[Federal Register: February 23, 1999 (Volume 64, Number 35)] [Notices] [Page 8963-9027] [[Page 8963]] _______________________________________________________________________ Part III Office of Personnel Management _______________________________________________________________________ Proposed Laboratory Personnel Management Demonstration Project; Department of the Navy, U.S. Naval Research Laboratory, Washington, DC; Notice [[Page 8964]] OFFICE OF PERSONNEL MANAGEMENT Proposed Laboratory Personnel Management Demonstration Project; Department of the Navy (DoN), U.S. Naval Research Laboratory (NRL), Washington, DC (Authority: 5 U.S.C. 4703) AGENCY: Office of Personnel Management. ACTION: Notice of intent to implement demonstration project. ----------------------------------------------------------------------- SUMMARY: Title VI of the Civil Service Reform Act, 5 U.S.C. 4703, authorized the Office of Personnel Management (OPM) to conduct demonstration projects that experiment with new and different personnel management concepts to determine whether such changes in personnel policy or procedures would result in improved Federal Personnel Management. Section 342 of the National Defense Authorization Act for fiscal year 1995 (Pub. L. 103-337, October 5, 1994) permits the Department of Defense (DoD), with the approval of the OPM, to carry out personnel demonstration projects at DoD laboratories designated as Science and Technology (S&T) Demonstration Project Reinvention Laboratories. The legislation requires that most requirements of 5 U.S.C. 4703 shall apply to the Demonstration Project. Section 4703 requires OPM to publish the proposed project plan in the Federal Register. This notice meets that requirement. DATES: Comment date: Written comments will be considered if received no later than April 9, 1999. Hearing date: A public hearing will be held by OPM on the proposed project plan on March 25, 1999 at the Best Western, Oxon Hill, MD at 12:30 p.m., until testimony is completed. ADDRESSES: Comment address: Send written comments to Judy White, U.S. Office of Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC 20415-6000. FOR FURTHER INFORMATION CONTACT: (1) on proposed demonstration project: Ms. Betty A. Duffield, Director, Strategic Workforce Planning, Code 1001.2, 4555 Overlook Avenue, SW, Washington, DC 20375-5320, 202-767- 3421; (2) on proposed demonstration project and public hearings: Judy White, U.S. Office of Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC 20415-6000, 202-606-1526. SUPPLEMENTARY INFORMATION: The DoD has submitted a proposed demonstration project entitled ``Naval Research Laboratory Personnel Management Demonstration Project'' for consideration under Chapter 47 of 5 U.S.C. The purpose of this project is to demonstrate a flexible and responsive personnel system that will enhance the Laboratory's ability to attract, retain, and motivate a high-quality workforce. To this end, the proposed project involves: (1) Streamlined hiring processes, (2) Broadbanding, (3) Simplified position classification, (4) A Contribution-based Compensation System (CCS), (5) Extended probationary period for new employees, and (6) Modified reduction-in-force (RIF) procedures. A public hearing will be held by OPM on March 25, 1999 at the Best Western, Oxon Hill, MD at 12:30 p.m. during which interested persons or organizations may present their written or oral views concerning the proposed Demonstration Project. So that OPM may regulate the course of the hearing and provide time for all who wish to present comments, parties who want to testify at the hearing are asked to contact one of the persons listed under FOR FURTHER INFORMATION CONTACT: for a specific scheduled time. Priority will be given to scheduled parties; others will be heard in the remaining available time. Each speaker's presentation will be limited to 5 minutes. In other respects, the hearing will be informal. The hearing record will be left open until April 9, 1999 to allow additional written data, views and arguments from the parties participating in the hearing. Dated: February 12, 1999. Office of Personnel Management. Janice R. Lachance, Director. Table of Contents I. Executive Summary II. Introduction A. Purpose B. Problems with the Current System C. Waivers Required D. Expected Benefits E. Participating Organizations and Employees F. Project Design III. Accessions and Internal Placement A. Hiring Authority 1. Background 2. Delegated Examining B. Legal Authority C. Determining Employee and Applicant Qualifications D. Noncitizen Hiring E. Expanded Detail Authority F. Extended Probationary Period G. Definitions 1. Basic Pay 2. Maintained Pay 3. Promotion 4. Reassignment 5. Change to Lower Career Level 6. Pay Adjustment 7. Detail 8. Highest Previous Rate 9. Approving Manager H. Pay Setting Determinations Outside the CCS 1. External New Hires 2. Internal Actions a. Promotion b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to Lower Career Level (except RIF) (1) Examples of Voluntary Change to a Lower Career Level (2) Example of Pay Adjustment (Voluntary Change to Lower Pay) or Change to a Lower Career Level c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to Lower Career Level Due to Adverse or Performance-based Action d. Involuntary Change to Lower Career Level or Reassignment to a Career Track with a Lower Salary Range, Other than Adverse or Performance-based e. RIF Action (including employees who are offered and accept a vacancy at a lower career level or in a different career track) f. Upward Mobility or Other Formal Training Program Selection g. Return to Limited or Light Duty from a Disability as a Result of Occupational Injury to a Position in a Lower Career Level or to a Career Track with Lower Basic Pay Potential than Held Prior to the Injury h. Reassignment i. Student Educational Employment Program j. Hazard Pay or Pay for Duty Involving Physical Hardship I. Priority Placement Program (PPP) J. Expanded Temporary Promotions IV. Sustainment A. Position Classification 1. Career Tracks and Career Levels a. Target Career Level b. Occupational Series and Position Titling c. Classification Standards d. Fair Labor Standards Act (FLSA) (1) Guidelines for FLSA Determinations (2) Nonsupervisory and Leader Positions (3) Supervisory Positions 2. Requirements Document (RD) 3. Delegation of Classification Authority a. Delegation Authority b. Position Classification Accountability B. Integrated Pay Schedule (IPS) 1. Annual Pay Action 2. Overtime Pay 3. Classification Appeals 4. Advanced Research Scientists and Engineers (ARSAE) 5. Distinguished Contributions Allowance (DCA) a. Eligibility b. Nomination c. Reduction or Termination of a DCA d. Lump-Sum DCA Payments e. DCA Budget Allocation f. Concurrent Monetary Payments [[Page 8965]] C. CCS 1. General 2. CCS Process 3. Pay Pool Annual Planning a. Element Weights and Applicability b. Supplemental Criteria 4. Annual CCS Appraisal Process 5. Exceptions 6. Normal Pay Range (NPR)--Basic Pay Versus Contribution 7. Compensation a. General Increases b. Merit Increases c. Locality Increases d. Contribution Awards 8. Career Movement Based on CCS a. Advancements in Level Which May be Approved by the Pay Pool Manager b. Advancements in Level Which Must be Approved by the Director of Research (DOR) c. Advancement to Level V of the Science and Engineering (S&E) Professional Career Track d. Regression to Lower Level 9. CCS Grievance Procedures V. Separations A. Performance-based Reduction-in-pay or Removal Actions B. RIF 1. RIF Authority 2. RIF Definitions a. Competitive Area b. Competitive Level c. SCD (1) CCS Process Results Credit (2) Credit From Other Rating Systems (3) RIF Cutoff Date 3. Displacement Rights a. Displacement b. Retention Standing c. Vacant Positions d. Ineligible for Displacement Rights e. Change to Lower Level Due to an Adverse or Performance-based Action 3. Notice Period 4. RIF Appeals 5. Separation Incentives 6. Severance Pay 7. Outplacement Assistance VI. Demonstration Project Transition A. Initial Conversion or Movement to the Demonstration Project 1. Placement into Career Tracks and Career Levels 2. Conversion of Retained Grade and Pay Employees 3. WGI Buy-in 4. Conversion of Special Salary Rate Employees B. CCS Startup C. Training 1. Types of Training a. NRL Employees b. Supervisors and Managers c. Support Personnel D. New Hires into the Demonstration Project E. Conversion or Movement from Demonstration Project 1. Grade Determination 2. Pay Setting 3. ARSAE 4. Determining Date of Last Equivalent Increase VII. Demonstration Project Duration A. General B. 5-year Reexamination VIII. Demonstration Project Evaluation Plan A. Overview B. Evaluation Models C. Evaluation IX. Demonstration Project Costs A. Transition B. Cost Containment and Controls C. Implementation Costs D. Method of Data Collection X. Automation Support A. General B. Defense Civilian Personnel Data System (DCPDS) C. Core Document (COREDOC) D. RIF Support System (RIFSS) E. CCS Data System (CCSDS) Appendix A: Required Waivers to Laws and Regulations Appendix B: Definitions of Career Tracks and Career Levels Appendix C: Table of Occupational Series within Career Tracks Appendix D: Classification and CCS Elements Appendix E: Computation of the IPS and the NPR Appendix F: RD Sample Appendix G: OPM Intervention Impact Model Appendix H: NRL Internal Evaluation I. Executive Summary Over the last 30 years, many studies of the DoD laboratories have been conducted on laboratory quality and personnel. Virtually all of these studies have recommended improvements in personnel policies, organization, and management. In order to respond to the findings of these studies, this proposed personnel demonstration project encompasses streamlined hiring processes, simplified position classification, the CCS, and modified RIF procedures. The demonstration project described herein was designed by the NRL, with the participation of and review by the DoN, the DoD, and the OPM. The purpose of the demonstration project is to develop and implement a personnel management system that will enable NRL to obtain, maintain, and retain the highest quality workforce possible to accomplish its mission in support of national defense. There are four primary objectives of the demonstration project: (1) Provide NRL increased authority to manage human resources, (2) Enable NRL to hire and retain the best qualified employees, (3) Enable NRL to compensate its employees equitably at a rate that is more competitive with the labor market, and (4) Provide a direct link between levels of individual contribution and the compensation received. Initially, the demonstration project will cover all NRL employees except Senior Executive Service (SES) members, scientific and professional (ST) employees (above GS-15), guards, and trade and craft employees. The guards and trade and craft employees may be included at a later time, after more experience is gained in the operation of the CCS. The project will be reviewed and evaluated throughout its duration by OPM, DoD, DoN, and NRL. In addition to evaluation topics, such as goal attainment and employee and management acceptance, the project will be assessed for cost containment. After 5 years, the project will be evaluated to determine if it is to be made permanent, modified, or terminated. Areas not specifically addressed will use provisions that currently exist in 5 United States Code (U.S.C.) and 5 Code of Federal Regulations (CFR). II. Introduction A. Purpose The goal of this personnel demonstration project is to develop and implement a human resources management system that will enable NRL to obtain, maintain, and retain, into the 21st century, the highest quality workforce possible to accomplish its mission in support of national defense. NRL's mission is to conduct a broadly based multidisciplinary program of scientific research and advanced technological development directed toward new and improved materials, equipment, techniques, systems, and related operational procedures for the DoN. The human resources management system must enable NRL to attract and retain the best scientists, engineers, and support personnel available in the labor market. The demonstration project has the following four primary objectives: a. Provide NRL management with increased authority to manage human resources consistent with its operation under the Navy Working Capital Fund (NWCF) as an industrially-funded activity; b. Provide a recruitment process, within the context of merit principles, that will enable NRL to hire the best qualified employees at a reasonable cost and for competitive compensation; c. Provide a compensation system that will enable NRL to compensate its employees equitably at a rate that is commensurate with their levels of responsibility and contribution, and is competitive with those found in the labor market; and d. Provide a direct link between levels of individual contribution and the compensation received. [[Page 8966]] B. Problems With the Current System The demonstration project addresses a set of issues regarding human resources in the Federal laboratory system. These problems have been extensively documented in a long series of reports by blue-ribbon panels. These include the following: the Packard Report,* the Grace Commission Report,** the Fowler Report,*** and other high-level analyses of the state of Federal research capabilities. In all of these reports, there is a common theme . . . that Federal laboratories need more efficient, cost effective, and timely processes and methods to acquire and retain a highly creative, productive, educated, and trained workforce. --------------------------------------------------------------------------- * White House Science Council, ``Report of the White House Science Council, Federal Laboratory Review Panel,'' (Packard Report), May 1983. ** Task Force on Research and Development (R&D), ``President's Private Sector Survey on Cost Control, Task Force Report on R&D,'' (Grace Commission Report), 8 December 1983. *** Defense Science Board, ``Report of the Defense Science Board 1987 Summer Study on Technology Base Management,'' (Fowler Report), December 1987. --------------------------------------------------------------------------- The NRL must be able to compete with the private sector for the best talent and be able to make job offers in a timely manner with the attendant compensation that attracts high quality employees. Once hired, NRL must have the means to motivate and reward employees for their innovative contributions to ensure that the creative process is continually renewed. Compensation levels must be directly linked to the levels of individual contributions. High contributors must be rewarded both to encourage their continued contributions and to ensure their retention at NRL. Similarly, lower contributing individuals should receive less compensation, or, in some cases, be encouraged to seek other employment. C. Waivers Required NRL proposes changes in the following broad areas to address its problems in human resources management: accessions and internal placements, sustainment, and separations. Appendix A lists the laws, rules and regulations requiring waivers to enable NRL to implement the proposed system. D. Expected Benefits The demonstration project is expected to result in: (1) Maintaining the quality of the NRL workforce in the scientific and engineering disciplines as well as administrative specialist and professional and support professions; (2) More timely processing of personnel actions; (3) Increased retention of high-level contributors and wider distribution of salaries; and (4) Increased satisfaction with human resources management processes by employees and managers. E. Participating Organizations and Employees Initially, the demonstration project would cover all NRL employees except SES members, ST employees, guards, and trade and craft employees. The guards and trade and craft employees may be included at a later time, after more experience is gained in the operation of the CCS. Figure 1 identifies the employees by group for major geographic locations. NRL sites with less than 10 employees each are identified as ``Other'' in Figure 1. BILLING CODE 6325-01-P [[Page 8967]] [GRAPHIC] [TIFF OMITTED] TN23FE99.000 BILLING CODE 6325-01-C [[Page 8968]] A union representative elected from the following bargaining units participated on the Staffing Design Team and was instrumental in the development of the accession and internal placement interventions proposed in this plan: Federal Firefighters Association--Firefighters, Chesapeake Beach, MD (as of 6/23/98 this function was transferred to another activity) Washington Area Metal Trades Council--Trades and Crafts Employees, Washington, DC International Association of Machinists and Aerospace Workers--Guards, Washington, DC F. Project Design In response to the authority granted by Congress to develop a demonstration project, NRL's Director of Research (DOR) set up five design teams to develop the project plan. Each team was led by a senior NRL manager from outside the Human Resources Office (HRO), and was responsible for developing project proposals in one of the five primary functional areas of the project. Each team was comprised of two human resources advisors, an Equal Employment Opportunity (EEO) advisor, several midlevel supervisors or managers, an NRL Administrative Council representative, and several employee representatives (including bargaining unit representatives when appropriate). III. Accessions and Internal Placements A. Hiring Authority 1. Background Private industry and academia are the principal recruiting sources for scientists and engineers at NRL. It is extremely difficult to make timely offers of employment to hard-to-find scientists and engineers. Even when a candidate is identified, he or she often finds another job opportunity before the lengthy recruitment process can be completed. 2. Delegated Examining a. Competitive service positions within the NRL Demonstration Project will be filled through Merit Staffing or under Delegated Examining. b. The ``Rule of Three'' will be eliminated. When there are no more than 15 qualified applicants and no preference eligibles, all eligible applicants are immediately referred to the selecting official without rating and ranking. Rating and ranking will be required only when the number of qualified candidates exceeds 15 or there is a mix of preference and nonpreference applicants. Statutes and regulations covering veterans' preference will be observed in the selection process and when rating and ranking are required. If the candidates are rated and ranked, a random number selection method using the application control number will be used to determine which applicants will be referred when scores are tied after the rating process. Veterans will be referred ahead of non-veterans with the same score. B. Legal Authority For actions taken under the auspices of the NRL Demonstration Project, the legal authority, Public Law 103-337, will be used. For all other actions, NRL will continue to use the nature of action codes and legal authority codes prescribed by OPM, DoD, or DoN. C. Determining Employee and Applicant Qualifications OPM's Qualification Standards Operating Manual for General Schedule (GS) Positions will be used to determine an employee's or candidate's basic eligibility. Employees and candidates must meet the qualification requirements which are equivalent to those described in the OPM Operating Manual at the level identified in Figure 2. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN23FE99.001 BILLING CODE 6325-01-C Special DoN or DoD requirements not covered by the OPM Qualification Standards Operating Manual for GS Positions, such as Defense Acquisition Workforce Improvement Act (DAWIA) qualification requirements for acquisition positions and physical performance requirements for sea duty, work on board aircraft, etc., must be met. D. Noncitizen Hiring Where Executive Orders or other regulations limit hiring noncitizens, NRL will have the authority to approve the hiring of noncitizens into competitive service positions when qualified U.S. citizens are not available. Under the demonstration project, as with the current system, a noncitizen may be appointed only if it has been determined there are no qualified U.S. citizens. In order to make this determination, the position will be advertised extensively throughout the nation using paid advertisements in major newspapers or scientific journals, etc., as well as the ``normal'' recruiting methods. If a noncitizen is the only qualified candidate for the position, the candidate may be appointed. The selection is subject to approval by the NRL approving manager. The demonstration project constitutes a delegated examining agreement from OPM for the purposes of 5 CFR 213.3102(bb). E. Expanded Detail Authority Under the demonstration project, NRL's approving manager would have the authority: (1) To effect details up to 1 year to demonstration project positions without the current 120-day renewal requirement; and (2) To effect details to a higher level position in the demonstration project up to 1 year without competition. Prior service during the preceding 12 months under noncompetitive details to higher level positions and noncompetitive time-limited promotions count toward the 1-year total. The Commanding Officer, NRL would approve details to demonstration project positions in excess of 1 year without the 120-day renewal requirement. F. Extended Probationary Period All current laws and regulations for the current probationary period are retained except that nonstatus candidates hired under the demonstration project in occupations where the nature of the work requires the manager more than one year to assess the employee's job performance will serve a 3-year probationary period. Employees with veterans' preference will maintain their rights under current law and regulation. [[Page 8969]] G. Definitions 1. Basic Pay The total amount of pay received at the rate fixed through CCS adjustment for the position held by an employee including any merit increase but before any deductions and exclusive of additional pay of any other kind. 2. Maintained Pay An employee may be entitled to maintain his or her rate of basic pay if that rate exceeds the maximum rate of basic pay for his or her career level as a result of certain personnel actions (as described in this plan). An employee's initial maintained pay rate is equal to the lesser of (1) the basic pay held by the employee at the time an action is taken which entitles the employee to maintain his or her pay or (2) 150 percent of the maximum rate of basic pay of the career level to which assigned. The employee is entitled to maintained pay for 2 years or until the employee's basic pay is equal to or more than the employee's maintained pay, whichever occurs first. Exceptions to the 2- year limit include employees on grade and pay retention ``grandfathered'' in upon initial conversion into the demonstration project, former special rate employees receiving maintained pay as a result of conversion into the project, and employees placed through the priority placement programs. Employees will receive half of the across- the-board GS percentage increase in basic pay and the full locality pay increase while on maintained pay. Upon termination of maintained pay, the employee's basic pay will be adjusted according to the CCS appraisal process. If the employee's basic pay exceeds the maximum basic pay of his or her career level upon expiration of the 2-year period, the employee's pay will not be reduced; the employee will be in the overcompensated range of basic pay category for CCS pay increase purposes, see Figure 10. Maintained pay shall cease to apply to an employee who: (1) Has a break in service of 1 workday or more; or (2) Is demoted for personal cause or at the employee's request. The employee's maintained rate of pay is basic pay for purposes of locality pay (locality pay is basic pay for purposes of retirement, life insurance, premium pay, severance pay, advances in pay, workers' compensation, and lump-sum payments for annual leave but not for computing promotion increases). Employees promoted while on maintained pay may have their basic pay (excluding locality pay) set up to 20 percent greater than the maximum basic pay for their current career level or retain their ``maintained pay,'' whichever is greater. 3. Promotion The movement of an employee to a higher career level within the same career track or to a different career track and career level in which the new career level has a higher maximum basic salary rate than the career level from which the employee is leaving. 4. Reassignment The movement of an employee from one position to another position within the same career level in the same career track or to a position in another career track and career level in which the new career level has the same maximum basic salary rate as the career level from which the employee is leaving. 5. Change to Lower Career Level The movement of an employee to a lower career level within the same career track or to a different career track and career level in which the new career level has a lower maximum basic salary range than the career level from which the employee is leaving. 6. Pay Adjustment Any increase or decrease in an employee's rate of basic pay where there is no change in the employee's position. 7. Detail The temporary assignment of an employee to a different position for a specified period when the employee is expected to return to his or her regular duties at the end of the assignment. (An employee who is on detail is considered for pay and strength purposes to be permanently occupying his or her regular position.) 8. Highest Previous Rate NRL will establish maximum payable rate rules that parallel the rules in 5 CFR 531.202 and 531.203(c) and (d). 9. Approving Manager The manager who has authority to approve the Request for Personnel Action (RPA), SF-52. H. Pay Setting Determinations Outside the CCS 1. External New Hires a. This includes reinstatements. Initial basic pay for new appointees into the demonstration project may be set at any point within the basic pay range for the career track, occupation, and career level to which appointed that is consistent with the special qualifications of the individual and the unique requirements of the position. These special qualifications may be consideration of education, training, experience, scarcity of qualified applicants, labor market considerations, programmatic urgency, or any combination thereof which is pertinent to the position to which appointed. Highest previous rate may be used to set the pay of new appointees into the demonstration project. (The approving manager authorizes the basic pay.) A recruitment or relocation bonus may be paid using the same provisions available for GS employees under 5 U.S.C. 5753. Employees placed through the DoD Priority Placement Program (PPP), the DoN Reemployment Priority List (RPL), or the Federal Interagency Career Transition Assistance Plan are entitled to the last earned rate if they have been separated. b. Transfers from within DoD and other Federal agencies will have their pay set using pay setting policy for internal actions based on the type of pay action. 2. Internal Actions a. Promotion. When an employee is promoted, the basic pay after promotion may be up to 20 percent greater than the employee's current basic pay. However, if the minimum rate of the new career level is more than 20 percent greater than the employee's current basic pay, then the minimum rate of the new career level is the new basic pay. The employee's basic pay may not exceed the basic pay range of the new career level. Highest previous rate may be applied, if appropriate. (The approving manager authorizes the basic pay.) Note: Most target career level promotions will be accomplished through the CCS appraisal and pay adjustment process (see section IV.C.8). b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to Lower Career Level (except RIF). When an employee accepts a voluntary change to lower pay or lower career level, basic pay may be set at any point within the career level to which appointed, except that the new basic pay will not exceed the employee's current basic pay or the maximum basic pay of the career level to which assigned, whichever is lower. Highest previous rate may be applied, if appropriate. (The approving manager authorizes the basic pay.) (1) Examples of Voluntary Change to a Lower Career Level. An employee in an Administrative Specialist and Professional Career Track position may decide he or she would prefer a Career Level II position in the Administrative Support Career Track because it offers a [[Page 8970]] different work schedule or duty station. An employee in Level IV of the Administrative Specialist and Professional Career Track who has a family member with a serious medical problem and wants to be relieved of supervisory responsibilities may request a change to Career Level III. (2) Example of Pay Adjustment (Voluntary Change to Lower Pay) or Change to a Lower Career Level. An employee may accept a change to lower pay or to a lower career level through a settlement agreement. A Research Physicist who is in Level III and is being paid near the top of Level III, is rated unacceptable in the critical element Research and Development (R&D) Business Management. In settlement of a proposal to remove this employee for unacceptable performance, an agreement is reached which reduces the employee's pay to a rate near the beginning of Level III. c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to Lower Career Level Due to Adverse or Performance-based Action. When an employee is changed to a lower career level, or receives a change to lower pay due to an adverse or performance-based action, the employee's basic pay will be reduced by at least 6 percent, but will be set at a rate within the rate range for the career level to which assigned. (The approving manager authorizes the basic pay.) Such employees will be afforded appeal rights as provided by 5 U.S.C. 4303 or 7512. d. Involuntary Change to Lower Career Level or Reassignment to a Career Track with a Lower Salary Range, Other than Adverse or Performance-based. If the change is not a result of an adverse or performance-based action, the basic pay will be preserved to the extent possible within the basic pay range of the new career level. If the pay cannot be set within the rate range of the new career level, it will be set at the maximum rate of the new career level and the employee's pay will be reduced. If the change is a result of a position reclassification resulting in the employee being assigned to a lower career level or reassigned to a different career track with a lower maximum basic salary range, the employee is entitled to maintained pay. e. RIF Action (including employees who are offered and accept a vacancy at a lower career level or in a different career track). The employee is entitled to maintained pay. f. Upward Mobility or Other Formal Training Program Selection. The employee is entitled to maintained pay. g. Return to Limited or Light Duty from a Disability as a Result of Occupational Injury to a Position in a Lower Career Level or to a Career Track with Lower Basic Pay Potential than Held Prior to the Injury. The employee is entitled indefinitely to the basic pay held prior to the injury and will receive full general and locality pay increases. If upon reemployment, an employee was not given the higher basic pay (basic pay received at the time of the injury), any retirement annuity or severance pay computation would be based on his or her lower basic pay (salary based on placement in a lower career level). Even though the Department of Labor (DOL) would make up the difference between the lower basic pay and the higher basic pay earned at the time of injury, the DOL portion is not considered in the retirement or severance pay computation. h. Reassignment. The basic pay normally remains the same. Highest previous rate may be applied, if appropriate. (The approving manager authorizes the basic pay.) i. Student Educational Employment Program. Initial basic pay for new appointees may be set at any point within the basic pay range for the career track, occupation, and career level to which appointed. Basic pay may be increased upon return to duty (RTD) or conversion to temporary appointment, in consideration of the student's additional education and experience at the time of the action. Students who work under a parallel work study program may have their basic pay increased in consideration of additional education and/or experience. Basic pay for students may be increased based on their CCS appraisal. (The approving manager authorizes the basic pay.) j. Hazard Pay or Pay for Duty Involving Physical Hardship. Employees under the demonstration project will be paid hazardous duty pay under the provisions of 5 CFR part 550, subpart I. I. Priority Placement Program (PPP) Current PPP procedures apply to new hires and internal actions. J. Expanded Temporary Promotions Current regulations require that temporary promotions for more than 120 days to a higher level position than previously held must be made competitively. Under the demonstration project, NRL would be able to effect temporary promotions of not more than 1 year without competition to positions within the demonstration project. Prior service during the preceding 12 months under noncompetitive time-limited promotions and noncompetitive details to higher level positions count toward the 1- year total. IV. Sustainment A. Position Classification The position classification changes are intended to streamline and simplify the process of identifying and categorizing the work done at NRL. NRL will establish an Integrated Pay Scale (IPS) for all demonstration project positions in covered occupations. The IPS will replace the current GS and extend the pay scale to the equivalent of the ES-4 level of the ``Rates of Basic Pay for the Members of the Senior Executive Service (SES).'' 1. Career Tracks and Career Levels Within the IPS, occupations with similar characteristics will be grouped together into four career tracks. Each career track consists of a number of career levels, representing the phases of career progression that are typical for the respective career track. The career levels within each career track are shown in Figure 3, along with their GS equivalents. The equivalents are based on the levels of responsibility as defined in 5 U.S.C. 5104, and not on current basic pay schedules. Appendix B provides definitions for each of the career tracks and the career levels within them. The career tracks and career levels were developed based upon administrative, organizational, and position management considerations at NRL. They are designed to enhance pay equity and enable a more seamless career progression to the target career level for an individual position or category of positions. This combination of career tracks and career levels allows for competitive recruitment of quality candidates at differing rates of compensation within the appropriate career track, occupation, and career level. It will also facilitate movement and placement based upon contribution, in conjunction with the CCS described in paragraph IV.C. Other benefits of this arrangement include a dual career track for S&E employees and greater competitiveness with academia and private industry for recruitment. Appendix C identifies the occupational series currently within each of the four career tracks. BILLING CODE 6325-01-P [[Page 8971]] [GRAPHIC] [TIFF OMITTED] TN23FE99.002 BILLING CODE 6325-01-C a. Target Career Level. Each position will have a designated target career level under the demonstration project. This target career level will be identified as the career level to which an incumbent may be advanced without further competition within a career track. These target career levels will be based upon present career ladders and the results of a pending position management study. Target career levels may vary based upon occupation or career track. Employees' basic pay will be capped at the target career level until other appropriate conditions (competition, availability of a high-grade billet, position management approval, increase in or acquisition of higher level duties, approval of an accretion of duties promotion, etc.) have been met, and the employee has been promoted into the next higher level. b. Occupational Series and Position Titling. Presently, NRL positions are identified by occupational groups and series of classes in accordance with OPM position classification standards. Under the demonstration project, NRL will continue to use occupational series designators consistent with those currently authorized by OPM to identify positions. This will facilitate related personnel management requirements, such as movement into and out of the demonstration project. Other occupational series may be added or deleted as needed to support the demonstration project. Interdisciplinary positions will be accommodated within the system based upon the qualifications of the individual hired. Titling practices consistent with those established by OPM classification standards will be used to determine the official title. Such practice will facilitate other personnel management requirements, such as the following: movement into and out of the demonstration project, reduction in force, external reporting requirements, and recruitment. CCS career level descriptors and Requirements Document (RD) (see paragraph IV.A.2) information will be used for specific career track, career level, and titling determinations. c. Classification Standards. Under the proposed demonstration project, the number of classification standards would be reduced from over 70 to 4. (See Figure 2.) Each standard would align with one of the four career tracks and would cover all positions within that career track. Each career track has two or three elements that are considered in both classifying a position and in judging an individual's contributions for pay setting purposes. Each element has generic descriptors for every career level. These descriptors explain the type of work, degree of responsibility and scope of contributions that need to be ultimately accomplished to reach the highest basic pay potential within each career level. (See Appendix D.) To classify a position, a manager would select the career level which is most indicative overall of the type of duties to be performed and the contributions [[Page 8972]] needed. For example: A supervisor needs a secretarial position for a branch. In reading the elements and descriptors for the Administrative Support Career Track, the supervisor determines that the Level II descriptors illustrate the type of work and contributions needed. Therefore, the position would be classified as a Secretary, Level II. d. Fair Labor Standards Act (FLSA). Demonstration project positions will be covered under the FLSA and 5 CFR part 551. Determination of their status (exempt or nonexempt) will be made based on the criteria contained in 5 CFR Part 551. The status of each new position under the demonstration project will be determined using computer assisted analysis as part of an automated process for preparing the RD. Those positions for which the computer is unable to make the final FLSA determination will be ``flagged'' for referral to a human resources specialist for determination. (1) Guidelines for FLSA Determinations. a. Supervisory Information: provided through an automated system in a checklist format; results of this checklist have an impact on FLSA determination. b. FLSA Information: provided through an automated system in a checklist format; results of this checklist in conjunction with the supervisory information provide a basis for the FLSA determination. c. If required, the section entitled ``Purpose of Position'' will be used to assist in FLSA determination. d. RD's requiring additional review before being finalized will be forwarded to a human resources specialist to review the FLSA determination. (2) Nonsupervisory and Leader Positions. Figure 4 shows the exempt or nonexempt status applicable to nonsupervisory and leader positions in the indicated career track and career level. In those cases where ``Review'' is indicated, the FLSA status must be determined based on the specific duties and responsibilities of the subject position. (3) Supervisory Positions. FLSA determination for supervisory positions must be made based on the duties and responsibilities of the particular position involved. As a rule, if a position requires supervision of employees who are exempt under FLSA, the supervisory position is likely to be exempt also. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN23FE99.003 BILLING CODE 6325-01-C 2. RD An RD will replace the Optional Form 8 and position description used under the current classification system. The RD will be prepared by managers using a menu-driven, automated system. The automated system will enable managers to classify and establish many positions without intervention by a human resources specialist. The abbreviated RD will combine the position information, staffing requirements, and contribution expectations into a 1- or 2-page document. Appendix F provides a sample RD for an Electronics Engineer, Level II. 3. Delegation of Classification Authority Classification authority will be delegated to managers as a means of increasing managerial effectiveness and expediting the classification function. This will be accomplished as follows: BILLING CODE 6325-01-P [[Page 8973]] [GRAPHIC] [TIFF OMITTED] TN23FE99.004 BILLING CODE 6325-01-C [[Page 8974]] a. Delegated Authority. 1. The NRL Commanding Officer (CO) will delegate classification authority to the management levels shown in Figure 5, i.e., DOR, Associate Directors of Research (ADORS), division superintendents or equivalent levels, and the HRO Director (the HRO Director may further delegate to selected HRO specialists). 2. The classification approval must be at least one level above the first-level supervisor of the position. 3. First-line supervisors at any level will provide classification recommendations. 4. HRO support will be available for guidance and recommendations concerning the classification process. (Any dispute over the proper classification between a manager and the HRO will be resolved by the DOR.) b. Position Classification Accountability. Those to whom authority is delegated are accountable to the DOR. The DOR is accountable to the CO. Those with delegated authority are expected to comply with demonstration project guidelines on classification and position management, observe the principle of equal pay for equal work, and ensure that RD's are current. First-line supervisors will develop positions using the automated system. All positions must be approved through the proper chain of command. B. IPS Under the demonstration project, an IPS will be established which will cover all demonstration project positions at NRL. This IPS will extend from the basic pay for GS-1, step 1 (from the GS without locality pay) to the basic pay for ES-4 (from ``Rates of Basic Pay for Members of the Senior Executive Service (SES)''). 1. Annual Pay Action NRL will eliminate separate pay actions for within-grade increases, general and locality pay increases, performance awards, quality step increases, and most career promotions, and replace them with a single annual pay action (including either permanent or bonus pay or both) linked to the CCS. This will eliminate the paperwork and processing associated with multiple pay actions which average 3 per employee per year. 2. Overtime Pay Overtime will be paid in accordance with 5 CFR part 550, subpart A. All nonexempt employees will be paid overtime based upon their ``hourly regular rate of pay,'' as defined in existing regulation (5 CFR part 551). 3. Classification Appeals An employee may appeal the occupational series, title, career track, or career level of his or her position at any time. An employee must formally raise the area of concern to supervisors in the immediate chain of command, either verbally or in writing. If an employee is not satisfied with the supervisory response, he or she may then appeal to the DoD appellate level. If an employee is not satisfied with the DoD response, he or she may then appeal to the OPM only after DoD has rendered a decision under the provisions of this demonstration project. Since OPM does not accept classification appeals on positions which exceed the equivalent of a GS-15 level, appeal decisions involving Career Level V for Advanced Research Scientists and Engineers (ARSAE) will be rendered by DoD and will be final. Appellate decisions from OPM are final and binding on all administrative, certifying, payroll, disbursing, and accounting officials of the Government. Time periods for case processing under 5 CFR subpart F, sections 511.603, 511.604, and 511.605 apply. An employee may not appeal the accuracy of the RD, the demonstration project classification criteria, or the pay-setting criteria; the propriety of a basic pay schedule; the assignment of occupational series to the occupational family; or matters grievable under an administrative or negotiated grievance procedure or an alternative dispute resolution procedure. The evaluation of classification appeals under this demonstration project is based upon the demonstration project classification criteria. Case files will be forwarded for adjudication through the HRO and will include copies of appropriate demonstration project criteria. 4. Advanced Research Scientists and Engineers (ARSAE) The NRL demonstration project includes a Career Level V for the Science and Engineering (S&E) Professional Career Track. Career Level V is created for ARSAE's. Current legal definitions of SES and ST positions do not fully meet the needs of NRL. The SES designation is appropriate for executive level managerial positions whose classification exceeds the GS-15 grade level. The primary knowledge and abilities of SES positions relate to supervisory and managerial responsibilities. Positions classified as STs are reserved for bench research scientists and engineers; these positions require a very high level of technical expertise and they have little or no supervisory responsibility. NRL currently has positions (typically branch head, principal investigator or team leaders) that have characteristics of both SES and ST classifications. Most branch heads in NRL are responsible for supervising other GS-15 positions, including non-supervisory research engineers and scientists and, in some cases, ST positions. Most branch heads are classified at the GS-15 level, although their technical expertise warrants classification beyond GS-15. Because of their management responsibilities, these individuals are excluded from the ST system. Because of management considerations, they cannot be placed in the SES. Management considers the primary requirement for branch heads to have knowledge of and expertise in the specific scientific and technology areas related to the mission of their branches. Historically, the incumbents of these positions have been recognized within the community as scientific and engineering leaders who possess primarily scientific or engineering credentials and are considered experts in their field. However, they must also possess strong managerial and supervisory ability. Therefore, although some of these employees have scientific credentials that might compare favorably with ST criteria, classification of these positions as ST is not an option because the managerial and supervisory responsibilities inherent in the positions cannot be ignored. Current GS-15 branch heads will convert into the demonstration project at Career Level IV. After conversion they will be reviewed against established criteria to determine if they should be reclassified to Career Level V. Other positions possibly meeting criteria for classification to Career Level V will be reviewed on a case-by-case basis. The salary range is a minimum of 120 percent of the minimum rate of basic pay for GS-15 with a maximum rate of basic pay established at the rate of basic pay (excluding locality pay) for SES level 4 (ES-4). Vacant positions in Career Level V will be competitively filled to ensure that selectees are preeminent researchers and technical leaders in the specialty fields who also possess substantial managerial and supervisory abilities. DoD will test Career Level V for a 5-year period. ARSAE positions established in Career Level V will be subject to limitations imposed by OPM and DoD. Career Level V will be established only in an S&T Reinvention Laboratory which employs scientists, [[Page 8975]] engineers, or both. ARSAE incumbents of Career Level V positions will work primarily in their professional capacity on basic or applied research and secondarily perform managerial or supervisory duties. The number of Career Level V, or equivalent, positions within the DoD will not exceed 40. These 40 positions will be allocated by Assistant Secretary of Defense (Force Management Policy) and administered by the respective services. The number of ARSAE Career Level V positions will be reviewed periodically to determine appropriate position requirements. Career Level V position allocations will be managed separately from SES, ST, and Senior Level (SL) positions. An evaluation of the Career Level V concept will be performed during the fifth year of the demonstration project. Specific details regarding the control and management of all Level V assets will be included in the demonstration project's operating procedures. Level V is expected to afford NRL the ability to more effectively and efficiently exercise managerial control at the local level, while adhering to merit staffing, affirmative action, and equal employment opportunity principles. 5. Distinguished Contributions Allowance (DCA) The DCA is a temporary monetary allowance up to 25 percent of basic pay (which, when added to an employee's rate of basic pay, may not exceed the rate of basic pay for ES-4) paid on either a bi-weekly basis (concurrent with normal pay days) or as a lump sum following completion of a designated contribution period(s), or combination of these, at the discretion of NRL. It is not basic pay for any purpose, i.e., retirement, life insurance, severance pay, promotion, or any other payment or benefit calculated as a percentage of basic pay. The DCA will be available to certain employees at the top of their target career levels, whose present contributions are worthy of scores found at a higher career level, whose level of contribution is expected to continue at the higher career level for at least 1 year, and current market conditions require additional compensation. Assignment of the DCA rather than a change to a higher career level will generally be appropriate for such employees under the following circumstances: (1) When it is not certain that the higher level contributions will continue indefinitely (e.g., a special project expected to be of 1- up to 5-year duration), or (2) when employees have reached the maximum rate of the target career level for the position and when no further promotion or compensation opportunities are available or externally imposed limits (such as high-grade restrictions) make changes to higher career levels unavailable, and (3) current market conditions compensate similar contributions at a greater rate in like positions in private industry and academia and there is a history of significant recruitment and retention difficulties associated with such positions. a. Eligibility. (1) Employees in Levels III and IV of the S&E Professional Career Track and those in Levels III, IV, and V of the Administrative Specialist and Professional Career Track are eligible for the DCA if they have reached the top CCS score for their target career level with a recommendation for a higher Overall Contribution Score (OCS) for their contributions, they have reached the maximum rate of basic pay available for their target career level, the higher level contributions are not expected to last indefinitely, and market conditions require greater compensation for these contributions. (2) Employees may receive a DCA for up to 3 years. The DCA authorization will be reviewed and reauthorized as necessary, but at least annually at the time of the CCS appraisal through nomination by the pay pool manager and approval by the DOR. Employees in the S&E Professional Career Track may receive an extension of up to 2 additional years (for a total of 5 years). The DCA extension authorization will be reviewed and reauthorized as necessary, but at least on an annual basis at the time of the CCS appraisal through nomination by the pay pool manager and approval by the DOR. (3) Monetary payment may be up to 25 percent of basic pay. (4) Nominees would be required to sign a memorandum of understanding or a statement indicating they understand that the DCA is a temporary allowance; it is not a part of basic pay for any purpose; it would be subject to review at any time, but at least on an annual basis, and the reduction or termination of the DCA is not appealable or grievable. b. Nomination. In connection with the annual CCS appraisal process, pay pool managers may nominate eligible employees who meet the criteria for the DCA. Packages containing the recommended amount and method of payment of the DCA and a justification for the allowance will be forwarded through the supervisory chain to the DOR. Details regarding this process will be addressed in standard operating procedures. These details will include time frames for nomination and consideration, payout scheme, justification content and format, budget authority, guidelines for selecting employees for the allowance and for determining the appropriate amount, and documentation required by the employee acknowledging he or she understands the criteria and temporary nature of the DCA. c. Reduction of Termination of a DCA. (1) A DCA may be reduced or terminated at any time the NRL deems appropriate (e.g., when the special project upon which the DCA was based ends; if performance or contributions decrease significantly; or if labor market conditions change, etc.). The reduction or termination of a DCA is not appealable or grievable. (2) If an employee voluntarily separates from NRL before the expiration of the DCA, an employee may be denied DCA payment. Authority to establish conditions and/or penalties will be spelled out in the written authorization of an individual's DCA. d. Lump-Sum DCA Payments. (1) When NRL chooses to pay part or all of an employee's DCA as a lump sum payable at the end of a designated period, the employee will accrue entitlement to a growing lump-sum balance each pay period. The percentage rate established for the lump-sum DCA will be multiplied by the employee's biweekly amount of basic pay to determine the lump sum accrual for any pay period. This lump-sum percentage rate is included in applying the 25-percent limitation. (2) If an employee covered under a lump-sum DCA authorization separates, or the DCA is terminated (see paragraph c), before the end of that designated period, the employee may be entitled to payment of the accrued and unpaid balance under the conditions established by NRL. NRL may establish conditions governing lump-sum payments (including penalties in cases such as voluntary separation or separation for personal cause) in general plan policies or in the individual employee's DCA authorization. e. DCA Budget Allocation. The DOR may establish a total DCA budget allocation that is never greater than 10 percent of the basic salaries of the employees currently at the cap in the S&E Professional Career Track, Career Levels III and IV, and the Administrative Specialist and Professional Career Track, Career Levels III, IV, and V. f. Concurrent Monetary Payments. Employees eligible for a DCA may be authorized to receive a DCA and a retention allowance at the same time, up to a combined total of 25 percent of [[Page 8976]] basic pay. A merit increase which raises an employee's pay to the top rate for his or her target career level (thus making the employee eligible for the DCA) may be granted concurrent with the DCA. Receipt of the DCA does not preclude an employee from being granted any award (including a contribution award) for which he or she is otherwise eligible. C. Contribution-Based Compensation System (CCS) 1. General The purpose of the CCS is to provide an effective means for evaluating and compensating the NRL workforce. It provides management, at the lowest practical level, the authority, control, and flexibility needed to develop a highly competent, motivated, and productive workforce. CCS will promote increased fairness and consistency in the appraisal process, facilitate natural career progression for employees, and provide an understandable basis for career progression by linking contribution to basic pay determinations. CCS combines performance appraisal and job classification into one annual process. At the end of each CCS appraisal period, basic pay adjustment decisions are made based on each employee's actual contribution to the organization's mission during the period. A separate function of the process includes comparison of performance in critical elements to acceptable standards to identify unacceptable performance that may warrant corrective action in accordance with 5 CFR part 432. Supervisory officials determine scores to reflect each employee's contribution, considering both how well and at what level the employee is performing. Often the two considerations are inseparable. For example, an employee whose written documents need to be returned for rework more often than those of his or her peers also likely requires a closer level of oversight, an important factor when considering level of pay. The performance planning and rating portions of the demonstration project's appraisal process constitute a performance appraisal program which complies with 5 CFR part 430 and the DoD Performance Management System, except where waivers have been approved. Performance-related actions initiated prior to implementation of the demonstration project (under DoN performance management regulations) shall continue to be processed in accordance with the provisions of the appropriate system. 2. CCS Process CCS measures employee contributions by breaking down the jobs in each career track using a common set of ``elements.'' The elements for each career track shown in Figure 6 and described in detail in Appendix D have been initially identified for evaluating the contributions of NRL personnel covered by this initiative. They are designed to capture the highest level of the primary content of the jobs in each career level of each career track. Within specific parameters, elements may be weighted or even determined to be not applicable for certain categories of positions. All elements applicable to the position are critical as defined by 5 CFR part 430. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN23FE99.005 BILLING CODE 6325-01-C For each element, ``Discriminators'' and ``Descriptors'' are provided to assist in distinguishing low to high contributions. The discriminators (2-4 for each element) break down aspects of work to be measured within the element. The descriptors (one for each level for each discriminator) define the expected level of contribution at the top of the related career level for that element. Scores currently range between 0 and 89; specific relationships between scores and career levels are different for each career track. (See Figure 7.) Basic pay adjustments are based on a comparison of the employee's level of contribution to the normal pay range for that contribution and the employee's present rate of basic pay. BILLING CODE 6325-01-P [[Page 8977]] [GRAPHIC] [TIFF OMITTED] TN23FE99.006 BILLING CODE 6325-01-C [[Page 8978]] Supervisors and pay pool panels determine an employee's contribution level for each element. A contribution score, available to that level, is assigned accordingly. For example, a scientist whose contribution in the Technical Problem Solving element for S&E Professionals is determined to be at Level II may be assigned a score of 18 to 47. Eighteen reflects the lowest level of responsibility, exercise of independent judgment, and scope of contribution; and 47 reflects the highest. For Level III contributions, a value of 44 to 66 may be assigned. Each higher career level equates to a higher range of values up to a total of 89 points for S&E professionals. The maximum score of (currently) 89 provides the potential for basic pay of $118,000 plus locality pay up to a cap of $125,900. Each element is judged separately and level of work may vary for different elements. The scores for each element are then averaged to determine the Overall Contribution Score (OCS). The CCS process will be carried out within a pay pool that typically consists of all employees in an NRL division. Pay pools should have a minimum size of about 35 employees; the largest pay pool may have about 300 employees. To facilitate equity and consistency, element weights and applicability and CCS score adjustments are determined by a pay pool panel, rather than by individual supervisors. Basic pay adjustments, contribution awards, and DCA's may be recommended by the pay pool panel or by individual supervisors. Pay pool panels will consist of supervisory officials or other individuals who are familiar with the organization's work and the contributions of its employees. In most cases division heads (mostly SES members) function as pay pool managers, with final authority to decide weights, scores, basic pay adjustments, and awards. 3. Pay Pool Annual Planning Prior to the beginning of each annual appraisal period, the pay pool manager and panel will review pay pool-wide expectations in the areas described below. a. Element Weights and Applicability. As written, all elements are weighted equally. If pay pool panels and managers decide that some elements are more important than others or that some do not apply at all to the effective accomplishment of the organization's mission, they may establish element weights including a weight of zero which renders the element not applicable. Element weights are not intended for application to individual employees. Instead, they may be established only for subcategories of positions, not to exceed a maximum of five subcategories in each career track. Subcategories for S&E Professionals might be: Bench Level S&E, Supervisor, Program Manager, and Support S&E. Subcategories should include a minimum of five positions, when possible. Weights must be consistent within the subcategory. b. Supplemental Criteria. The CCS level descriptors are designed to be general so that they may be applied to all employees in the career track. Supervisors and pay pool panels may establish supplemental criteria to further inform employees of expected contributions. This may include (but is not limited to) examples of contributions which reflect work at each level for each element, taskings, objectives, and/ or standards. 4. Annual CCS Appraisal Process (See Figure 8) BILLING CODE 6325-01-P [[Page 8979]] [GRAPHIC] [TIFF OMITTED] TN23FE99.007 BILLING CODE 6325-01-C [[Page 8980]] The NRL appraisal period will be 1 year, with a minimum appraisal period of 90 days. At the beginning of the appraisal period, or upon an employee's arrival at NRL or into a new position, the following information will be communicated to employees so that they are informed of the basis on which their performance and contributions will be assessed: their career track and career level; applicable elements, descriptors and discriminators; element weights; any established supplemental criteria; OCS's which correspond to each employee's NPR (see section IV.C.6); and basic acceptable performance standards. The CCS Summary Form (Appendix D) will be used to facilitate and document this communication. All employees will be provided this information; however, employees in some situations may not receive CCS scores. These situations are described in section IV.C.5, Exceptions. The communication of information described by this paragraph constitutes performance planning as required by 5 CFR 430.206(b). Supervisor and employee discussion of organizational objectives, specific work assignments, and individual performance expectations (as needed), should be conducted on an ongoing basis. Either the supervisor or the employee may request a formal review during the appraisal period; otherwise, a documented review is required only at the end of the appraisal period. At the end of the appraisal period, employees will provide input describing their contributions by preparing a Yearly Accomplishment Report (YAR). Standard operating procedures will provide guidance for paypools and employees on the content and format of YARs, and on other types of information about employee contributions which should be developed and considered by supervisors. This will include procedures for capturing contribution information regarding employees who serve on details, who change positions during the appraisal period, who are new to NRL, and other such circumstances. Supervisors will review the employee's YAR and other available information about the employee's contributions during the appraisal period and determine an initial CCS score for each element. In addition, supervisors will determine whether the employee's performance was acceptable or unacceptable in each element when compared against the basic acceptable performance standards. The rating of the elements (all that are applicable are designated critical as defined by 5 CFR part 430) will serve as the basis for assignment of a summary level of Acceptable or Unacceptable. If any element is rated unacceptable, the summary level will be Unacceptable; otherwise the summary level will be Acceptable. Unacceptable ratings must be reviewed and approved by a higher level than the first-level supervisor. If an employee changes positions during the last 90 days of the appraisal period, the losing supervisor will conduct a performance rating (i.e., rate each element Acceptable or Unacceptable and determine the summary level) at the time the employee moves to the new position. This will serve as the employee's rating of record. For employees who report to NRL during the last 90 days of the appraisal period, any close-out rating of Acceptable (or its equivalent) or better from another Government agency will serve as the employee's rating of record (the employee will be rated Acceptable). The determination of CCS scores and application of related pay adjustments for such employees is set forth in section IV.C.5, ``Exceptions''. The pay pool panel will meet to compare scores, make appropriate adjustments, and determine the final OCS for each employee. Final approval of CCS scores and element and summary ratings will rest with the pay pool manager (unless higher level approval is requested or deemed necessary). Supervisors will communicate the element scores, ratings and OCS summary level to each employee, and discuss the results and plans for continuing growth. Employees rated Unacceptable will be provided assistance to improve their performance (see paragraph V.A). The CCS process will be facilitated by an automated system, the CCSDS. During the appraisal process, all scores and supervisory comments will be entered into the CCSDS. The CCSDS will provide supervisors, pay pool panel members, and pay pool managers with background information (e.g., YARS, employees' prior year scores and current basic pay) and spreadsheets to assist them in comparing contributions and determining scores. Records of employee appraisals will be maintained in the CCSDS, and the system will be able to produce a hard copy document for each employee which reflects his or her final approved score. 5. Exceptions All employees who have worked 90 days or more by the end of the appraisal period will receive a performance rating of record. However, in certain situations NRL does not consider the actual determination of CCS scores to be necessary. In other situations, it may not be feasible to determine a meaningful CCS score. Therefore, the determination of CCS scores will not be required for the following types of employees: a. Employees on intermittent work schedules; b. Those on temporary appointments of 1 year or less; c. Those who work less than 6 months in an appraisal period (e.g., on extended absence due to illness); d. Those on long-term training for all or much of the appraisal period; e. Employees who have reported to NRL or to a new position during the 90 days prior to the end of the appraisal period; and f. Student Educational Employment Program employees. If supervisors believe that the nature of such an employee's contributions provide a meaningful basis to determine a CCS score, they may appraise employees in the categories listed above, provided that the employee has worked at least 90 days in an NRL position during the appraisal period. Those employees mentioned above who are not appraised under CCS will not be eligible for merit increases or contribution awards. (This will affect the calculation of service credit for RIF (see section V.C.). All employees listed above will be given full general and locality increases (as described in sections IV.C.7.a, ``General Increases,'' and IV.C.7.c, ``Locality Increases''). All employees are eligible for awards under NRL's Incentive Awards Program, such as ``On- the-Spot'' and Special Act Awards, as appropriate. 6. Normal Pay Range (NPR)--Basic Pay Versus Contribution The NRL CCS assumes a relationship between the assessed contribution of the employee and a normal range of pay. For all possible contribution scores available to employees, the NPR spans a basic pay range of 12 percent. Employees who are compensated below the NPR for their assessed score are considered ``undercompensated,'' while employees compensated above the NPR are considered ``overcompensated.'' The lower boundary of the NPR is initially established by fixing the basic pay equivalent to GS-1, step 1 of the General Schedule (without locality pay), with a CCS score of zero. The upper boundary is fixed at the basic pay equivalent to GS-15, step 10 of the General Schedule (without locality pay), with a CCS score of 80. The distance between these upper and lower boundaries for a given overall contribution score is 12 percent of basic pay for all available CCS scores. Using [[Page 8981]] these constraints, the interval between scores is approximately 2.37 percent through the entire range of pay. The lines were extended using the same interval so that the upper boundary of the normal range of basic pay accommodates the basic pay for SES Level IV. This currently occurs at a contribution score near 90. (The actual end point will vary depending on any pay adjustment factors, e.g., general increase.) The formula used to derive the NPR may be adjusted in future years of the demonstration project. See Appendix E for further details regarding the formulation of the NPR. Each year the boundaries for the NPR plus the minimum and maximum rate of basic pay for each career level (except the maximum rate for Level V of the S&E Professional Career Track) will be adjusted by the amount of the across-the-board GS percentage increase granted to the Federal workforce. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN23FE99.008 BILLING CODE 6325-01-C At the end of each annual appraisal period, employees' contribution scores will be determined by the CCS process described above, then their CCS scores and current rates of basic pay will be plotted as a point on a graph along with the NPR. The position of the point relative to the NPR gives a relative measure of the degree of over- or undercompensation of the employee, as shown in Figure 9. Points which fall below the NPR indicate undercompensation; points which fall above the NPR indicate overcompensation. 7. Compensation Presently, employee pay is established, adjusted, and/or augmented in a variety of ways, including general pay increases, locality pay increases, special rate adjustments, within-grade increases (WGI's), quality step increases (QSI's), performance awards, and promotions. Multiple pay changes in any given year (averaging 3 per employee) are costly to process and do not consider comprehensively the employee's contributions to the organization. Under the demonstration project, NRL will distribute the budget authority from the sources listed above into 4 pay categories: (1) General increase, (2) locality increase, (3) merit increase, and (4) contribution awards. From these pay categories, a single annual pay action would be authorized based primarily on employees' contributions. Competitive promotions will still be processed under a separate pay action; most career promotions will be processed under the CCS. In general, the goal of CCS is to pay in a manner consistent with employee contribution or, in other words, migrate employees' basic pay closer to the NPR. One result may be a wider distribution of pay among employees for a given level of duties. After the CCS appraisal process has been completed and the employees' standing relative to the NPR has been determined, the pay pool manager, in consultation with the pay pool panel or other pay pool supervisory and staff officials, will determine the appropriate basic pay change and contribution award, if appropriate, for each employee. Standard operating procedures will provide guidance to assist pay pool managers in making pay determinations. In most cases, the pay pool manager will approve basic pay changes and awards. In some cases, however, approval of a higher level official will be required. Figure 10 summarizes the eligibility criteria and applicable limits for each pay category. BILLING CODE 6325-01-P [[Page 8982]] [GRAPHIC] [TIFF OMITTED] TN23FE99.009 BILLING CODE 6325-01-C The Contribution-based Compensation System Data System (CCSDS) will calculate each employee's OCS and his or her standing in relation to the NPR. The system will provide a framework to assist pay pool officials in selecting and implementing a payout scheme. It will alert management to certain formal limits in granting pay increases; e.g., an employee may not receive a permanent increase above the maximum rate of basic pay for his or her career level until a corresponding level change has been effected. Once basic pay and award decisions have been finalized and approved, the CCSDS will prepare the data file for processing the pay actions, and maintain a consolidated record of CCS pay actions for all NRL demonstration project employees. a. General Increases. General increase budget authority will be available to pay pools as a straight percentage of employee salaries, as derived under law. Pay pool panels or managers may reduce or deny general pay increases for employees whose contributions are in the overcompensated category. (See Figure 10.) Such reduction or denial may not place an employee in the undercompensated category. An employee receiving maintained pay (except one receiving maintained pay for an occupational injury who receives a full general pay increase) will receive half of the across-the-board GS percentage increase in basic pay until the employee's basic pay is within the basic pay range assigned for their current position or for 2 years, whichever is less. NRL employees on pay retention at the time of demonstration project implementation or as a result of placement through the DoN RPL, DoD PPP or the Federal Interagency Career Transition Assistance Plan will receive half of the across-the-board GS percentage increase until the employee's maintained pay is exceeded by the maximum rate for the employee's career level or the maintained pay is ended due to a promotion. General increase authority not expended is available to either the merit increase or contribution award pay categories or both. b. Merit Increases. Merit increases will be calculated after the determination of employees' general increases. Merit increases may be granted to employees whose contribution places them in the ``normal'' or ``undercompensated'' categories. (See Figure 10.) In general, the higher the range in which the employee is contributing compared to his or her basic pay, the higher the merit increase should be. However, the following limitations apply: a merit increase may not place any employee's basic pay (1) in the ``overcompensated'' category (as established by the NPR for the upcoming year, which has been adjusted by the amount of the new general increase); (2) in excess of SES Level IV; (3) in excess of the maximum rate of basic pay for the individual's career level (unless the employee is being concurrently advanced to the higher career level); or (4) above any outside-imposed dollar limit (e.g., high-grade ceiling). Merit increases for employees in the NPR will be limited to 6 percent of basic pay, not to exceed the upper limit of the NPR for the employee's score. In addition, merit increases for employees in the undercompensated range may not exceed 6 percent above the lower rail of the NPR, or 20 percent of basic pay without DOR approval. The NRL merit increase category will include what is now WGI's, QSI's, and career ladder promotions. This category will be set each year near 2.4 percent of total NRL basic pay rates (including the general increase rate approved for the coming year). This is close to the average of NRL's expenditures for step increases and promotions over the last 3 years. This percentage has been used by other demonstration projects in the past. The 2.4 percent figure will be adjusted as necessary to facilitate cost containment over the life of the demonstration project. The amount of budget authority available to each pay pool will be determined annually by the DOR. Because statistical variations will occur in year-to-year personnel growth, any unexpended merit increase authorities may be carried over for use in the next cycle or transferred to the Contribution Awards Category. Any unexpended merit increase authority must be used no later than the payout for the next rating cycle. c. Locality Increases. All employees will be entitled to the locality pay [[Page 8983]] increase authorized by law for their official duty station. In addition, the locality-adjusted pay of any employee may not exceed the rate for level IV of the Executive Schedule, except that, for employees in Career Level V of the S&E Professional Career Track, the locality- adjusted pay cap is level III of the Executive Schedule ($125,900 from ``Rates of Pay for the Executive Schedule,'' effective since January 1998). d. Contribution Awards. Authority to pay contribution awards (lump- sum payments recognizing significant contributions) will be initially available to pay pools as a straight 1.5 percent of employees' basic pay (similar to the amount currently available for performance awards). The percentage rate may be adjusted in future years of the demonstration project. In addition, unexpended general increase and merit increase budget authorities may be used to augment the award category. Contribution awards may be granted to those employees whose contributions place them in the ``normal'' or ``undercompensated'' category, and to employees in the ``overcompensated'' category who are on maintained pay. Standard operating procedures will provide guidance to pay pool managers in establishing and applying criteria to determine significant contributions which warrant awards. An award exceeding $10,000 requires DOR approval. (See Figure 10.) Any unexpended contribution award authority must be used at the payout for the next rating cycle. Pay pools may also grant time-off as a contribution award, in lieu of or in addition to cash. 8. Career Movement Based on CCS Movement through the career levels will be determined by contribution and basic pay at the time of the annual CCS appraisal process. The NRL demonstration project is an integrated system that links level of work to be accomplished (as defined by a career track and career level) with individual achievement of that work (as defined by an OCS) to establish the rate of appropriate compensation (as defined by the career track pay schedule), and to determine progression through the career track. This section addresses only changes in level which relate directly to the CCS determination. When an employee's OCS falls within 3 scores of the top score available to his or her current career level, supervisors should consider whether it is appropriate to advance the employee to the next higher level (refer to IV.A.1.a for other criteria). If progression to the next higher level is deemed warranted, supporting documentation would be included with the CCS appraisal and forwarded through the appropriate channels for approval. If advancement is not considered appropriate at this time, the employee would remain in his or her current career level. Future basic pay raises would be capped by the top of the employee's current career level unless the employee progresses to the next higher career level through a CCS-related promotion, an accretion of duties promotion, or a competitive promotion. a. Advancements in Level Which May be Approved by the Pay Pool Manager. Advancements to all levels except Levels IV and V of the S&E Professional and the Administrative Specialist and Professional Career Tracks may be approved by the pay pool manager (this may be changed in future years of the demonstration project if there are changes in the way high-grade positions are defined). b. Advancements in Level Which Must be Approved by the DOR Level. Advancement to (1) levels outside target career levels or established position management criteria; (2) Levels IV and V of the S&E Professional Career Track; and (3) Levels IV and V of the Administrative Specialist and Professional Career Track require approval by the DOR or his or her designee. These levels include (presently) all of NRL's high-grade billets. Details regarding the process for nomination and consideration, format, selection criteria, and other aspects of this process will be addressed in the standard operating procedures. In the event that unanticipated high-grade turnover results in vacancies prior to the end of the appraisal period, NRL may carry out this process at other times of the year. c. Advancement to Level V of the S&E Professional Career Track. Vacancies in the billets allotted to NRL in this level will be filled as described in section IV.B.4. d. Regression to Lower Level. (See Figure 9, ``Employee A''.) If an employee is contributing less than expected for the level at which he or she is being paid, the individual may regress into a lower career level through reduction or denial of general increases and ineligibility for merit increases. (This is possible because the NPR plus the minimum and maximum pay rates for each career level will be adjusted upwards each year by the across-the-board GS percentage increase in basic pay.) If the employee's basic pay regresses to a point below the pay overlap area between his or her level and the next lower level, it will no longer be appropriate to designate him or her as being in the higher level. Therefore, the employee will be formally changed to the lower level. The employee will be informed of this change in writing, but procedural and appeal rights provided by 5 U.S.C. 4303 and 7512 (and related OPM regulations) will not apply (except in the case of employees who have veterans' preference). NRL is providing for waivers of the statute and regulations for such actions. Further, because a change to lower level under such circumstances is not discretionary, the change may not be grieved under NRL's administrative grievance procedures. 9. CCS Grievance Procedures An employee may grieve the appraisal received under CCS using procedures specifically designed for CCS appraisals. Under these procedures, the employee's grievance will first be considered by the pay pool panel, who will recommend a decision to the pay pool manager. If the employee is not satisfied with the pay pool manager's decision, he or she may file a second-step grievance with the next higher level management official. This official will render a final NRL decision on the grievance. The following are not grievable: pay actions resulting from CCS (receipt, non-receipt or amount of general increase, merit increase, DCA or contribution award); reductions in level without reduction in pay due to regression (see section IV.C.8.d); any action for which another appeal or complaint process exists. V. Separations A. Performance-based Reduction in Pay or Removal Actions This section applies to reduction in pay or removal of demonstration project employees based solely on unacceptable performance. Adverse action procedures under 5 CFR part 752 remain unchanged. When a supervisor determines during or at the end of the appraisal period that the employee is not completing work assignments satisfactorily, the supervisor must make a determination as to whether the employee is performing unacceptably in one or more of the critical elements. All CCS elements applicable to the employee's position are critical as defined by 5 CFR part 430. Unacceptable performance determinations must be made by comparing the employee's performance to the acceptable performance standards established for elements. At any time during or at the end of the appraisal period that an employee's [[Page 8984]] performance is determined to be unacceptable in one or more critical elements, the employee will be provided assistance in improving his or her performance. This will normally include clarifying (or further clarifying) the meaning of terms used in the acceptable performance standards (e.g., ``timely'' ``thorough research'' and ``overall high quality'') as they relate to the employee's specific responsibilities and assignments. An employee whose performance is unacceptable after he or she has been given a reasonable opportunity to improve may be removed or reduced in grade or level, in accordance with the provisions of 5 U.S.C. 4303 and related OPM regulations. Employees may also be removed or reduced in grade or level based on unacceptable performance under the provisions of 5 U.S.C. 7512. All procedural and appeal rights set forth in the applicable statute and related OPM regulations will be afforded to demonstration project employees removed or reduced in grade or level for unacceptable performance. B. RIF 1. RIF Authority Under the demonstration project, NRL would be delegated authority to approve RIF as defined in Secretary of the Navy Instruction 12351.5E and the use of separation pay incentives. 2. RIF Definitions a. Competitive Area. A separate competitive area will be established by geographic location for all personnel included in the demonstration project. b. Competitive Level. Positions in the same occupational career level, which are similar enough in duties and qualifications that employees can perform the duties and responsibilities including the selective placement factor, if any, of any other position in the competitive level upon assignment to it, without any loss of productivity beyond what is normally expected. c. Service Computation Date (SCD). The employee's basic Federal SCD would be adjusted for CCS results credit. (1) CCS Process Results Credit. a. An employee's basic Federal SCD may be credited with up to 20 years credit based on the results of the CCS process. The CCS RIF Assessment Category would be used to determine the number of RIF years credited. The CCS RIF Assessment Category is the combination of the employee's standing under the CCS relative to the NPR and any merit increase, DCA, or contribution award. Figure 11 shows the RIF years available for each CCS RIF Assessment Category. ------------------------------------------------------------------------ RIF years Assessment category available ------------------------------------------------------------------------ 0=Employees within the overcompensated range without any 0 portion of a general increase............................. 1=Employees receiving maintained pay or any portion of a 12 general increase but no merit increase or contribution award..................................................... 2=Employees receiving a merit increase or contribution 16 award..................................................... 3=Employees receiving both a merit increase and 20 contribution award or with capped salary and receiving a contribution award and/or a DCA........................... Final RIF Credit: Average of the three most recent CCS Process Results received during the 4-year period prior to the cutoff date ------------------------------------------------------------------------ Figure 11--CCS RIF Assessment Categories b. If an employee has fewer than three CCS process results, the value (RIF years available) of the actual number of process results on record will be divided by the number of actual process results on record. In cases where an employee has no actual CCS process results, the employee will be given the additional RIF CCS process results credit for the most common, or ``modal'' NRL demonstration project CCS RIF Assessment Category for the most recent CCS appraisal period. (2) Credit from Other Rating Systems. Employees who have been rated under different patterns of summary rating levels will receive RIF appraisal credit as follows: --If there are any ratings to be credited for the RIF given under a rating system which includes one or more levels above fully successful (Level 3), employees will receive credit as follows: 12 years for Level 3, 16 years for Level 4, 20 years for Level 5; or --If an employee comes from a system with no levels above Fully Successful (Level 3), they will receive credit based on the demonstration project's modal CCS RIF assessment category. (3) RIF Cutoff Date. To provide adequate time to properly determine employee retention standing, the cutoff date for use of new CCS process results is set at 30 days prior to the date of issuance of RIF notices. 3. Displacement Rights (a) Displacement Process. Once the position to be abolished has been identified, the incumbent of that position may displace another employee within the incumbent's current career track and career level when the incumbent has a higher retention standing and is fully qualified for the position occupied by an employee with a lower standing. If there are no displacement rights within the incumbent's current career track and career level, the incumbent may exercise his or her displacement rights to any position previously held in the next lower career level, regardless of career track, when the position is held by an employee with a lower retention standing. In the case of all preference eligibles, they may displace up to the equivalent of 3 grades or intervals below the highest equivalent grade of their current career level in the same or a different career track regardless of whether they previously held the position provided they are fully qualified for the position and the position is occupied by an employee with a lower retention standing. Preference eligibles with a compensable service connected disability of 30 percent or more may displace an additional 2 GS grades or intervals (total of 5 grades) below the highest equivalent grade of their current career level provided they have previously held the position and the position is occupied by an employee in the same subgroup with a later RIF service computation date. (b) Retention Standing. Retention standing is based on tenure, veterans' preference, length of service, and contribution. (c) Vacant Positions. Assignment may be made to any available vacant position including those with promotion potential in the competitive area. (d) Ineligible for Displacement Rights. Employees who have been notified in writing that their performance is considered to be unacceptable or whose most recent CCS rating puts them in Assessment Category O would not be entitled to displacement rights under RIF procedures. (e) Change to Lower Level due to an Adverse or Performance-based Action. An employee who has received a written decision to change him or her to a lower level due to adverse or performance based action will compete from the position to which he or she will be or has been demoted. 3. Notice Period The notice period and procedures in 5 CFR subpart H, section 351.801 will be followed. 4. RIF Appeals Under the demonstration project, employees affected by a RIF action, [[Page 8985]] other than a reassignment, maintain their right to appeal to the Merit Systems Protection Board if they feel the reason for the RIF is not valid or if they think the process or procedures were not properly applied. 5. Separation Incentives NRL will have delegated authority to approve separation incentives and will use the current calculation methodology of a lump sum payment equal to an employee's severance pay calculation or $25,000, whichever is less. 6. Severance Pay Employees will be covered by the severance pay rules in 5 CFR part 550, subpart G, except that NRL will establish rules for determining a ``reasonable offer'' that parallel Title 5 rules. 7. Outplacement Assistance All outplacement assistance currently available would be continued under the demonstration project. VI. Demonstration Project Transition A. Initial Conversion or Movement to the Demonstration Project 1. Placement into Career Tracks and Career Levels Conversion or movement of GS employees into the demonstration project will be into the career track and career level which corresponds to the employee's current GS grade and basic pay. If conversion into the demonstration project is accompanied by a simultaneous change in the geographic location of the employee's duty station, the employee's overall GS pay entitlements (including locality rate) in the new area will be determined before converting the employee's pay to the demonstration project pay system. Employees will be assured of placement within the new system without loss in pay. Once under the demonstration project, employee progression through the career tracks and career levels up to their target career level is dependent upon contribution score, not upon previous methods (e.g., WGI's, QSI's, or career promotions as previously defined). 2. Conversion of Retained Grade and Pay Employees NRL's workforce will be grouped into career tracks and associated pay levels with designated pay ranges rather than the traditional grade and step. Therefore, grade and pay retention will be eliminated. NRL will grant ``maintained pay'' (as defined in section III.G.2, ``Maintained Pay''), which is related to the current meaning of ``retained pay'' but does not provide for indefinite retention of pay except in certain situations. Employees currently on grade or pay retention will be immediately placed on maintained pay at their current rate of basic pay if this rate exceeds the maximum rate for their career level and ``grandfathered'' in the appropriate career level. Employees will receive half of the across-the-board GS percentage increase in basic pay and the full locality pay increase until their basic pay is within the appropriate basic pay range for their current position without time limitation. 3. WGI Buy-in The participation of all covered NRL employees in the demonstration project is mandatory. However, acceptance of the system by NRL employees is essential to the success of the demonstration project. Therefore, on the date that employees are converted to the project pay plan, they will be given a permanent increase in pay equal to the earned (time spent in step) portion of their next WGI based on the value of the WGI at the time of conversion so that they will not feel they are losing a pay entitlement accrued under the GS system. 4. Conversion of Special Salary Rate Employees Employees who are in positions covered by a special salary rate prior to the demonstration project will no longer be considered a special salary rate employee under the demonstration project. These employees will, therefore, be eligible for full locality pay. The adjusted salaries of these employees will not change. Rather, the employees will receive a new basic rate of pay computed by dividing their basic adjusted pay (higher of special salary rate or locality rate) by the locality pay factor for their area. A full locality adjustment will then be added to the new basic pay rate. Adverse action will not apply to the conversion process as there will be no change in total salary. However, if an employee's new basic pay rate after conversion to the demonstration project pay schedule exceeds the maximum basic pay authorized for the career level, then the employee will be granted maintained pay under paragraph III.G.2 until the employee's salary is within the range of the career level. For example, an Electronics Engineer, GS-855-9, step 5, is paid $44,715 per annum in accordance with special GS salary rates as of January 1999 for Table Number: 0422. The employee is located in the locality area of Washington-Baltimore, DC-MD-VA-WV. Under the demonstration project, the computation of the engineer's new basic rate of pay with a full locality adjustment and WGI buy-in is computed as follows: a. Basic adjusted pay divided by locality pay factor=new basic rate of pay. b. New basic rate of pay multiplied by the full locality adjustment for current area=full locality adjustment amount for special rate employees. c. New basic rate of pay + WGI buy-in amount X locality pay factor = demo special rate for conversion. EXAMPLE: a. $44,715 (basic adjusted pay) divided by 1.0787 (locality pay factor) = $41,453 (new basic rate of pay). b. $41,453 (new basic rate of pay) X 1.0787 (full locality adjustment factor for current area) = $3,262 (full locality adjustment amount). c. $41,453 (new basic rate of pay) + $500 (example WGI buy-in amount) = $41,953 (new conversion basic rate of pay) X 1.0787 (locality pay factor) = $45,254 (demo special rate for conversion). B. CCS Startup CCS elements, descriptors, discriminators and standards have been established as the appraisal criteria for the 1998-1999 cycle which began June 1, 1998. Except for its compensation components, CCS is consistent with DoN's two-level appraisal program, which was effected in 1998. The CCS process will be used to appraise employees at the end of the 1998-1999 cycle on September 30, 1999. The first CCS payout is expected to occur at the beginning of the first full pay period in January 2000. C. Training An extensive training program is planned for everyone in the demonstration project including the supervisors, managers, and administrative staff. Training will be tailored to fit the requirements of every employee included in the demonstration project and will fully address employee concerns to ensure everyone has a comprehensive understanding of the program and to emphasize the benefits to employees. In addition, leadership training will be provided to all managers and supervisors as the new system places more responsibility and decision making authority on them. NRL training personnel will provide local coordination and facilities, supplemented by contractor support as needed. The training will be completed [[Page 8986]] prior to the anticipated project implementation date. 1. Types of Training Training packages will be developed to encompass all aspects of the project and validated prior to training the workforce. Specifically, training packages will be developed for the following groups of employees: a. NRL Employees. All NRL demonstration project employees will be provided an overview of the demonstration project and employee processes and responsibilities. b. Supervisors and Managers. All supervisors and managers under the demonstration project will be provided training in supervisory and managerial processes and responsibilities under the demonstration project. c. Support Personnel. Administrative support personnel, HRO personnel, financial management personnel, and Management Information Systems Staff will be provided training on administrative processes and responsibilities under the demonstration project. D. New Hires Into the Demonstration Project The following steps will be followed to place employees (new hires) entering the system: a. The career track and career level will be determined based upon the employee's education and experience in relation to the duties and responsibilities of the position in which he or she is being placed, consistent with OPM qualification standards. b. Basic pay will be set based upon available labor market considerations relative to special qualifications requirements, scarcity of qualified candidates, programmatic urgency, and education and experience of the new candidate. c. Employees placed through the DoN RPL, the DoD PPP, or the Federal Interagency Career Transition Assistance Plan who are eligible for maintained pay will receive one half of the across-the-board GS percentage increase in basic pay and the full locality pay increase until the employee's basic pay is within the basic pay range of the career track and career level to which assigned. Employees are eligible for maintained pay as long as there is no break in service and if the employee's rate of pay exceeds the maximum rate of his or her career level. E. Conversion or Movement From Demonstration Project In the event the demonstration project is terminated or employees leave the demonstration project through promotion, change to lower grade, reassignment or transfer, conversion back to the GS system may be necessary. The converted GS grade and GS rate of pay must be determined before movement or conversion out of the demonstration project and any accompanying geographic movement, promotion, or other simultaneous action. An employee will not be converted at a level which is lower than the GS grade held immediately prior to entering the Demo project, unless, since that time, the employee has undergone a reduction in career level. The converted GS grade and rate will become the employee's actual GS grade and rate after leaving the demonstration project and will be used to determine the pay action and GS pay administration rules for employees who leave the project to accept a position in the traditional Civil Service system. The following procedures will be used to convert the employee's demonstration project career level to a GS equivalent grade and the employee's demonstration project rate of pay to the GS equivalent rate of pay. 1. Grade Determination Employees will be converted to a GS grade based on a comparison of the employee's current adjusted rate of basic pay to the highest GS applicable rate range considering only those grade levels that are included in the employee's current career level. The highest GS applicable rate range includes GS basic rates, locality rates, and special salary rates. Once a grade range is determined, the following procedures will be used to determine the GS grade: a. Identify the highest GS grade within the current career level that accommodates the employee's adjusted rate of basic pay (including any locality payment). b. If the employee's adjusted rate of basic pay equals or exceeds the applicable step 4 rate of the identified highest GS grade, the employee is converted to that grade. c. If the employee's adjusted rate of basic pay is lower than the applicable step 4 of the highest grade, the employee is converted to the next lower grade. d. If under the above-described ``step 4'' rule, the employee's adjusted project rate exceeds the maximum rate of the grade assigned but fits in the rate range for the next higher applicable grade (i.e., between step 1 and step 4), then the employee shall be converted to the next higher applicable grade. e. For two-grade interval occupations, conversion should not be made to an intervening (even) grade level below GS-11. f. Employees in Level IV of the Administrative Specialist and Professional Career Track will convert to the GS-13 level. 2. Pay Setting Pay conversion will be done before any geographic movement or other pay-related action that coincides with the employee's movement or conversion out of the demonstration project. The employee's pay within the converted GS grade is set by converting the employee's demonstration project rate of pay to a GS rate of pay as follows: a. The employee's demonstration project adjusted rate of pay (including locality) is converted to a rate on the highest applicable adjusted rate range for the converted GS grade. For example, if the highest applicable GS rate range for the employee is a special salary rate range, the applicable special rate salary table is used to convert the employee's pay. b. When converting an employee's pay, if the rate of pay falls between two steps of the conversion grade, the rate must be set at the higher step. c. Employees whose basic pay exceeds the maximum basic pay of the highest GS grade for their career level will be converted to the highest grade in their career level. NRL will coordinate with OPM to prescribe a procedure for determining the GS-equivalent pay rate for employees whose rate of pay exceeds the maximum rate of basic pay for their converted grade. 3. ARSAE Employees in Career Level V of the S&E Professional Career Track will convert to the GS-15 grade level. NRL will develop a procedure to ensure that S&E employees entering Career Level V understand that if they leave the demonstration project and their adjusted pay exceeds the GS-15, step 10 rate, there is no entitlement to retained pay. Their GS- equivalent rate will be deemed to be the rate for GS-15, step 10. For those Career Level V employees paid below the adjusted GS-15, step 10 rate, the post-conversion rates will be set using the converted rates in applying the highest previous rate rule. 4. Determining Date of Last Equivalent Increase The last equivalent increase will be the date the employee received a CCS pay increase, was eligible to receive a CCS pay increase, or received a promotion, whichever occurred last. [[Page 8987]] VII. Demonstration Project Duration A. General Section 342 of the National Defense Authorization Act for fiscal year 1995 (Public Law 103-337) does not require a mandatory expiration date for this demonstration project. The project evaluation plan addresses how each intervention will be comprehensively evaluated for at least the first 5 years of the demonstration project. Major changes and modifications to the interventions can be made through another announcement in the Federal Register and would be made if formal evaluation data warrant a change. B. 5-Year Reexamination At the 5-year point, the entire demonstration will be reexamined for either: (a) permanent implementation, (b) modification and another test period, or (c) termination of the project. VIII. Demonstration Project Evaluation Plan A. Overview Chapter 47 of 5 U.S.C. requires that an evaluation be performed to measure the effectiveness of the proposed project, and its impact on improving public management. A comprehensive evaluation plan for the entire laboratory demonstration program, originally covering 24 DoD laboratories, was developed by a joint OPM/DoD Evaluation Committee in 1995. This plan was submitted to the Office of Defense Research & Engineering and was subsequently approved (see Proposed Plan for Evaluation of the Department of Defense S&T Laboratory Demonstration Program, Office of Merit Systems Oversight and Effectiveness, June 1995). The primary focus of the evaluation is to determine whether the waivers granted result in a more effective personnel system and improvements in ultimate outcomes (i.e., laboratory effectiveness, mission accomplishment, and customer satisfaction). In March 1996, the Director of Defense Research & Engineering (DDR&E), who is responsible for laboratory management, entered into an agreement with OPM's Personnel Resources and Development Center (PRDC) to conduct the external evaluation of the project from FY1996 to FY2001. B. Evaluation Models Figure 12 shows a general model for the evaluation of the demonstration program. It includes measurements for both intermediate and ultimate outcomes. The intermediate outcomes are defined as the results of specific personnel system changes and the associated waivers of law and regulation expected to improve human resource (HR) management. The ultimate outcomes (mentioned above) are improved laboratory performance, mission accomplishment, and customer satisfaction. While it is not possible to establish a direct causal link between changes in the HR management system and organizational effectiveness, it is hypothesized that the new HR system will contribute to improved organizational effectiveness. The evaluators will attempt to use measures of results determined by the laboratories to assess ultimate outcomes. Consideration of the context, the degree of implementation, and support of implementation are important in the interpretation of results. Contextual considerations include the effects of potential intervening variables, for example, downsizing, changes in mission, and the state of the economy in general. Degree of implementation is defined as the extent to which proposed changes are given a fair trial, the degree to which they are used, and the extent to which they conform to the concepts behind the changes. Support for implementation includes the training and automated support systems and can also be affected by the individual characteristics of those who are implementing the program. The degree to which the project is implemented and operated will be tracked to ensure the evaluation results reflect the project as it was intended. Data will be collected to measure changes in both intermediate and ultimate outcomes, as well as any unintended outcomes that can occur as a result of any organizational change. In addition, the evaluation will track the impact of the project and its interventions on veterans and other EEO groups, the Merit Systems Principles, and the Prohibited Personnel Practices. Additional measures will be added to the model in the event that changes or modifications are made to the demonstration plan. An intervention impact model will be used to measure the effectiveness of the various personnel system changes or interventions implemented at NRL (see the example in Appendix G). The intervention impact model specifies each personnel system change as an intervention, expected effects of each intervention, corresponding measures, and data sources for obtaining the measures. While this intervention impact model makes an attempt to predict and measure outcomes of specific interventions, causal attributions about the full impact of specific interventions will not always be possible. Many of the initiatives are expected to interact with each other and contribute to the same outcomes. Furthermore, the impact of changes in the HR system may be mitigated by contextual variables (e.g., the job market, legislation, and internal support systems) as well as the individual characteristics of those who are implementing the systems. C. Evaluation A modified quasi-experimental design will be used for the evaluation of the S&T Laboratory Demonstration Program. Because most of the eligible laboratories are participating, a 5 U.S.C. comparison group will be constructed from the Civilian Personnel Data File (CPDF). This comparison group will consist of workforce data from Governmentwide research organizations in civilian Federal agencies with missions and job series matching those in the DoD laboratories. This comparison group will be used primarily in the analysis of broadbanding costs and turnover rates. The original ``China Lake'' project will serve as a second comparison group which can be used as a benchmark representing a stable broadbanding system. The two original Navy demonstration laboratories (Naval Air Warfare Center--Weapons Division in China Lake, CA and Naval Command Control and Ocean Surveillance Center in San Diego, CA) will participate in the employee survey and will also provide workforce data. Since some of the interventions are used in a few laboratories and not others, there will be additional comparison groups for specific interventions. The staggered implementation of the demonstration program across laboratories will also allow for time series analyses using multiple baselines. NRL is expected to implement its demonstration proposal in 1999 and will have several years of pre- demonstration baseline data. D. Method of Data Collection Data from a variety of sources will be used in the evaluation. Information from existing management information systems and from personnel office records will be supplemented with perceptual data to assess variables related to effectiveness. Multiple methods provide more than one perspective on how the interventions are working. Information gathered through one method will be used to validate information gathered through another. Confidence in the findings will increase as they are substantiated by the different collection methods. [[Page 8988]] Both quantitative and qualitative data will be used when evaluating outcomes. The following data will be collected: (1) workforce data; (2) personnel office and other data on quality and timeliness; (3) employee attitude surveys; (4) a survey of HR officers on results orientation; (5) research ratings for scientists and engineers to be used in turnover analyses; (6) structured interviews and focus group data; (7) local site historian logs and implementation information; and (8) core results measures of laboratory performance. The evaluation effort will consist of two phases, formative and summative evaluation, covering at least 5 years to permit inter- and intra-organizational estimates of effectiveness. The formative evaluation phase will include baseline data collection and analysis, implementation evaluation, and interim assessments. The formal reports and interim assessments will provide information on the accuracy of project operation, and current information on impact of the project on veterans and EEO groups, Merit System Principles, and Prohibited Personnel Practices. The summative evaluation will focus on an overall assessment of project outcomes after 5 years. This will provide information on how well the HR system changes achieved the desired goals, which interventions were most effective, and whether the results are generalizable to other Federal installations. The external evaluation will be supplemented by an internal evaluation conducted by NRL (see Appendix H) to meet individual laboratory needs. Periodic reports and annual summaries will be prepared to document the findings. The summative evaluation will focus on an overall assessment of project outcomes after 5 years. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN23FE99.010 BILLING CODE 6325-01-C IX. Demonstration Project Costs A. Transition There will be no grades or steps in the broadband classification system as there are under the GS. NRL will provide GS employees with a permanent pay change that is equivalent to the proportion of the WGI earned at the time of implementation. For example, the employee 1 year past the last WGI in a 3-year waiting period would receive a permanent pay change equivalent to one third of the current value of the WGI. Employees at step 10 or receiving a retained rate will not be eligible for the prorated WGI. This permanent pay increase will occur at the time the demonstration project is implemented. Supervisors will be able to withhold these prorated WGI's if the employee's performance is below the ``fully successful'' level at the time of implementation. The first official annual appraisal cycle under the CCS will be the 1998-1999 appraisal cycle, with the payout occurring the first full pay period in January 2000. Future CCS pay adjustments will be effective the beginning of the first full pay period in January each year. B. Cost Containment and Controls It is required that the demonstration project be ``relatively cost neutral.'' This is defined to mean that the NRL demonstration project will not increase the average personnel costs above what would have been expected under the previous 5 U.S.C. based system. Since NRL operates under the NWCF which requires cost efficiency so that NRL's technical programs can be marketed competitively, internal controls are in effect to ensure that costs are controlled. [[Page 8989]] NRL's Research Advisory Committee (RAC), comprising the CO, the DOR, the Chief Staff Officer, and the ADOR's will oversee the administration of the demonstration project. Because the RAC is the same management team that critically reviews the technical programs and the cost to operate NRL, the costs associated with this system will come under the same critical review. NRL is an innovative organization shaped by its mission and operating environment, and it exists in a highly dynamic and challenging climate. To be a vigorous and creative performer in such an environment, NRL must possess high quality personnel, challenging programs, and sound management practices. Broadbanding and CCS are designed to encourage the creative performer and to provide appropriate compensation. It does not automatically provide increases for those who are already being paid commensurate with their contribution level. NRL has established pay pool managers at the division level or equivalent. The CCS design includes a pay pool review panel responsible for evaluating the contribution scores for their pay pool and making adjustments, as required. The CCSDS will be designed to provide assistance to the pay pool manager in selecting the appropriate basic pay increase for an individual, based on that individual's contribution score. The CCSDS will contain controls on the amount of permanent and nonpermanent money available to the pay pool. BILLING CODE 6325-01-P [GRAPHIC] [TIFF OMITTED] TN23FE99.011 BILLING CODE 6325-01-C Costs associated with implementing the demonstration project are shown in Figure 13. These include automation of systems such as the CCSDS, training, and project evaluation. The automation and training costs are startup costs. Transition costs are one-time costs. Costs for project evaluation will be ongoing for at least 5 years. X. Automation Support A. General One of the major goals of the demonstration project is to streamline the personnel processes to increase cost effectiveness. Automation must play an integral role in achieving that goal. Without the necessary automation to support the interventions proposed for the demonstration project, optimal cost benefit cannot be realized. In addition, adequate information to support decision making must be available to managers if line management is to assume greater authority and responsibility for human resources management. Automation to support the demonstration project is required at two distinct levels. At the DoN and DoD level, automation support [in the form of changes to the DCPDS] is required to facilitate processing and reporting of demonstration project personnel actions. At the NRL level, automation support (in the form of local processing applications) is required to facilitate management processes and decisionmaking. B. Defense Civilian Personnel Data System (DCPDS) Since DCPDS is a legacy system, efforts have been made to minimize changes to the system, and, therefore, the resources required to make the necessary changes. The following is a compendium of the proposed DCPDS modifications. The detailed specifications for required changes to DCPDS are provided in the System Change Request (SCR), Form 804. C. Core Document (COREDOC) The COREDOC application is a DoD system which will require modification to accommodate the interventions in this demonstration project. Specifically, there will be an RD that will replace the position description in the basic application; career tracks and career levels will replace GS grades; and a CCS Assessment Form that will replace performance elements. D. RIF Support System (RIFSS) The RIFSS is an automated tool used by human resources specialists to support RIF processing. Under the demonstration project, RIF rules will be modified to increase the credit for contributions and limit the rounds of competition. The AutoRIF application, developed by DoD, could be used if it were modified to accommodate these process changes. Detailed functional requirements for RIFSS are being established as Appendix J. E. CCSDS This automated system is required as an internal control and as a mechanism to equate contribution scores to appropriate rates of basic pay. This system will allow pay pool managers to develop a spreadsheet that will assist them in determining an appropriate merit increase or contribution award or both based on the overall contribution score for each individual. It will also be used as an internal control to ensure that the permanent and nonpermanent money allotted to each pay pool is not exceeded. It will further allow pay pool managers to visualize the effects of giving large basic pay increases or awards to high contributors, and the effects of withholding either the general or merit increase or both of those who are low contributors, or in the overcompensated range. BILLING CODE 6325-01-P [[Page 8990]] [GRAPHIC] [TIFF OMITTED] TN23FE99.012 [[Page 8991]] [GRAPHIC] [TIFF OMITTED] TN23FE99.013 [[Page 8992]] [GRAPHIC] [TIFF OMITTED] TN23FE99.014 [[Page 8993]] [GRAPHIC] [TIFF OMITTED] TN23FE99.015 [[Page 8994]] [GRAPHIC] [TIFF OMITTED] TN23FE99.016 [[Page 8995]] [GRAPHIC] [TIFF OMITTED] TN23FE99.017 [[Page 8996]] [GRAPHIC] [TIFF OMITTED] TN23FE99.018 [[Page 8997]] [GRAPHIC] [TIFF OMITTED] TN23FE99.019 BILLING CODE 6325-01-C [[Page 8998]] Appendix B: Definitions of Career Tracks and Career Levels Career Track: S&E Professional Includes professional positions in S&E occupations such as physics, electronics engineering, chemistry, and student positions associated with these professions. Level I: This includes student trainees. The education and employment must be part of a formal student employment program. Specific, clear, and detailed instructions and supervision are given to complement education. The level of education and experience completed is a major consideration in establishing the level of on- the-job training and work assignments. Level II: This is the entry or developmental stage, preparing S&E's for the full and independent performance of their work. Performs supporting work in science or engineering requiring professional training but little experience. Conducts activities with objectives and priorities identified by supervisor or team leader; assistance given on new or unusual projects; completed work reviewed for technical soundness. Level III: This is the advanced developmental, or typically, target career level, of this career track. Conceives and defines solutions to technical problems of moderate complexity; plans, analyzes, interprets, and reports findings of projects; guides technical and programmatic work of team members in comparable or junior grades; completed work and reports are reviewed to evaluate overall results. Level IV: S&E's at this level are authorities within their professional areas or key program administrators. Conducts or directs technical activities or assists higher levels on challenging and innovative projects or technical program development with only general guidance on policy, resources and planning; develops solutions to complex problems requiring various disciplines; responsible for fulfilling program objectives. Level V: ARSAE at this level are renowned experts in their fields. Independently defines and leads most challenging technical programs consistent with general guidance and/or independently directs overall R&D program managerial and/or supervisory aspects; conceives and develops elegant solutions to very difficult problems requiring highly specialized areas of technical expertise; recognized within DoD and other agencies for broad technical area expertise and has established professional reputation in technical community nationally and internationally. The primary requirement for Level V positions is the knowledge of and expertise in specific scientific and technology areas related to the mission of their organization. However, the ability to manage and/or supervise R&D operations or programs is also considered a necessity. May direct the work of an organizational unit; may be held accountable for the success of one or more specific programs or projects; monitors progress toward organizational goals and periodically evaluates and makes appropriate adjustments to such goals; supervises the work of employees; or otherwise exercises important policy-making, policy- determining, or other managerial functions. Career Track: S&E Technical Includes nonprofessional positions which support S&E activities through application of various skills in areas such as the following: engineering, computer, physical, chemical, biological, mathematical sciences; and student trainees. Leve