated performance and contribution;
(3) Specialized skills or knowledge possessed by the employee;
(4) Labor market conditions (including availability of candidates
and the labor market rates for similar types of employees at the level
represented by the pay band to which the employee is being promoted);
(5) Base salary rates paid to other employees in similar positions
in the higher pay band; and
(6) Location of position.
(c)(1) If an employee's temporary promotion is made permanent
without a break, the employee's base salary will remain unchanged. No
additional promotion increase may be provided.
(2) When an employee returns from a temporary promotion to another
NSPS position, the employee's current base
[[Page 56408]]
salary rate must be reconstructed as if the employee had not been
temporarily promoted. For this purpose, the employee will be deemed to
have received performance pay increases under Sec. 9901.342 and other
increases in base salary under Sec. Sec. 9901.344 and 9901.345 equal
to the percentage value of such increases actually received by the
employee during the temporary promotion. However, any such increases
must be applied as if the employee were in the position and band held
immediately before the temporary promotion (i.e., using the rate range
and any applicable control points for that band). The employee will
also be credited with any general salary increases provided during the
temporary promotion that would have been applied to the employee if he
or she had continued to hold the position held immediately before that
temporary promotion. A reduction-in-band increase upon return to the
previous position (or comparable position) under this paragraph is not
authorized. (See Sec. 9901.342(l) for rules governing pay setting for
an employee who returns to an NSPS position after being temporarily
assigned to a non-NSPS position.)
(d)(1) An employee on pay retention who is re-promoted to the pay
band from which reduced (or a comparable band) is not automatically
entitled to have his/her pay set in accordance with the promotion rules
described in paragraphs (a) and (b) of this section. If the employee's
retained rate falls within the rate range of the newly assigned pay
band, the authorized management official may maintain the same base
salary upon re-promotion, or increase the employee's base salary to a
rate above his or her retained rate. However, the employee's new base
salary may not exceed the rate that would be provided using the
promotion rules described in paragraphs (a) and (b) of this section.
The employee's retained rate will be used when calculating any increase
approved by an authorized management official. If the employee's
retained rate falls below the minimum rate of the newly assigned pay
band, the employee's base salary must be set at least at the minimum
rate of the band. If the employee's retained rate is higher than the
maximum rate of the newly assigned pay band, pay retention will
continue (subject to the requirements of Sec. 9901.356).
(2) An employee who is promoted to a pay band higher than the one
from which previously reduced in band will be covered by the promotion
rules described in paragraphs (a) and (b) of this section. The
employee's retained rate will be used when calculating the 6 percent
(or higher) increase.
Sec. 9901.355 Setting pay upon reduction in band.
(a) General. When an employee is reduced in band, either
voluntarily or involuntarily, the setting of the employee's base salary
rate is subject to the rules in this section. As applicable, pay
retention provisions established under Sec. 9901.356 will apply. If
pay retention does not apply, the employee's base salary may be
reduced, subject to the requirements in paragraph (b) of this section.
The employee may be eligible for an increase to base salary, subject to
the requirements in paragraph (c) of this section.
(b) Pay reduction. An employee's base salary may be reduced upon
reduction in band, subject to the following requirements:
(1) No base salary reduction is made when pay retention is
applicable, except under paragraph (b)(4) of this section.
(2) The reduction in base salary may not cause the rate to fall
below the minimum rate of the employee's new band.
(3) The base salary must be reduced as necessary to ensure that the
new base salary is no greater than the maximum rate of the employee's
new band.
(4) Adverse action procedures in 5 U.S.C. chapter 75 must be
applied when an employee is involuntarily placed in a position in a
lower pay band for unacceptable performance and/or conduct. In this
circumstance, the authorized management official may reduce the
employee's base salary. If such a reduction is made, it must be at
least 5 percent, but no more than 10 percent, of an employee's base
salary after applying adverse action procedures. However, a reduction
in base salary under this paragraph may be less than 5 percent to
prevent the employee's base salary from falling below the minimum rate
of the employee's new pay band and may be more than 10 percent if a
larger reduction is needed to place the employee at the maximum rate of
the lower band. (See also Sec. 9901.343.)
(5) If an employee held a position with a targeted local market
supplement or a non-NSPS position prior to the reduction in band, the
pay reduction is applied using adjusted salary rates, consistent with
the reassignment rules in Sec. 9901.353(c) (including, as appropriate,
a geographic recalculation prior to applying the decrease, consistent
with the provisions of Sec. 9901.351(b)).
(c) Pay increase. An employee's base salary may be increased by an
authorized management official upon reduction in band, subject to the
following requirements:
(1) An employee who is reduced in band involuntarily--e.g., through
reduction-in-force (RIF) procedures or by placement through the DoD
Priority Placement Program (PPP) or Reemployment Priority List (RPL)--
is not eligible for an increase to base salary (except if necessary to
set the employee's base salary at the minimum rate of the new pay
band).
(2) When an employee voluntarily moves to a lower pay band, the
authorized management official may increase the employee's base salary,
but must set the employee's base salary within the rate range for the
employee's band. An increase in base salary may be up to 5 percent of
the employee's current base salary (not to exceed the maximum of the
rate range). This increase of up to 5 percent is deemed to be a
``reassignment increase'' for the purpose of applying the 12-month
limitation in Sec. 9901.353(b)(2). Also, in applying this increase,
adjusted salary rates will be used when an employee held a position
with a targeted local market supplement or a non-NSPS position prior to
the reduction in band, consistent with the reassignment increase rules
in Sec. 9901.353(c) (including, as appropriate, a geographic
recalculation prior to applying the increase, consistent with the
provisions of Sec. 9901.351(b)). This increase is subject to higher-
level approval. At a minimum, the higher-level approval may be no lower
than one level above the authorized management official who approved
the reduction in band, unless there is no higher-level management
official.
(3) After setting the employee's NSPS adjusted salary, the adjusted
salary will be apportioned between the employee's base salary and the
appropriate local market supplement or targeted local market
supplement.
(4) A decision to increase an employee's pay under paragraph (c)(2)
of this section will be based on--
(i) Critical mission or business requirements;
(ii) The need to advance multi-functional competencies;
(iii) The labor market conditions (i.e., availability of
candidates, labor market rates for similar types of employees);
(iv) Reassignment from nonsupervisory to supervisory position;
(v) Location of position;
(vi) Required specialized skills, knowledge, or education possessed
by the employee;
(vii) Performance-based considerations; and
[[Page 56409]]
(viii) The base salary rates paid to other employees in similar
positions in the lower pay band.
(d) Termination of temporary promotion. This section does not apply
to a reduction in band associated with the termination of a temporary
promotion. Instead, the rules in Sec. 9901.354(c)(2) apply.
(e) Failure to complete probationary period. When an employee who
fails to complete a supervisory probationary period is reduced in band
upon return to the position held before the probationary period (or a
comparable position), the employee's current base salary rate must be
reconstructed as if the employee had not been promoted. For this
purpose, the employee will be deemed to have received performance pay
increases under Sec. 9901.342 and other increases in base salary under
Sec. Sec. 9901.344 and 9901.345 equal to the percentage value of such
increases actually received by the employee during the promotion.
However, any such increases must be applied as if the employee were in
the position and band held immediately before the promotion (i.e.,
using the rate range and any applicable control points for that band).
The employee will also be credited with any general salary increases
provided during the promotion that would have been applied to the
employee if he or she had remained in the position held immediately
before that promotion. A reduction-in-band increase upon return to the
previous position (or comparable position) under this paragraph is not
authorized. (See Sec. 9901.342(l) for rules governing pay setting for
an employee who returns to an NSPS position after being temporarily
assigned to a non-NSPS position.)
Sec. 9901.356 Pay retention.
(a) Pay retention prevents a reduction in base salary that would
otherwise occur by preserving the former rate of base salary within the
employee's new pay band or by establishing a retained rate that exceeds
the maximum rate of the new pay band. Local market supplements are not
considered part of base salary in applying pay retention.
(b) Pay retention will be based on the employee's rate of base
salary in effect immediately before the action that would otherwise
reduce the employee's rate. A retained rate will be compared to the
range of rates of base salary applicable to the employee's position.
(c) Pay retention will be granted for a period of 104 weeks. The
Secretary may issue implementing issuances describing exceptions to the
104-week retention limit.
(d) Under NSPS, pay retention will be granted when an employee's
base salary would otherwise be reduced in the following situations:
(1) As the result of reduction in force or reclassification;
(2) When an otherwise eligible employee is placed through the
Priority Placement Program (PPP), including placement resulting from
early registration, even though the employee does not have a specific
reduction in force (RIF) notice;
(3) When an organization undergoes realignment or reduction, and
(i) An employee who would not be affected personally requests a
reduction in band;
(ii) Management determines the employee's reduction in band results
in placement in a more suitable position; and
(iii) That action lessens or avoids the impact of the RIF on other
employees;
(4) When an employee accepts a position in a lower pay band
designated in advance by the component as being hard-to-fill using any
of the following criteria:
(i) Rates of pay offered by non-Federal employers are significantly
higher than those payable under NSPS for the area, location,
occupational group, or other class of positions involved;
(ii) The remoteness of the area or location involved;
(iii) The undesirability of the working conditions or the nature of
the work involved (including exposure to toxic substances or other
occupational hazards); or
(iv) Any other circumstances the Component considers appropriate,
subject to review and approval by an official who is at a higher level
than the official who made the initial decision;
(5) When an employee is reduced in band on return from an overseas
assignment under the terms of a pre-established agreement including--
(i) An employee released from a period of service specified in his
or her current transportation agreement due to an involuntary,
management-initiated action other than for unacceptable performance
and/or misconduct;
(ii) An employee, who has completed more than one year of service
under a current agreement, released from a transportation agreement for
compelling humanitarian or compassionate reasons; and
(iii) A non-displaced overseas employee under no obligation to
return to the United States who is otherwise eligible for PPP
registration in accordance with DoD Instruction 1400.20;
(6) When an employee declines an offer to transfer with his or her
function to a location outside the commuting area, or is identified
with such function but does not receive an offer at the gaining
activity, and is placed in a position in a lower pay band at the losing
activity or any other DoD activity;
(7) When an employee accepts a position in a lower pay band offered
by an activity to accommodate a disabling medical condition similar to
the circumstances described in 5 CFR 831.1203(a)(4);
(8) When an employee occupying a position under a Schedule C
appointment (authorized under 5 CFR 213.3301) is placed, other than for
unacceptable performance and/or misconduct or at the employee's
request, in a position in a lower pay band in the competitive service
or in another Schedule C position, provided that such action is not
solely the result of a change in agency leadership (change in
administration);
(9) When an employee occupying an Army or Air Force dual status
military technician position lost, or is scheduled to lose, eligibility
for dual status technician employment through no fault of his or her
own and accepts placement without a break in service to a non-dual
status technician position in a lower pay band;
(10) When an employee occupying a National Guard dual status
technician position is involuntarily separated, through no fault of his
or her own, and accepts placement, without a break in service, to a
non-dual or dual status technician position in a lower pay band or a
competitive service NSPS position in a lower pay band;
(11) When an employee whose job is abolished declines an offer
within the competitive area, but outside the commuting area, and is
placed in a lower pay band position in the commuting area, provided the
employee is not serving under a mobility agreement;
(12) When an employee's base salary is reduced as the result of the
movement of his or her position from a DoD nonappropriated fund (NAF)
instrumentality to coverage by the DoD civil service system without a
break in service of more than three days; or
(13) When an employee's base salary would exceed the maximum of the
rate range because the maximum of the rate range decreased or as a
result of a management-directed reassignment.
(e) An authorized management official may grant pay retention for
circumstances other than those detailed in paragraphs (d)(1) through
(d)(13) of this section. This determination is discretionary, and
appropriate use is subject to higher-level approval. At a
[[Page 56410]]
minimum, the higher-level approval may be no lower than one level above
the authorized management official who recommended the determination.
These circumstances may be specified in advance or may be approved on a
case-by-case basis. This authority applies to personnel actions
initiated by management, not at the employee's request, and other than
for unacceptable performance and/or misconduct, and only if those
actions would further the agency's mission in accordance with
applicable law and regulation.
(f) Pay retention under this authority will terminate--
(1) At the end of the 104-week period (except as otherwise provided
under paragraphs (c) and (m) of this section);
(2) When the employee moves to another position with a rate range
that encompasses the employee's retained rate;
(3) When an increase in the maximum rate for the employee's pay
band causes the maximum rate to equal or exceed his/her retained rate,
or the employee's base salary is encompassed within his or her assigned
rate range as a result of a pay reduction based on unacceptable
performance and/or conduct, subject to adverse action procedures;
(4) When the employee is no longer covered by an NSPS position or
has a break in service of 1 workday or more (which includes employees
placed via PPP after separation), unless otherwise covered under
another section of this regulation;
(5) When the employee is reduced in band for unacceptable
performance and/or conduct; or
(6) When the employee is reduced in band at his or her request in
circumstances other than stated in paragraph (d) of this section.
(g) An employee whose pay retention terminates at the end of the
104-week period will have his or her pay set at the maximum rate of the
pay band in which he/she is currently assigned.
(h) Upon termination of pay retention, the employee immediately
becomes eligible for any applicable general salary increase and
performance payout which may include an increase to base salary, unless
otherwise ineligible.
(i) Pay retention does not apply in the following circumstances:
(1) Declination of a position offer under RIF procedures set forth
in 5 CFR part 351;
(2) Break in service of 1 workday or more (which includes employees
placed via PPP after separation), unless otherwise covered under
paragraph (d) of this section;
(3) Movement from a non-DoD position to an NSPS-covered position;
(4) Failure to satisfactorily complete a supervisory probationary
period;
(5) Return to an employee's former position at the end of a
temporary promotion or temporary reassignment;
(6) Reassignment or reduction in band for unacceptable performance
and/or conduct; or
(7) Reassignment or reduction in band at the employee's request in
circumstances other than stated in paragraph (d) of this section.
(j) Employees entitled to a retained rate will receive any
performance payouts in the form of bonuses, rather than base salary
adjustments, as provided in Sec. 9901.342(g)(8).
(k) An employee receiving a retained rate will receive any general
salary increase under Sec. 9901.323(a)(1), subject to the conditions
in Sec. 9901.323, and will receive any applicable local market
supplement adjustment, subject to the conditions in Sec. 9901.334.
(l) The 104-week time limit established under paragraphs (c) and
(f)(1) of this section will be extended by a period of time equal to
the length of time an employee is deployed away from his or her regular
duty station in support of a contingency operation as defined in 10
U.S.C. 101, or an emergency as determined in accordance with DoD
Directive 1400.31, ``DoD Civilian Work Force Contingency and Emergency
Planning and Execution'' (or any successor regulation).
(m) Any employee with a preexisting entitlement to pay retention
under 5 CFR part 536 immediately before becoming covered by NSPS
through a management-directed action, or who obtains entitlement to pay
retention upon becoming covered by NSPS through a management-directed
action, will be entitled to a retained rate under this section without
regard to the 104-week limit (as described in paragraphs (c) and (f)(1)
of this section). Pay retention will terminate under the conditions in
paragraphs (f)(2) through (f)(6) of this section.
Premium Pay
Sec. 9901.361 General provisions.
(a) Introduction. As provided in Sec. 9901.303(a)(2), the
provisions of 5 U.S.C. chapter 55, subchapter V, and related
regulations are waived or modified as provided in paragraph (e) of this
section and Sec. Sec. 9901.362 through 9901.364 (except as provided in
paragraph (b) of this section). To the extent that the provisions of 5
U.S.C. chapter 55, subchapter V, and related regulations are not waived
or modified, NSPS employees and positions remain subject to those
provisions. Sections 9901.363 and 9901.364 establish new types of
premium payments in addition to those found in 5 U.S.C. chapter 55,
subchapter V.
(b) Provisions not waived or modified. The following provisions of
5 U.S.C. chapter 55, subchapter V, are not waived or modified:
(1) 5 U.S.C. 5544 (relating to prevailing rate employees); and
(2) 5 U.S.C. 5545b (relating to firefighter pay).
(c) Applicability of Fair Labor Standards Act. The Fair Labor
Standards Act of 1938 (FLSA), as amended (29 U.S.C. 201 et seq.) and
OPM regulations in 5 CFR part 551 apply to NSPS employees. DoD must
determine whether an employee is exempt or nonexempt under the FLSA
minimum wage and overtime pay provisions in accordance with the FLSA
and OPM regulations. In applying FLSA overtime pay provisions, local
market supplements are treated the same as locality pay under 5 U.S.C.
5304 and are included in computing total remuneration, the hourly
regular rate, and straight time rate under 5 CFR part 551.
(d) Applying regulations in 5 CFR part 550, subpart M. In applying
the regulations in 5 CFR part 550, subpart M (dealing with firefighter
pay) to NSPS employees, the reference to ``locality pay'' in 5 CFR
550.1305(e) must be interpreted to be a reference to a local market
supplement. Consistent with 5 CFR 550.1306(a), a firefighter
compensated under 5 CFR part 550, subpart M, may not receive additional
premium pay except for compensatory time off for travel under Sec.
9901.362(j) or for religious observances under Sec. 9901.362(k) and
foreign language proficiency pay under Sec. 9901.364.
(e) Physicians and dentists. Physicians and dentists (in
occupational series 0602 and 0680, respectively) under NSPS are not
eligible for premium pay except for compensatory time off for religious
observances under Sec. 9901.362(k).
(f) Senior Executive Service. Members of the Senior Executive
Service under NSPS are not eligible for premium pay, except for
compensatory time off for religious observances under Sec.
9901.362(k).
Sec. 9901.362 Modification of standard provisions.
(a) Premium pay limitations. (1) An employee is covered by the
premium pay limitations established under 5 U.S.C. 5547 and related
regulations, except as provided in paragraph (a)(2) of this section.
Notwithstanding the modification of various premium
[[Page 56411]]
payments under this section, those payments are still considered to be
payments in 5 U.S.C. chapter 55, subchapter V, for the purpose of
applying 5 U.S.C. 5547 (including the purpose of determining the
covered premium payments under 5 U.S.C. 5547(a)).
(2) Subject to Sec. 9901.105, the Secretary may waive the
limitations established by 5 U.S.C. 5547 and related regulations and
instead apply an annual limitation equal to the rate payable under 3
U.S.C. 104 in the case of specified categories of employees and
situations on a time-limited basis. Such a waiver may not apply with
respect to additional compensation that is normally creditable as basic
pay for retirement or any other purpose.
(b) Overtime pay. (1) An employee is covered by the overtime pay
(including compensatory time off) provisions in 5 U.S.C. 5542 and 5543
and related regulations, subject to the requirements and modifications
described in paragraphs (b)(2) through (b)(6) of this section.
(2) Consistent with 5 U.S.C. 5542(c), an employee who is subject to
section 7 of the Fair Labor Standards Act of 1938 (FLSA), as amended,
is covered by OPM's FLSA overtime regulations in 5 CFR part 551.
(3) Compensation for irregular or overtime work performed by
National Guard Technicians is governed by 32 U.S.C. 709(h) and policies
issued by the National Guard Bureau.
(4) Firefighters covered by 5 U.S.C. 5545b are subject to special
overtime pay rules as described in that section and in 5 U.S.C. 5542(f)
and in related regulations. (See also Sec. 9901.361(d).)
(5) Compensatory time off earned under 5 U.S.C. 5543 must be used
by the end of the 26th pay period after that in which it was earned.
Compensatory time off not used within 26 pay periods will be paid at
the overtime rate at which it was earned. Employees with unused
compensatory time earned before June 8, 1997 (January 5, 1997, for
Defense Logistics Agency employees), have had a separate ``old
compensatory time'' account established for their use. Old compensatory
time is charged only if the employee has insufficient current
compensatory time (earned on or after June 8, 1997) to cover the
compensatory time off requested. Within each category of compensatory
time, the oldest will be charged first. When a DoD employee separates,
moves to another Component, or transfers to another Federal agency, any
unused compensatory time off balance will be paid at the overtime rate
at which it was earned. Also, when an employee moves to a pay system
that does not provide for compensatory time off (e.g., Senior Executive
Service), any unused compensatory time off balance will be paid at the
overtime rate at which it was earned.
(6) The following modifications to 5 U.S.C. 5542 and 5543 and
related regulations apply:
(i) The overtime hourly rate cap for FLSA-exempt employees based on
the rate of basic pay for the minimum rate for GS-10 does not apply;
instead, an FLSA-exempt employee is entitled to an overtime hourly rate
equal to 1.5 times the employee's adjusted salary hourly rate unless
the employee is in a pay band for which the overtime hourly rate is set
equal to the employee's adjusted salary hourly rate based on a
determination by the Secretary, subject to Sec. 9901.105;
(ii) An FLSA-exempt employee will be compensated for overtime work
(whether regular or irregular or occasional) using a quarter of an hour
as the smallest fraction of an hour, with minutes rounded to the
nearest full fraction of an hour;
(iii) An FLSA-exempt employee may not be credited with overtime
hours of work for travel time unless that travel involves the
performance of actual work while traveling; instead, any such
noncreditable travel hours may be credited as earned compensatory time
off for travel, subject to the requirements in paragraph (j) of this
section; and
(iv) An FLSA-exempt employee may be required to receive
compensatory time off under 5 U.S.C. 5543 in lieu of overtime pay,
regardless of the type of overtime work or the amount of the employee's
adjusted salary rate.
(c) Night pay. An employee is covered by the night pay provisions
in 5 U.S.C. 5545(a) and (b) and related regulations, except for the
following modifications:
(1) Night pay is payable for irregular or occasional overtime work
in the same manner it is payable for regularly scheduled work; and
(2) Night pay is not payable during paid absences, except for a
period of court leave, military leave, time off awarded under 5 U.S.C.
4502(e), or compensatory time off during religious observances, or when
excused from duty on a holiday.
(d) Sunday pay. An employee is covered by the Sunday pay provisions
in 5 U.S.C. 5546 and related regulations, except for the following
modifications:
(1) Work for which Sunday pay is payable (i.e., Sunday work) is
limited to applicable hours of work that are actually performed on
Sunday (i.e., the definition of ``Sunday work'' in 5 CFR 550.103
applies except that non-Sunday hours are excluded even if those hours
are within a daily tour of duty that includes Sunday hours); and
(2) Consistent with section 624 of the Treasury and General
Government Appropriations Act, 1999 (as found in section 101(h) of
Division A of Public Law 105-277, October 21, 1998), Sunday pay is not
payable unless an employee actually performed work during the time
corresponding to such pay (i.e., no Sunday pay for periods of paid
leave, compensatory time off, credit hours, paid excused absence, or
other paid time off).
(e) Pay for holiday work. An employee is covered by the holiday
premium pay provisions in 5 U.S.C. 5546 and related regulations, except
for the following modifications:
(1) Holiday premium pay is paid at twice an employee's adjusted
salary hourly rate for each hour (including overtime hours) an employee
is ordered or approved to work on a holiday;
(2) For FLSA-exempt employees, the payment for overtime hours
worked on a holiday has two components: Payment required under
paragraph (b) of this section for overtime worked, and an additional
amount under this paragraph (e) such that the total payment for each
hour is twice the employee's adjusted salary hourly rate; and
(3) For FLSA-nonexempt employees, the payment for overtime hours
worked on a holiday has two components: Payment required under 5 CFR
551.512 for overtime worked, and an additional amount under this
paragraph (e) such that the total payment for each hour is twice the
employee's adjusted salary hourly rate.
(f) Standby duty pay. (1) An employee is covered by the standby
duty pay provisions in 5 U.S.C. 5545 (c)(1) and related regulations,
subject to the requirements and modifications in paragraphs (f)(2)
through (f)(6) of this section.
(2) Except as provided in paragraph (f)(3), eligibility for
regularly scheduled standby duty is limited to firefighters classified
to the 0081 occupation who are not eligible for coverage under 5 U.S.C.
5545b, and to emergency medical technicians not involved in fire
protection activities who are required to perform standby duty.
(3) The Secretary may approve extending standby duty premium pay
coverage to occupations other than those cited in paragraph (f)(2) of
this section. Component proposals to extend coverage will explain why
employees within the specified occupational group must regularly remain
at the duty station longer than ordinary periods of duty, a substantial
part of which involves remaining in a standby status
[[Page 56412]]
rather than performing actual work, and must address how the criteria
in 5 CFR 550.143 are met.
(4) The standby percentage is always multiplied by an employee's
adjusted salary rate regardless of the amount.
(5) Standby pay attributable to use of an adjusted salary rate
exceeding the applicable GS-10, step 1, rate limitation is not
considered to be paid under 5 U.S.C. 5545(c)(1) and thus is not
creditable basic pay for retirement purposes.
(6) No additional premium pay for hours of overtime work (whether
regularly scheduled or irregular or occasional), including compensatory
time off, is payable to an employee receiving standby duty pay.
(g) Administratively uncontrollable overtime pay. The
administratively uncontrollable overtime pay provision in 5 U.S.C.
5545(c)(2) is waived and will not be applied to NSPS employees.
Compensation for such work will be made under the applicable provisions
of this section.
(h) Law enforcement availability pay. An employee is covered by the
law enforcement availability pay provisions in 5 U.S.C. 5545a and
related regulations, except that the reference to ``premium pay'' in 5
CFR 550.186 will be interpreted to refer to the applicable title 5
premium payments and to the corresponding modified provisions in this
section. In addition, the reference to ``limitation on premium pay'' in
5 CFR 550.185(a)(2) will be construed to refer to the limitations under
5 U.S.C. 5547 and to the corresponding modified provision in paragraph
(a) of this section.
(i) Pay for duty involving physical hardship or hazard. (1) An
employee is covered by the hazardous duty pay provisions in 5 U.S.C.
5545(d) and related regulations, subject to the requirements and
modifications described in paragraphs (i)(2) through (i)(6) of this
section.
(2) In determining eligibility for hazardous duty pay, an
authorized management official will apply occupational safety and
health standards consistent with the permissible exposure limit
promulgated by the Secretary of Labor under the Occupational Safety and
Health Act of 1970 as published in Subtitle B, Chapter XVII, of title
29, United States Code, or, in the absence of a permissible exposure
limit issued by the Secretary of Labor, other applicable standard
promulgated by the Secretary.
(3) Subject to Sec. 9901.105, the Secretary may establish new
categories of hazardous duty pay in addition to those found in Appendix
A to subpart I of 5 CFR part 550. Components may request a new category
of hazardous duty pay be established and must submit, with their
request, the information required in 5 CFR 550.903(b).
(4) Except as provided in paragraphs (i)(5) and (i)(6) of this
section, an employee is paid a hazard pay differential when he or she
is assigned to and performs a duty specified in Appendix A to subpart I
of 5 CFR part 550 or as provided under paragraph (i)(3) of this
section.
(5) An employee will be eligible to receive hazardous duty pay when
an authorized management official determines--
(i) One or more of the conditions requisite for such payment exist;
and
(ii) Safety precautions, protective or mechanical devices,
protective or safety clothing, protective or safety equipment, or other
preventive measures have not reduced the element of hazard below the
permissible exposure limits promulgated by the Secretary of Labor or
any applicable standard promulgated by the Secretary, consistent with
paragraph (i)(2) of this section.
(6) Hazard pay differentials are not payable to employees in
occupations or jobs in which unusual physical risk is an inherent
characteristic of the occupation or job, such as police officer,
emergency medical technician, test pilot, ordnance/explosives/
incendiary inspector, and engineering technician performing inspection
functions inside fuel storage tanks, tunnels, or shafts. The
classification of the employee's position (i.e., determination of pay
band level) includes a consideration of the hazardous duty or physical
hardship. For the purposes of this paragraph, the phrase ``includes a
consideration of the hazardous duty'' means that the duty is one
element considered in determining the pay band level of the position--
i.e., the knowledge, complexities, skills and abilities required to
perform that duty are considered in the classification of the position.
Such consideration does not require the hazardous duty or physical
hardship to be pay band controlling.
(j) Compensatory time off for travel. (1) An employee is covered by
the compensatory time off for travel provisions in 5 U.S.C. 5550b and
related regulations, subject to the requirements and modifications
described in paragraphs (j)(2) through (j)(7) of this section.
(2) The term ``official duty station'' as defined in the related
regulations is not applicable; instead, the term ``official worksite''
is used to determine an employee's entitlement to compensatory time off
for travel. The term ``official worksite'' has the meaning given in 5
CFR 531.605.
(3)(i) Time spent commuting between an employee's residence and the
workplace (official or temporary worksite) is not creditable for the
purpose of compensatory time off for travel, except as provided in
paragraph (j)(3)(ii) of this section.
(ii) If an employee is required to travel to a temporary worksite
and if the one-way commuting time exceeds the employee's normal one-way
commuting time by more than 1 hour, the commuting time beyond 1 hour
may be credited.
(4) If an employee is required to travel directly between his or
her residence and a transportation terminal, the travel time is
creditable as time in a travel status. The travel time outside regular
working hours directly to or from a transportation terminal is
creditable as time in a travel status. However, if the travel occurs on
a day that the employee is regularly scheduled to work, the time the
employee would have spent in normal home-to-work or work-to-home
commuting must be deducted.
(5) An employee earns compensatory time off for time spent in a
travel status away from the official worksite when such time is not
otherwise compensable.
(6) Employees must file requests for credit of compensatory time
off for travel within 10 workdays after returning to the official duty
station, or within 10 workdays of returning from temporary duty (TDY)
assignment or approved leave which immediately follows the TDY during
which the compensatory time off for travel was earned, by submitting a
travel itinerary, or any other documentation acceptable to the
employee's supervisor, in support of the request. If not submitted
within 10 workdays, the employee will forfeit his or her claim to the
compensatory time off for travel. Compensatory time off for travel will
be credited in increments of 6 minutes or 15 minutes and will be
tracked and managed separately from other forms of compensatory time
off.
(7)(i) When an employee moves from an NSPS position to a non-NSPS
position within the Department, in which the employee will be eligible
for compensatory time off for travel under 5 CFR part 550, subpart N,
he or she will retain unused compensatory time off for travel. The time
elapsed from the end of the pay period in which the compensatory time
off was earned through the date of conversion will count as elapsed
time in applying the limit for usage in 5 CFR part 550, subpart N.
[[Page 56413]]
(ii) When an employee moves from a non-NSPS position to an NSPS
position within the Department, he or she will retain unused
compensatory time off for travel. The time elapsed from the end of the
pay period in which the compensatory time off was earned through the
date of conversion will count as elapsed time in applying the limit for
usage established under 5 CFR 550.1407.
(k) Compensatory time off for religious observances. An employee is
covered by the compensatory time off for religious observances
provisions in 5 U.S.C. 5550a and related regulations, subject to the
following requirements and modifications:
(1) An employee's request for time off should not be granted
without simultaneously scheduling the hours during which the employee
will work to make up the time (unless the employee earned the needed
hours in advance); and
(2) An employee may not receive payment for any unused compensatory
time off for religious observances under any circumstances. This
prohibition against payment applies to surviving beneficiaries in the
event of the individual's death.
(l) Air traffic controller differential. (1) The air traffic
controller differential provisions in 5 U.S.C. 5546a are waived and not
applicable to NSPS employees, except for subsections (a)(1) and (d) of
that section.
(2) An employee is covered by the air traffic controller
differential provisions in subsections (a)(1) and (d) of 5 U.S.C.
5546a, subject to the modification described in paragraph (1)(3) of
this section.
(3) The reference to the grade levels of GS-9 and GS-11 in 5 U.S.C.
5546a(a)(1) must be construed to mean a comparable level of work as
determined under the NSPS classification structure.
Sec. 9901.363 Premium pay for health care personnel.
(a) Coverage. (1) This section applies to DoD health care personnel
covered under NSPS who may be eligible for premium pay, as described in
paragraphs (b), (c), and (d) of this section. For the purpose of this
section, health care personnel means employees providing direct patient
care services or services incident to direct patient care services.
Examples include employees in the following occupations: nurse,
biomedical engineer, dietitian, dental hygienist, psychologist, and
medical records technician.
(2) Premium pay under this section is not considered part of basic
pay for any purpose, nor is it used in computing a lump-sum payment for
leave under 5 U.S.C. 5551 or 5552.
(b) On-call premium pay. (1) When health care personnel are not
otherwise compensated for on-call time, heads of Components may
authorize on-call premium pay under this section for officially
scheduled ``on-call'' time which requires these employees to restrict
their activities sufficiently to be available to return to the worksite
promptly when it is necessary.
(2) To be paid on-call premium pay, an employee must be officially
scheduled to be on-call outside his or her regular duty hours or during
hours on a holiday when the employee is excused from regular duty.
(3) An employee may not be scheduled to be on-call unless it is
essential for the employee to be immediately available to return to the
worksite.
(4) An employee officially scheduled to be on-call will be paid 15
percent of his or her adjusted salary hourly rate for each hour of on-
call status.
(5) An employee may not receive on-call pay during periods of
actual work. When an employee on-call is required to return to work
status, on-call pay will be suspended. When released from the
requirement to perform actual work, the employee will return to the
remaining scheduled on-call status.
(6) An employee may not be charged leave during periods of
regularly scheduled on-call duty; nor may such an employee receive on-
call premium pay when, because of leave or other authorized absence,
the employee is not expected to be able to return to the worksite
immediately.
(c) Night pay for health care personnel. (1) Health care personnel
working a tour of duty, any part of which falls between 6 p.m. and 6
a.m., with 4 or more hours falling between 6 p.m. and 6 a.m., will be
paid additional pay for each hour of work on such tour. When fewer than
4 hours of work fall between 6 p.m. and 6 a.m., health care personnel
will be paid additional pay for each hour of work performed between 6
p.m. and 6 a.m. Night pay for health care personnel is 10 percent of
the employee's hourly rate of adjusted salary. An employee receiving
night pay under this section may not also receive night pay under Sec.
9901.362(c).
(2) Health care personnel are entitled to pay for night duty for a
period of paid absence only for a period of court leave, military
leave, time off awards under 5 U.S.C. 4502(e), or compensatory time off
for religious observances.
(3) When excused from work because of a holiday or in-lieu-of
holiday, health care personnel are entitled to the night pay that would
have applied had they not been excused from work.
(d) Pay for weekend duty for health care personnel. (1) Health care
personnel who work a tour of duty, any part of which falls in the 2-day
period between midnight Friday and midnight Sunday, will be paid
additional pay for each hour of work during such tour. Health care
personnel who have two separate tours of duty, each of which qualify as
weekend duty, will be paid additional pay for each hour of both tours.
Additional pay for weekend duty is 25 percent of the employee's hourly
rate of adjusted salary. An employee receiving pay for weekend duty may
not also receive pay for Sunday work under Sec. 9901.362(d).
(2) When on court leave, military leave, time off awarded under 5
U.S.C. 4502(e), or compensatory time off for religious observances,
health care personnel are entitled to pay for weekend duty they
otherwise would have received.
Sec. 9901.364 Foreign language proficiency pay.
(a) General provisions. (1) This section applies to employees who
may be paid Foreign Language Proficiency Pay (FLPP) if they are
certified as proficient in a foreign language the Secretary has
determined to be necessary for national security interests, and if they
are not receiving FLPP as provided in 10 U.S.C. 1596 and 10 U.S.C.
1596a.
(2) The Secretary is authorized to publish an annual list of
foreign languages necessary for national security interests and to
establish overall policy for administration of the Defense Language
Program.
(3) Employees may be certified as proficient in a necessary foreign
language using criteria and procedures established by the Secretary and
receive FLPP.
(b) Eligibility Criteria. An authorized management official
delegated the authority for approving payment must document that an
employee meets eligibility criteria before authorizing FLPP. The
documentation includes--
(1) Certification within the last 12 months of the employee's
proficiency in a foreign language the Secretary has determined
necessary for national security interests;
(2) Affirmation that the employee does not currently receive
comparable pay under 10 U.S.C. 1596 or 1596a;
(3) Certification of the employee's foreign language proficiency
level renewed annually; and
[[Page 56414]]
(4) Certification based on an annual test that is part of the
Defense Language Proficiency Test System.
(c) Amount and method of payment. The decision to grant FLPP,
including the amount, will be reviewed and approved by an official who
is at a higher level than the official who made the initial decision,
as determined by the Component, unless there is no official at a higher
level in the organization. The amount of FLPP received by the employee,
not to exceed $500 per pay period, will be determined based on the
following considerations:
(1) The employee's measured proficiency level in the necessary
language;
(2) The need for the employee's particular language skills;
(3) The difficulty of recruiting or retaining employees with the
same proficiencies;
(4) The extent to which the employee performs tasks requiring
proficiency;
(5) The number of necessary languages in which the employee is
proficient; and
(6) Other considerations authorized by the Secretary.
(d) Treatment for other purposes. FLPP is not considered part of
basic pay for any purpose and does not count towards retirement,
insurance, or any other benefit related to basic pay. FLPP is not pay
for purposes of a lump-sum payment for leave under 5 U.S.C. 5551 or
5552.
(e) Termination. The authorized management official as determined
by the Component may reduce or terminate FLPP at any time when the
official determines--
(1) The need for the employee's language capability has been
reduced or eliminated; or
(2) The employee no longer meets the certification requirements.
(f) Miscellaneous. (1) The minimum qualifying level may not be less
than Interagency Language Roundtable Level 2 proficiency in at least
two skills (listening, reading, speaking, or writing, as required).
(2) FLPP may be paid for proficiency in multiple languages;
however, the total amount may not exceed $500 per pay period.
Conversion Provisions
Sec. 9901.371 Conversion into NSPS pay system.
(a) Introduction. This section describes the pay-setting provisions
that apply when DoD employees are converted into the NSPS pay system
established under this subpart. (See Sec. 9901.231 for conversion
rules related to determining an employee's career group, pay schedule,
and band.) An affected employee may convert from the GS system, the SL/
ST system, or the SES system (or such other systems designated by the
Secretary as DoD may be authorized to include under 5 U.S.C. 9902), as
provided in Sec. 9901.302. For the purpose of this part (except Sec.
9901.372), the terms ``convert,'' ``converted,'' ``converting,'' and
``conversion'' refer to employees who become covered by the NSPS pay
system without a change in position (as a result of a coverage
determination made under Sec. 9901.102(b)) and exclude employees who
move from a noncovered position to a position already covered by the
NSPS pay system.
(b) Implementing issuances. The Secretary will issue implementing
issuances prescribing the policies and procedures necessary to
implement these conversion provisions.
(c) Bar on pay reduction. Subject to paragraph (e) of this section,
employees will be converted into the NSPS pay system without a
reduction in their adjusted salary rate. (As defined in Sec. 9901.304,
the term ``adjusted salary'' means base salary plus any applicable
locality payment under 5 U.S.C. 5304, special rate supplement under 5
U.S.C. 5305, local market supplement under Sec. 9901.332, or
equivalent supplement under other legal authority.)
(d) Rate comparison. For the purpose of determining whether
conversion into NSPS constitutes an adverse action for reduction of pay
under 5 U.S.C. chapter 75, subchapter II (dealing with adverse
actions), an employee's rate of basic pay includes any applicable
locality payment under 5 U.S.C. 5304, special rate supplement under 5
U.S.C. 5305, local market supplement under Sec. 9901.332, or
equivalent supplement under other legal authority. The rate of basic
pay immediately before conversion must be adjusted as described in
paragraph (e) of this section before comparing that rate of basic pay
to the initial NSPS rate of basic pay.
(e) Simultaneous actions. If another personnel action (e.g.,
promotion, geographic movement) takes effect on the same day as the
effective date of an employee's conversion to the new pay system, the
other action will be processed under the rules pertaining to the
employee's former system before processing the conversion action.
(f) Temporary promotion prior to conversion. An employee on a
temporary promotion at the time of conversion will be returned to his
or her official position of record prior to processing the conversion
(as provided in Sec. 9901.231(c)), and pay will be set consistent with
the pay-setting rules of the pay system that applies prior to
conversion. For GS employees, pay in the permanent position of record
must be reconstructed to reflect any increase that would have otherwise
occurred if the employee had not been temporarily promoted, as provided
in GS pay-setting regulations. If the employee is temporarily promoted
immediately after the conversion, pay will be set under the rules for
promotion increases under the NSPS pay system. (See also paragraph (k)
of this section.)
(g) Grade retention prior to conversion. An employee on grade
retention immediately before conversion must be converted to a pay band
based on the grade of his or her assigned permanent position of record
(not the retained grade), as provided in Sec. 9901.231(d), but the
employee's base and adjusted salary while in grade retention status
will be used in applying this section (e.g., in setting the initial
NSPS base and adjusted salary and in determining the amount of any
within-grade increase adjustment). After conversion and any within-
grade increase adjustment under paragraph (j) of this section, if the
employee's base salary exceeds the rate range for the assigned pay
band, the employee will be granted pay retention, subject to the
conditions described in Sec. 9901.356.
(h) Pay retention prior to conversion. For an employee on pay
retention under 5 U.S.C. 5363 immediately before conversion, the
employee's pay will be realigned so that the employee's NSPS adjusted
salary (consisting of base salary plus any applicable local market
supplement) equals the employee's retained rate before conversion. If
the employee's base salary (after realignment) exceeds the rate range
for the assigned pay band, the employee will be granted pay retention,
subject to the conditions described in Sec. 9901.356.
(i) Conversion adjustments. The only NSPS base salary adjustments
that may be made in conjunction with an employee's conversion into NSPS
are those identified in paragraphs (j) through (m) of this section.
(j) Within-grade increase (WGI) adjustment. (1) Upon conversion to
NSPS, a General Schedule (GS) employee (regardless of work schedule)
who would otherwise be eligible for a within-grade increase (WGI), and
who is paid below the maximum rate for their grade, will receive a
prorated WGI adjustment to his or her NSPS base salary rate to account
for the time (measured in calendar days) since the employee's last
equivalent pay increase.
[[Page 56415]]
(2) The WGI adjustment is calculated based on the number of
calendar days between the effective date of the employee's last
equivalent increase and the date of conversion into NSPS, regardless of
the number of days in a non-pay status (if any). The maximum adjustment
may not exceed a full WGI.
(3) For an employee on a temporary promotion immediately before
conversion, the employee's GS pay entitlements must be determined as
provided in paragraph (f) of this section before calculating the WGI
adjustment.
(4) For an employee entitled to grade retention immediately before
conversion, the WGI adjustment is determined using the employee's
retained grade and step.
(5) The WGI adjustment is not applicable to an employee entitled to
pay retention immediately before conversion.
(6) The WGI adjustment is not applicable to an employee whose
performance has been determined to be below an acceptable level of
competence under 5 CFR part 531, subpart D.
(7) An employee is entitled to a WGI adjustment in accordance with
paragraphs (j)(1) through (6) of this section each time he or she
occupies a position that is converted into NSPS under this part.
(k) Special increase for employees on temporary promotion prior to
conversion--(1) General. If an employee had a temporary promotion
immediately before conversion, and if the position to which the
employee was temporarily promoted becomes covered by NSPS, an
authorized management official may temporarily reassign or temporarily
promote the employee back to that position, subject to the same terms
and conditions as the initial temporary promotion (e.g., if the
temporary promotion was not to exceed 5 years and the action is a
temporary reassignment under NSPS, the temporary reassignment may not
exceed 5 years). When the employee is temporarily placed back into the
position immediately after conversion, the pay-setting rules in
paragraphs (k)(2) and (k)(3) of this section apply.
(2) Temporary reassignment. If the post-conversion action would be
a temporary reassignment, the authorized management official may
provide the employee with a temporary base salary increase up to the
same base salary rate the employee was receiving during the temporary
promotion (prior to conversion) in lieu of setting pay under the
reassignment rules under Sec. 9901.353. This is a one-time exception
to the limitations on reassignment increases imposed under Sec.
9901.353. Upon expiration of the temporary reassignment, pay will be
set as specified in Sec. 9901.353(g) or paragraph (k)(4) of this
section, as applicable.
(3) Temporary promotion. (i) If the post-conversion action would be
a temporary promotion, the authorized management official may provide
the employee with a temporary base salary increase up to the same base
salary rate the employee was receiving during the temporary promotion
(prior to conversion) or may set pay according to the promotion rules
under Sec. 9901.354 to provide a greater increase. Upon expiration of
the temporary promotion, pay will be set as specified in Sec.
9901.354(c) or paragraph (k)(4) of this section, as applicable.
(ii) The increase described in paragraph (k)(3)(i) of this section
may also apply to an employee who is on a temporary promotion at the
time that temporary promotion position converts to NSPS, even if the
employee's permanent position of record has not yet converted. In this
case, upon expiration of the temporary promotion, pay will be set under
the rules of the applicable pay system.
(4) Temporary placement becomes permanent. If a temporary
reassignment or promotion to an NSPS position under this paragraph (k)
becomes permanent with no break, the employee's base salary will not
change, but will continue at the rate received at the end of the
temporary reassignment or promotion.
(l) Special increases equivalent to GS promotion increase. (1)
During the first 12 months following conversion, employees who are not
eligible for the Accelerated Compensation for Developmental Positions
(ACDP) under Sec. 9901.345 are eligible to receive (at the discretion
of an authorized management official) a one-time base salary increase
equivalent to a noncompetitive promotion increase the employee would
have received but for conversion to NSPS. This paragraph may be applied
only when the grade level of the promotion is encompassed within the
same pay band, the employee's performance warrants the pay increase,
and the promotion would have otherwise occurred during that period.
(2) An employee who is selected for a non-NSPS position that
subsequently becomes covered by NSPS before the effective date of the
employee's placement in the position is eligible to receive (at the
discretion of an authorized management official) a one-time base salary
increase equivalent to the increase the employee would have received
had the placement been effected prior to the position becoming covered
by NSPS. This paragraph may be applied only when the employee is not
already in an NSPS-covered position on the effective date of the
placement, and the effective date is within 12 months of the position
becoming covered by NSPS. An employee who receives an increase under
this paragraph is not eligible for the WGI adjustment described in
paragraph (j) of this section.
(m) Adjustment for physicians and dentists. For a GS physician or
dentist who was regularly receiving a physicians' comparability
allowance or premium pay, the Component may increase the base salary
after conversion to NSPS to account for the loss of such allowance or
premium pay (since such payments are not authorized for physicians and
dentists under NSPS). The Component must also consider the additional
pay represented by any applicable targeted local market supplement in
determining the rate at which the base salary should be set under this
paragraph.
Sec. 9901.372 Conversion or movement out of NSPS pay system.
(a) General. (1) This section applies to the conversion or movement
of employees out of the NSPS pay system to a different pay system.
Under this section, when an NSPS employee is converted or moved to a GS
position, a GS virtual grade and rate is established for the NSPS
employee so that the employee is treated as a GS employee in applying
GS pay-setting rules.
(2) For the purpose of this section (unless otherwise specified)--
(i) The terms ``convert,'' ``converted,'' ``converting,'' and
``conversion'' refer to NSPS employees who become covered by a
different pay system without a change in position (as a result of a
determination made by the Secretary under Sec. 9901.102(e) or as
otherwise provided by law); and
(ii) The terms ``move,'' ``moved,'' ``moving,'' and ``movement''
refer to NSPS employees who become covered by a different pay system
through a change in position, rather than by conversion.
(b) Classification of converted position. Prior to converting an
employee out of NSPS, an authorized management official, as defined by
the Component, will review the duties of the employee's current
permanent position of record and classify the position's duties in
accordance with Office of Personnel Management (OPM) classification
guidance and/or other appropriate criteria to determine the appropriate
title, series, and grade or pay band of the position in the new pay
[[Page 56416]]
system. Employees occupying positions classified to NSPS-unique
occupational series at the time of conversion out cannot be retained in
those series, but must be assigned to the series that most closely
represents the employee's current duties (i.e., the duties of the
former NSPS position).
(c) Determining pay under new pay system. When converting or moving
an employee out of NSPS to another pay system, the pay-setting rules of
the gaining system will apply. For the purpose of applying those rules,
the employee's final pay under NSPS is determined based on the
employee's NSPS permanent position of record (including band), official
worksite, and pay as of the day immediately before the date of
conversion or movement out of NSPS. An employee on a temporary
reassignment or temporary promotion will be returned to his or her
permanent position of record prior to conversion or movement. No
personnel or pay action that, but for the conversion or movement out of
NSPS, would have occurred under NSPS on the date of conversion or
movement may be considered. Any personnel or pay action occurring on
the date of conversion or movement must be processed under the rules of
the gaining system. In the case of a conversion or movement to the
General Schedule (GS) pay system, the supplemental rules in paragraph
(d) of this section must be followed to determine a virtual GS grade
and rate (as of the date before the employee's conversion or movement
out of NSPS) that will be used in apply GS pay-setting rules.
(d) Virtual GS grade and rate--(1) Virtual GS grade. (i) Before an
employee converts or moves out of NSPS under this paragraph, a virtual
GS grade will be established for the purpose of applying GS pay-setting
rules (e.g., a promotion increase if the actual GS grade is higher than
the virtual GS grade). This virtual GS grade will be based on a
comparison of the NSPS employee's current adjusted salary to the
highest applicable GS rate range that would apply to the employee's
NSPS permanent position of record considering only those GS grade
levels and associated rate ranges that are included in the employee's
assigned NSPS pay band. For the purpose of this section, a highest
applicable GS rate range includes the following rate ranges: The GS
locality rate schedule for the locality pay area in which the
employee's NSPS official worksite is located; the special rate schedule
based on the employee's position of record, official worksite, or other
established conditions; the law enforcement officer special base rate
schedule; or the GS base pay schedule. The grade-band conversion tables
established in DoD's NSPS implementing issuances for the purpose of
converting employees into NSPS must be used in determining which GS
grades are covered by the employee's assigned NSPS pay band. For two-
grade interval occupations, conversion may not be made to an
intervening (even) grade level below GS-11.
(ii) If the employee's pay band covers one GS grade, the employee's
virtual grade will be that grade.
(iii) For an employee in a pay band encompassing more than one GS
grade, if the employee's adjusted salary equals or exceeds the step 4
rate of the highest applicable GS rate range for the highest GS grade
encompassed within his or her assigned NSPS pay band, the employee's
virtual grade will be that grade. If the employee's adjusted salary is
lower than the step 4 rate, the adjusted salary is compared with the
step 4 rate of the highest applicable GS rate range for the second
highest GS grade encompassed within the employee's pay band. If the
employee's adjusted salary equals or exceeds the step 4 rate of the
second highest grade, the employee's virtual grade will be that grade.
This process is repeated for each successively lower grade encompassed
within the assigned band until a grade is found at which the employee's
adjusted salary equals or exceeds the step 4 rate of the highest
applicable GS rate range for that grade.
(iv) Notwithstanding paragraph (d)(1)(iii) of this section, if the
employee's adjusted salary exceeds the maximum rate of the highest
applicable GS rate range for the assigned GS grade determined under
paragraph (d)(1)(iii) of this section but fits in the highest
applicable GS rate range for the next higher grade (i.e., is greater
than or equal to the rate for step 1 but less than the rate for step
4), then the employee's virtual GS grade will be that higher grade.
(v) Notwithstanding paragraph (d)(1)(iii) of this section, an
employee's virtual GS grade may not be less than the permanently
assigned GS grade the employee held upon conversion into NSPS (for an
employee who was converted as described in Sec. 9901.371), unless,
since that time, the employee has undergone--
(A) A voluntary reduction in band or reduction in base salary;
(B) An involuntary reduction in band or reduction in base salary
based on unacceptable performance and/or conduct; or
(C) A reduction in band based on a reduction in force (RIF) or
classification action.
(vi) If the employee's adjusted salary exceeds the maximum rate of
the highest applicable GS rate range for the highest grade encompassed
by his or her assigned pay band, the employee's virtual grade will be
that highest GS grade.
(vii) If the employee's adjusted salary is less than the step 4
rate of the highest applicable GS rate range for the lowest GS grade
encompassed within his or her assigned NSPS pay band, the employee's
virtual grade will be the lowest GS grade in the band.
(2) Virtual GS rate. (i) Once a virtual GS grade has been
established, a virtual GS rate will be set (before any pay-related
action that would take effect on the date of the employee's conversion
or movement out of NSPS). As of the day before the date of conversion
or movement out of NSPS, the employee's NSPS adjusted salary will be
compared to the highest applicable GS rate range for the established
virtual grade. If the employee's adjusted salary rate falls within that
range, the virtual rate will be set equal to that adjusted salary rate.
(Since this virtual GS rate is used only as a basis for setting the
employee's rate in a new non-NSPS position, it is not necessary to set
it at a GS step rate at this stage.) If an employee's adjusted salary
is less than the minimum rate of the highest applicable GS rate range
for the virtual GS grade, his or her virtual rate will be set at the
minimum step rate. If the employee's adjusted salary is greater than
the maximum rate of the highest applicable GS rate range for the
virtual GS grade, his or her virtual rate will be set at the maximum
step rate or at a retained rate set using GS pay retention rules in 5
CFR part 536 (if the employee is eligible for pay retention under those
rules).
(ii) If the virtual rate derived under paragraph (d)(2)(i) of this
section is an adjusted salary rate that includes a locality payment or
special rate supplement, an employee's virtual GS base salary rate will
be derived based on that adjusted salary rate.
(iii) The virtual GS grade and rates established under this
paragraph (d) will be used in applying GS pay administration rules in
setting pay in the new GS position (e.g., the GS promotion rules, pay
retention rules, and the maximum payable rate rule). (Since the NSPS
system did not continue coverage under the grade retention provision in
5 U.S.C. 5362, grade retention is not applicable to NSPS employees who
convert or move to a GS position.) As required by
[[Page 56417]]
paragraph (c) of this section, any pay action effective on the date of
conversion or movement from NSPS to the GS pay system will be processed
under GS pay administration rules.
(e) GS within-grade increases. Service under NSPS is creditable for
within-grade increase purposes upon conversion or movement to a GS
position under this section to the extent provided under 5 CFR part
531, subpart D.
(f) Comparison of rates of basic pay. For the purpose of
determining whether the conversion or movement out of NSPS under this
section is an adverse action for reduction of pay under 5 U.S.C.
chapter 75, subchapter II (dealing with adverse actions), an employee's
rate of basic pay includes any applicable locality payment under 5
U.S.C. 5304, special rate supplement under 5 U.S.C. 5305, local market
supplement under Sec. 9901.332, or equivalent supplement under other
legal authority. This comparison is made before any pay-related action
(e.g., geographic movement) under the gaining system that takes effect
on the date of conversion or movement.
Subpart D--Performance Management
Sec. 9901.401 Purpose.
(a) This subpart establishes a performance management system as
authorized by 5 U.S.C. 9902.
(b) The performance management system established under this
subpart is designed to promote and sustain a high-performance culture.
The implementation and operation of the system will provide for the
following elements:
(1) Adherence to merit principles set forth in 5 U.S.C. 2301;
(2) A fair, credible, and transparent employee performance
appraisal system;
(3) A link between the performance management system and DoD's
strategic plan;
(4) A means for ensuring employee involvement in the design and
implementation of the system;
(5) Adequate training and retraining for supervisors, managers, and
employees in the implementation and operation of the performance
management system;
(6) A process for ensuring ongoing performance feedback and
dialogue among supervisors, managers, and employees throughout the
appraisal period, and setting timetables for review;
(7) Effective safeguards to ensure that the management of the
system is fair and equitable and based on employee performance;
(8) A means for ensuring that adequate agency resources are
allocated for the design, implementation, and administration of the
performance management system; and
(9) A pay-for-performance evaluation system to better link
individual pay to performance and provide an equitable method for
appraising and compensating employees.
Sec. 9901.402 Coverage.
(a) This subpart applies to eligible employees and positions in the
categories listed in paragraph (b) of this section, subject to a
determination by the Secretary under Sec. 9901.102.
(b) The following employees and positions in organizational and
functional units are eligible for coverage under this subpart:
(1) Employees and positions that would otherwise be covered by 5
U.S.C. chapter 43;
(2) Employees and positions excluded from chapter 43 by OPM under 5
CFR 430.202(d) prior to the date of coverage of this subpart; and
(3) Such others designated by the Secretary as DoD may be
authorized to include under 5 U.S.C. 9902.
(c) Except as provided in Sec. 9901.408, this subpart does not
apply to employees who have been, or are expected to be, employed in an
NSPS position for less than a minimum period (as described in Sec.
9901.407) during a single 12-month period.
Sec. 9901.403 Waivers.
When a specified category or group of employees is covered by the
performance management system established under this subpart, the
provisions of 5 U.S.C. chapter 43 are waived with respect to that
category of employees.
Sec. 9901.404 Definitions.
In this subpart--
Appraisal means the review and evaluation of an employee's
performance.
Appraisal period has the meaning given that term in Sec. 9901.103.
Competencies has the meaning given that term in Sec. 9901.103.
Contribution has the meaning given that term in Sec. 9901.103.
Contributing Factors has the meaning given that term in Sec.
9901.103.
Job Objectives has the meaning given that term in Sec. 9901.103.
Minimum period means the period of time during which an employee
will perform under one or more approved NSPS performance plans before
receiving a rating of record.
Pay-for-performance evaluation system means the performance
management system established under this subpart to link individual pay
to performance and provide an equitable method for evaluating
performance and compensating employees.
Pay Pool Manager has the meaning given that term in Sec. 9901.103.
Pay Pool Panel has the meaning given that term in Sec. 9901.103.
Performance has the meaning given that term in Sec. 9901.103.
Performance expectations means the duties, responsibilities, and
competencies required by, or objectives associated with, an employee's
position and the contributions and demonstrated competencies management
expects of an employee, as described in Sec. 9901.406.
Performance management means applying the integrated processes of
setting and communicating performance expectations, monitoring
performance and providing feedback, developing performance and
addressing poor performance, and rating and rewarding performance in
support of the organization's goals and objectives.
Performance management system means the policies and requirements
established under this subpart, as supplemented by implementing
issuances, for setting and communicating employee performance
expectations, monitoring performance and providing feedback, developing
performance and addressing poor performance, and rating and rewarding
performance. It incorporates and operationalizes the elements set forth
in Sec. 9901.401(b).
Performance Review Authority has the meaning given that term in
Sec. 9901.103.
Rating official means a representative of management, usually the
immediate supervisor, who evaluates and assesses employee performance
and recommends a rating of record, share assignment, and payout
distribution for review by the Pay Pool Panel.
Rating of record has the meaning given that term in Sec. 9901.103.
Unacceptable performance has the meaning given that term in Sec.
9901.103.
Sec. 9901.405 Performance management system requirements.
(a) The Secretary may issue implementing issuances further defining
a performance management system for NSPS employees, subject to the
requirements set forth in this subpart.
(b) The NSPS performance management system--
(1) Provides for the appraisal of the performance of each employee
annually;
(2) Holds supervisors and managers accountable for effectively
managing the performance of employees under their supervision as set
forth in paragraph (c) of this section;
[[Page 56418]]
(3) Specifies procedures for setting and communicating performance
expectations, monitoring performance and providing feedback, and
developing, rating, and rewarding performance;
(4) Specifies the criteria and procedures to address the
performance of employees who are detailed or transferred and for
employees in other special circumstances;
(5) Provides for the following multiple rating levels:
------------------------------------------------------------------------
Rating of record Rating of record descriptor
------------------------------------------------------------------------
Level 5................................... Role Model.
Level 4................................... Exceeds Expectations.
Level 3................................... Valued Performer.
Level 2................................... Fair.
Level 1................................... Unacceptable.
------------------------------------------------------------------------
(6) Specifies rounding rules for average adjusted ratings as
follows:
(i) The combination of the job objective rating and the
contributing factor assessment results in an adjusted rating for each
job objective;
(ii) The job objective adjusted ratings are averaged to obtain the
employee's raw score;
(iii) Any objective rated as ``NR'' is not counted when averaging
ratings;
(iv) When the employee's raw score ends with .51 or higher, the
rating is rounded to the next higher whole number;
(v) When the employee's raw score ends with .50 or lower, the
rating is rounded to the next lower whole number; and
(vi) The resulting rounded score is the recommended rating of
record.
(c) In fulfilling the requirements of paragraph (b) of this
section, supervisors and managers will--
(1) Clearly communicate performance expectations and hold employees
responsible for accomplishing them;
(2) Make meaningful distinctions among employees based on
performance and contribution;
(3) Foster and reward excellent performance;
(4) Address poor performance; and
(5) Assure that employees are assigned a rating of record.
Sec. 9901.406 Setting and communicating performance expectations.
(a) Performance expectations will support and align with the
mission and strategic goals, organizational program and policy
objectives, annual performance plans, and other measures of
performance.
(b) Performance expectations will be communicated to the employee
in writing prior to holding the employee accountable for them.
(c) Notwithstanding the requirements in paragraphs (d) through (g)
of this section, employees are accountable for demonstrating
professionalism and appropriate standards of conduct and behavior, such
as civility and respect for others.
(d) In addition to the requirement in paragraph (c) of this
section, supervisors and managers will be held accountable through
their performance expectations for how well they plan, monitor,
develop, correct, and assess subordinate employees' performance.
(e) Performance expectations include--
(1) Goals or objectives that set general or specific performance
targets at the individual, team, and/or organizational level;
(2) Organizational, occupational, or other work requirements, such
as standard operating procedures, operating instructions, manuals,
internal rules and directives, and/or other instructions that are
generally applicable and available to the employee; and
(3) Competencies an employee is expected to demonstrate on the job,
and/or the contributions an employee is expected to make.
(f) Performance expectations may be amplified through particular
work assignments or other instructions (which may specify the quality,
quantity, accuracy, timeliness, or other expected characteristics of
the completed assignment, or some combination of such characteristics).
Such assignments and instructions need not be in writing.
(g) Supervisors will involve employees, insofar as practicable, in
the development of their performance expectations. However, final
decisions regarding performance expectations are within the sole and
exclusive discretion of management.
(h) Performance expectations are subject to higher- or second-level
review to ensure consistency and fairness within and across
organizations.
(i) Performance expectations that comprise a performance plan are
considered to be approved when the supervisor has communicated the
performance plan to the employee in writing.
Sec. 9901.407 Minimum period of performance.
(a) Only employees who have completed the minimum period under one
or more NSPS approved performance plans may be issued a rating of
record in accordance with the procedures prescribed by this subpart.
(b) The minimum period of performance is 90 calendar days.
(1) Periods during which an employee is in a leave status may not
be applied toward the 90-day minimum.
(2) If an employee has a break in NSPS-covered service (e.g., due
to job change to a non-NSPS position, resignation), the service
performed prior to the break may not be used to satisfy the 90-day
minimum period. A break caused by a situation described in Sec.
9901.342(i) through (1) is not considered a break for this purpose.
(c) Employees who have not completed the minimum period of
performance during the applicable appraisal period will not be rated
and will not be eligible for a performance payout unless otherwise
provided in Sec. 9901.342(i) through (1).
Sec. 9901.408 Employees on time-limited appointments.
Employees who are appointed for less than 90 days--
(a) Will be given performance expectations that are linked to the
organization's strategic plan; and
(b) May receive an evaluation at the end of the appointment which--
(1) Consists of a narrative description addressing employee
performance, accomplishments and contributions during that appointment;
and
(2) May serve as documentation and justification for recognition
under 5 U.S.C. chapter 45.
Sec. 9901.409 Monitoring and developing performance.
(a) In applying the requirements of the performance management
system and its implementing issuances and policies, supervisors will--
(1) Monitor the performance of their employees and their
contribution to the organization;
(2) Provide ongoing (i.e., regular and timely) feedback to
employees on their actual performance with respect to their performance
expectations, including one or more interim performance reviews during
each appraisal period; and
(3) Document at least one interim performance review. Documented
interim reviews are not required for overall periods of performance of
less than 180 days.
(b) Developing performance is integrated with the performance
management process and is a shared responsibility of management and
employees. Developing performance includes but is not limited to--(1)
Coaching and mentoring employees;
[[Page 56419]]
(2) Reinforcing strengths and addressing weaknesses; and
(3) Discussing employee development opportunities.
Sec. 9901.410 Addressing performance that does not meet expectations.
(a) If at any time during the appraisal period a supervisor
determines that an employee's performance is not meeting expectations,
the supervisor will--
(1) Identify and communicate to the employee the specific
performance deficiencies that require improvement;
(2) Consider the range of options available to address the
performance deficiency, including remedial training, improvement
periods, reassignment, oral warnings, letters of counseling, written
reprimands, or adverse action (including a reduction in rate of basic
pay or pay band or a removal); and
(3) Take appropriate action to address the deficiency, taking into
account the circumstances, including the nature and gravity of the
unacceptable performance and its consequences.
(b) Adverse actions taken based on unacceptable performance and/or
conduct will be taken in accordance with the provisions in 5 U.S.C.
chapter 75 or other appropriate procedures if not covered by chapter
75, such as procedures for National Guard Technicians under 32 U.S.C.
709(f).
Sec. 9901.411 Appraisal period.
(a) Except as provided in paragraphs (a)(1) through (3) and (b) of
this section, the appraisal period will be October 1 to September 30.
(1) The appraisal period may begin after October 1 and end after
September 30 for newly converted groups of employees;
(2) The appraisal period may begin after October 1 for employees
who move to an NSPS position from a non-NSPS position after that date;
and
(3) The appraisal period may end between July 3 and September 30
for employees receiving early annual recommended ratings.
(b) If, by the end of the appraisal period, an employee has not met
the minimum period of performance, management may extend the appraisal
period provided such extensions do not--
(1) Delay the payout for the applicable pay pool; or
(2) Extend beyond the rating of record effective date.
(c) The effective date of ratings of record will be January 1,
except for additional ratings of record as described in Sec.
9901.412(b)(2).
(d) The effective date of a rating of record described in Sec.
9901.412(b)(2) is the date the rating is final, as described in
paragraph (g) of Sec. 9901.412.
Sec. 9901.412 Rating and rewarding performance.
(a) Forced distribution of ratings (setting pre-established limits
for the percentage or number of ratings that may be assigned at any
level) is prohibited.
(b) An appropriate rating official--
(1) Will prepare and recommend a rating of record after the
completion of the appraisal period; and
(2) May recommend an additional rating of record following an
unacceptable rating of record to reflect a substantial and sustained
change in the employee's performance since the last rating of record.
(c) The recommended rating of record is subject to higher-level
review.
(d) A rating of record will assess an employee's performance with
respect to his or her performance expectations, as amplified through
work assignments or other instructions, and/or relative contributions.
(e) If an employee engages in work-related misconduct and the
nature or severity of that misconduct has an impact on the execution of
his or her duties, that of the team, and/or that of the organization,
the impact may be considered in the employee's rating of record.
(f) A Pay Pool Panel will --
(1) Review recommended ratings of record, share assignments, and
payout distributions, and make adjustments, which in the panel's view
would result in equity and consistency across the pay pool; and
(2) Afford the rating official the opportunity to provide further
justification of a recommended rating of record before a change to that
rating becomes final.
(g) Consistent with the requirements of merit system principles and
this part, the Pay Pool Manager is the approving authority for Pay Pool
Panel recommendations concerning ratings of record, share assignments,
and payout distribution. A rating of record is considered final when
issued to the employee with all appropriate reviews and signatures.
(h) An appropriate rating official will communicate the final
rating of record, share assignment, and payout distribution to the
employee.
(i) Once the minimum performance period is met and an employee is
eligible for a rating of record, the rating of record of an employee
may not be lowered based on an approved absence from work, including
the absence of a disabled veteran to seek medical treatment as provided
in Executive Order 5396.
(j) A rating of record issued under this subpart--
(1) Is an official rating of record for the purpose of any
provision of this title for which an official rating of record is
required;
(2) Will be transferred between subordinate organizations and to
other Federal departments or agencies in accordance with implementing
issuances;
(3) Will be used as a basis for--
(i) A pay determination under any applicable pay rules;
(ii) Determining reduction-in-force retention standing; and
(iii) Such other action that the Secretary considers appropriate,
as specified in implementing issuances;
(4) Will cover a specified appraisal period; and
(5) Will not be carried over as the rating of record for a
subsequent appraisal period without an actual evaluation of the
employee's performance during the subsequent appraisal period.
(k) Employees who change pay pools after the last day of the
appraisal period and before the effective date of the payout will be
evaluated and assigned a rating of record by the Pay Pool Manager
associated with the pay pool of record on the last day of the appraisal
period and the share assignment and payout distribution determination
will be made in accordance with Sec. 9901.342(g).
(l)(1) An early annual recommended rating of record will be issued
when--
(i) The supervisor (or rating official if different) ceases to
exercise the duties relative to monitoring, developing, and rating
employee performance within 90 days before the end of the appraisal
period; or
(ii) The employee is reassigned, promoted, or reduced in band
resulting in the assignment of a new rating official within 90 days
before the end of the appraisal period.
(2) An employee who is eligible for a recommended rating of record
or an early annual recommended rating of record at the time they move
to a position outside of NSPS will be entitled to a rating of record.
Such ratings of record must be approved through the Pay Pool Panel
process.
(m) At any time prior to the last 90 days of the appraisal period,
a supervisor or other rating official may prepare a performance
assessment (e.g., close-out assessment) for the purpose of providing
input on an employee's performance to a new supervisor. Such an
assessment is not a rating of record (recommended or final).
[[Page 56420]]
Sec. 9901.413 Reconsideration of ratings.
(a) Nonbargaining unit employees. (1) A rating of record or job
objective rating may be challenged by a nonbargaining unit employee
only through the reconsideration process specified in this subpart and
implementing issuances. This process will be the sole and exclusive
agency administrative process for all nonbargaining unit employees to
challenge a rating of record.
(2) Consistent with this part, Pay Pool Managers will decide job
objective rating and rating of record reconsiderations.
(3) If the Pay Pool Manager decision is challenged, consistent with
this part, the Performance Review Authority will make a final decision.
(4) A share assignment determination, payout distribution
determination, or any other payout matter will not be subject to the
reconsideration process or any other agency administrative grievance
system.
(b) Bargaining unit employees. (1) Negotiated grievance procedures
are the exclusive administrative procedures for bargaining unit
employees to challenge a rating of record or job objective rating as
provided for in 5 U.S.C. 7121.
(2) If a negotiated grievance procedure is not available to a
bargaining unit employee or challenging a rating of record or job
objective rating is outside the scope of the employee's negotiated
grievance procedure, a bargaining unit employee may challenge a rating
of record or job objective rating in accordance with this subpart and
implementing issuances.
(c) Recalculation based on adjusted job objective rating or rating
of record. In the event a reconsideration or negotiated grievance
decision results in an adjusted job objective rating or rating of
record the revised rating will be referred to the Pay Pool Manager for
recalculation of the employee's performance payout amount and
distribution.
(1) Any adjustment to salary will be retroactive to the effective
date of the performance payout.
(2) Salary adjustments will be based on the share range appropriate
for the adjusted rating of record as identified in Sec. 9901.342(f).
(3) Share values for the adjusted rating of record will reflect the
share value paid to other members across the pay pool for that rating
cycle.
(4) Decisions made through the reconsideration process or a
negotiated grievance procedure will not result in recalculation of the
payout made to other employees in the pay pool.
(d) Alternative dispute resolution. Alternative dispute resolution
techniques, such as mediation, interest-based problem-solving, or
others, may be pursued at any time during the reconsideration process
consistent with the Component's policies and procedures.
[FR Doc. E8-22483 Filed 9-25-08; 8:45 am]
BILLING CODE 6325-39-P