December 24, 1997 federal register · 12/24/1997 · Federal Register/Vol. 62, No. 247/Wednesday, December 24, 1997/Notices 67435 organizations, and OPMBs will monitor authorities

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WednesdayDecember 24, 1997

Part II

Office of PersonnelManagementPersonnel Demonstration Project;Alternative Personnel ManagementSystem for the U.S. Department ofCommerce; Notice

67434 Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices

OFFICE OF PERSONNELMANAGEMENT

Personnel Demonstration Project;Alternative Personnel ManagementSystem for the U.S. Department ofCommerce

AGENCY: Office of PersonnelManagement.ACTION: Notice of approval of ademonstration project final plan.

SUMMARY: Title VI of the Civil ServiceReform Act, now codified in 5 U.S.C.4703, authorizes the Office of PersonnelManagement (OPM) to conductdemonstration projects that experimentwith new and different human resourcesmanagement concepts to determinewhether changes in policies andprocedures result in improved Federalhuman resources management. Thisdemonstration project is designed toreplicate many of the features of theNational Institute of Standards andTechnology (NIST) demonstrationproject created by Congress pursuant tothe National Bureau of StandardsAuthorization Act for Fiscal Year 1987(Pub. L. 99–574). This project will coverunits of four Department of Commerce(DoC) organizations:(1) Technology Administration

—Office of the Under Secretary—Office of Technology Policy

(2) Economics and StatisticsAdministration

—Bureau of Economic Analysis(3) National Telecommunications and

Information Administration—Institute for Telecommunication

Sciences(4) National Oceanic and Atmospheric

Administration—Units of the Office of Oceanic and

Atmospheric Research—Units of the National

Environmental Satellite, Data, andInformation Service

—Units of the National MarineFisheries Service

DATES: This demonstration project willbe implemented on March 24, 1998.FOR FURTHER INFORMATION CONTACT: (1)Department of Commerce: Darlene F.Haywood, U.S. Department ofCommerce, 1400 Constitution Avenue,N.W., Room 5004, Washington, DC20230, 202–482–3620; (2) OPM: JudithB. White, U.S. Office of PersonnelManagement, 1900 E Street, N.W., Room7460, Washington, DC 20415, 202–606–1526.

SUPPLEMENTARY INFORMATION:

1. Background

The NIST Demonstration Project wassuccessful and was made permanent by

Congress in 1996 (Pub. L. 104–113).Independent surveys have demonstratedthat a majority of NIST employees aresatisfied with the demonstration project.The Federal Employees PayComparability Act of 1990 includedmany of the interventions testedsuccessfully at NIST. The DoC project isdesigned to test whether theinterventions of the NIST project can besuccessful in DoC environments withdifferent missions and differentorganizational hierarchies. Like theNIST project, the DoC DemonstrationProject involves simplified positionclassification, pay for performance, andsimplified recruiting and examiningprocesses.

2. OverviewA total of 67 oral and written

comments were received in response tothe first Federal Register Notice of May2, 1997. These comments were avaluable source of input for theDepartment of CommerceDemonstration Project. All commentshave been considered, and changes tothe project plan have been made wheredeemed appropriate. Changes to theplan involve supervisory pay,performance-based reduction-in-forceretention credit, and the extendedprobationary period for employees inthe Scientific and Engineering CareerPath. In addition to these changes,several sections of the plan have beenclarified and expanded. Some editorialchanges and corrections were alsomade.

3. Summary of CommentsNine speakers commented on the first

Federal Register Notice at the fivepublic hearings. A total of 58 letterswere received, with one letter bearing20 signatures. A variety of issues andconcerns were raised; however,recurring comments addressed fivemajor topics:

(1) accountability, (2) reduction-in-force (RIF) retention credit, (3) impact ofthe project on equal employmentopportunity (EEO)/Diversity, (4) payadministration, and

(5) performance appraisal. Otherissues raised include classification,employee input, project evaluation, andcommunication. The followingsummarizes the written and oralcomments by topic and provides aresponse to each.

(1) AccountabilityComments. A majority (about two-

thirds) of the comments fromindividuals and organized groupsexpressed a high level of concern thatthe demonstration project gives more

authority and responsibility tosupervisors and managers. Believingthat many supervisors do not properlyand fairly execute supervisoryresponsibilities or utilize the power andtools provided under the currentmanagement system, these employeesfear a new system that gives supervisorsadditional authority over their careerand pay. Employees specificallyquestioned whether proper controlswould be in place to preventmanagement abuse in theadministration of the performanceappraisal and classification systems.Comments focused on the potential forfavoritism and unfair treatment ofemployees in the distribution of ratingsand awards. Employees also questionedwhether pay pool managers would havethe requisite knowledge to make fairdecisions about the work of allemployees in the pay pool.

Response. The Department willimplement a number of measures toensure management accountability.These will include: (1) employee focusgroups, (2) supervisory training, and (3)oversight.

Employee focus groups: Annualproject evaluations will utilizeemployee focus groups as an importantsource of data in measuring the degreeto which project interventions areaccomplishing desired objectives.

Training: Supervisors and managerswill receive detailed training in the newauthorities they are to exercise.Classification training will emphasizethe underlying principles of projectclassification and will instructsupervisors on the application of theseprinciples to classification decisions.Training on the performance appraisalsystem will cover performanceplanning, monitoring, feedback, andappraisal. In addition, supervisors willreceive training on the automatedperformance pay increase system andwill be required to conduct a simulationof the performance evaluation andrewards system prior to the actual end-of-year performance appraisal. Thetraining will also cover the pay poolmanager’s responsibilities for reviewingand reconciling ratings and ensuringequity and consistency in performanceplans and ratings.

Oversight: The authorities delegatedto supervisors under this demonstrationproject will be subject to three levels ofoversight. The Office of PersonnelManagement will oversee the projectunder the authority of 5 U.S.C. 4703.The DoC Departmental PersonnelManagement Board (DPMB) will manageand oversee authority delegated to theOperating Personnel ManagementBoards (OPMBs) in participating

67435Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices

organizations, and OPMBs will monitorauthorities delegated to supervisors,withdrawing them when warranted.

(a) Classification: Under authoritydelegated by the OPMBs, servicinghuman resources management staff willmonitor and review classificationdecisions made by managers to ensureconsistent and uniform application ofclassification policies and guidelines.When classification actions are found tobe inconsistent with establishedpolicies, the servicing human resourcesmanagement specialist will attempt toresolve the inconsistency with theresponsible supervisor. If agreementcannot be reached, the issue will bereferred to a Classification Review Panel(CRP). The CRP is an ad hoc advisorypanel established by authority of theOPMB to review proposed classificationactions referred to it by the servicingHuman Resources Manager.

(b) Performance Evaluation: OPMBswill oversee the operating unit annualperformance appraisal process, fromdevelopment of plans to individual payincreases and bonuses. OPMBs will alsoestablish operating unit guidelines onperformance elements.

(2) Reduction-in-Force (RIF) RetentionCredit

About half of all comments receivedaddressed two related concerns withrespect to RIF retention credit: loss ofcurrent performance-based credit andthe percentage of employees eligible forcredit under the project.

(a) Loss of current credit

Comments. Employees thought itunfair that conversion to thedemonstration project would result inthe loss of performance-based RIF creditacquired under the current system.

Response. The demonstration projectwill introduce a new ‘‘pay-for-performance’’ personnel system, and itis intended that all employees enter thesystem on an equal basis, i.e, on a ‘‘levelplaying field.’’ Allowing someemployees to bring forwardperformance-based RIF credit gainedunder the current system would givethose employees an unfair advantage.

(b) Percentage of Employees Eligible forCredit

Comments. A number of employeesobjected to the provision that wouldaward performance-based credit for onlythose employees who rank in the top tenpercent of their career paths.

Response. The objective of this featureis to reward performance that is trulyoutstanding. Consequently, the group ofemployees receiving this credit must, bydefinition, be limited. However, in order

to more closely parallel agencyhistorical experience, the project planhas been revised to grant performance-based RIF retention credit to employeeswho rank in the top 20 percent of theircareer path within a pay pool, ratherthan the top 10 percent.

(3) Impact of the Project on EEO andDiversity

Comments. Several employeesexpressed concern that thedemonstration project would notsupport existing EEO and Diversitygoals. Specific questions were raisedabout the impact of the project on thehiring of women and minorities andwhether these groups would receive anequitable share of promotions, payincreases, and bonuses.

Response. EEO and Diversity goals ofthe Department will not change underthe demonstration project. On an annualbasis, the Department will continue tosubmit an annual report and update ofaffirmative employment to the EqualEmployment Opportunity Commission.In addition, Diversity Plans andDiversity Councils now in place willcontinue to be required fororganizations participating in thedemonstration project. Also, SeniorExecutive Service managers willcontinue to be rated on a Diversitycritical element. The Project EvaluationModel will include criteria that willtrack hiring, award, promotion, andretention data in order to closelymonitor the impact of the project onworkforce diversity. A variety of datasources will be used. These includerecords in servicing human resourcesmanagement offices (including recordsof recruitment sources) and records ofEEO complaints.

(4) Pay AdministrationTwo major compensation issues were

raised. Several employees objected tothe manner in which they would becompensated for time credited towardtheir next within-grade increase. Inaddition, some employees questionedthe appropriateness of the supervisorypay differential.

(a) Within-Grade Increase (WIGI) PayoutComments. Employees objected to the

one-time lump sum payment for timecredited toward the next within-gradeincrease on the grounds that it wouldresult in a negative impact on theirsalary and retirement contributions andearnings. In lieu of the lump sum, somesuggested that the WIGI payout beprocessed as a base pay increase. Othersfelt that they should be given a choicebetween a one-time payment and apermanent salary increase.

Response. Organizations participatingin the demonstration project will berequired to maintain compensationcosts at the levels they would havereached under the current system. Adecision to grant permanent salaryincreases for time credited towardwithin-grade increases would result inimmediate cost escalation prior toimplementation that would distort basecost calculations. Such a decisionwould be counter to Departmental costcontainment goals. Moreover, under thedemonstration project, the salaries ofgood performers will soon overtakesalaries they would have reached withWIGIs through the following provisionsof the project plan:

(1) Annual Performance PayIncreases: The new pay system providesan opportunity for a performance payincrease each year, regardless of anemployee’s position in the band. This isin contrast to the waiting periods of oneto three years for a WIGI in the GeneralSchedule (GS) system. The potentialsize of a performance pay increase inthe new system is significantly higherthan the size of a GS within-gradeincrease.

(2) Removal of Grade Barriers: Broadbanding removes the pay barriersbetween the GS grades that are placedin the same band. For example, becausegrades GS–7 and GS–8 will be placed inthe same band in the Support CareerPath, employees who previouslyreached the top of the GS–7 grade willnow have access to the GS–8 pay range.

(3) Potential for Higher Pay IncreasesUpon Promotion: When an employee ispromoted to a higher band, theemployee’s salary may be set at anypoint in the range of the higher band aslong as the new salary represents anincrease of at least 6 percent.

(4) Supervisory Performance Pay:Through pay for performance,supervisors have salary potential 6percent higher than the normal ceilingof a band.

(b) Supervisory Performance PayComments. Several employees

questioned the appropriateness of theimmediate salary increase thatsupervisors would receive under thedemonstration project. Some stated thatsupervisors would receive additionalcompensation because they wouldconvert to a higher pay band on thebasis of their supervisory duties, andtherefore, an automatic pay increasewould result in double compensationfor supervision. Some asserted that thispolicy conflicts with the basic ‘‘pay-for-performance’’ concept and suggestedthat any pay incentive awardedsupervisors should be given after the


first performance appraisal cycle, ifearned through performance.

Response. The proposed project planprovided for an automatic paydifferential for supervisors in theScientific and Engineering (ZP) CareerPath only. The amount of this type ofdifferential was to be fixed at 3 percentor 6 percent, for first-level and second-level (and higher) supervisors,respectively. However, as a result ofcomments received, this feature of thesystem has been eliminated. ZPsupervisors will not be given animmediate salary increase uponconversion to the demonstration project.Supervisors in all career paths will beeligible for salaries up to 6 percenthigher than the maximum rates of theirpay bands, and there will be nodifferentiation in the amount of theincrease based on supervisory level.Any employee who meets thedemonstration project definition of‘‘supervisor’’ will be eligible for the 6percent increase, which may be reachedthrough performance pay increasesgranted through the regular performanceappraisal process (see Section III(D)(4)Supervisory Performance Pay).

1. (5) Performance AppraisalAbout half of all comments received

addressed the performance appraisalprocess. Issues raised focused on threemajor areas: ranking versus teamwork,linking the annual comparabilityincrease to performance, and therequirement for all performanceelements to be critical.

(a) Impact of Ranking on TeamworkComments. Several employees

commented that ranking employees byperformance score will pit employeesagainst each other, create a competitivework environment, and destroyteamwork.

Response. Under the demonstrationproject, employees will be rated againstthe criteria in their performance plansand ranked accordingly. There will beno direct comparison of employees’performance. It is expected that morecompetitive salaries that are directlytied to performance will improve bothindividual and organizationalperformance. Furthermore, thedemonstration project performanceappraisal system is flexible enough toreward those aspects of work thatrequire cooperation and teamwork. Forexample, in units requiring high levelsof cooperation and teamwork toaccomplish organizational goals,supervisors may include contributionsto the team’s accomplishments inperformance plans and rate employeesaccordingly.

(b) Linking the Annual ComparabilityIncrease to Performance

Comments. Several employeesexpressed concern about the proposal toallow only those employees with acurrent annual performance rating ofEligible to receive the annual generalcomparability increase. They considerthe annual increase a cost-of-livingincrease, which should not be tied toperformance.

Response. The annual GeneralSchedule (GS) pay adjustment isauthorized under 5 U.S.C. 5303. It isbased on the cost of labor, not the costof living. GS pay adjustments are linkedto changes in the Employment CostIndex (ECI), which measures the overallrate of change in employers’compensation costs in the private andpublic sector, excluding the FederalGovernment. The demonstration projectis based on the principle of pay forperformance; therefore, all payincreases, including the annualcomparability increase, are tied toperformance.

(c) Use of All Critical Elements inPerformance Plans

Comments. Some employeesexpressed concern about therequirement for all elements in aperformance plan to be criticalelements. In their opinion, this willmake it easier for supervisors towithhold pay increases or bonuses, oreven initiate removal, when oneelement is rated Unsatisfactory.

Response. The requirement for allelements in a performance plan to becritical is not a departure from thecurrent performance appraisal system.The demonstration project will notrequire that noncritical elements used inthe current system be changed to criticalelements under the project. The projectsimply eliminates noncritical elements.Also, while noncritical elements maynow be included in an employee’sperformance plan, they have very littleweight. Under the current system,unacceptable performance in onecritical element results in a mandatoryrating of Unacceptable. Likewise, underthe demonstration project, unsuccessfulperformance on one element will resultin a rating of Unsatisfactory.

(6) Other CommentsEmployees addressed a number of

other issues including classification,employee input to the project, projectevaluation, and communication.

(a) ClassificationComments. One employee expressed

concern that problems with the currentGS classification standards would carry

over into the demonstration project.Some questioned the basis for groupingoccupations into four career paths, anda few employees questioned the careerpath decisions for their occupations.Others expressed dissatisfaction withwhat they consider the ‘‘arbitrary’’structure of the pay bands, believingthat employees who convert to the topof their bands will have minimalopportunity for pay increases.

Response. (1) ClassificationStandards: Under the demonstrationproject, OPM classification standardswill not be used. They will be replacedwith more streamlined classificationstandards that have been developed tocover the work in the participatingorganizations. Each pay band in a careerpath will have a narrative standard thatuses two factors:

(1) Duties and Responsibilities and (2)Knowledge, Skills, and Abilities (KSAs).At each successively higher band, thestandards describe a higher level ofwork and a higher level of KSAsrequired to successfully perform thework. These standards will simplify theclassification process, make it moreunderstandable to managers andemployees, and reduce the timerequired to make classificationdecisions.

(2) Career Paths: The four career pathsare intended to replace the GS methodof grouping occupations. Under thecurrent system, GS occupations areplaced in occupational groups accordingto general subject matter. Each groupincludes both two-grade and one-gradeinterval occupations, with each typereceiving different treatment forclassification and other purposes. Bycontrast, career paths group occupationsthat have parallel career patterns andcan be similarly treated for staffing,classification, pay, and other personnelpurposes.

(3) Pay Bands: Pay bands are designedto parallel the typical career patterns foroccupations in a career path. Forexample, in the Scientific andEngineering (ZP) Career Path,professional technical employees begintheir careers as trainees (Band I), movethrough a developmental stage thatbuilds on professional knowledgegained through undergraduate work(Band II), proceed to independent, fullperformance research or operationalwork (Band III), acquire programresponsibility (Band IV), and achievebroad recognition as an authority in thefield (Band V).

(4) Potential for Pay Increases: Withineach pay band, the maximum potentialfor a performance pay increase ishighest for employees in interval oneand lowest for employees in interval


three. This arrangement is intended toslow salary increases as employeesmove through a band, duplicating theeffect of the longer waiting periods forGS within-grade increases as GSemployees move through the steps of agrade.

Comments. Some employeesquestioned whether their occupationswere assigned to the appropriate careerpaths.

Response. The four career paths usedin the Department of CommerceDemonstration Project as well asplacement of occupations in those pathsreplicate the NIST system. Career pathdeterminations for occupations notcovered by the NIST project are basedon the definitions of career paths.However, after the first year ofoperation, questions concerning changesin career path may be considered.

(b) Employee Input

Comment. A few employees felt thatthe project plan had not received anyinput from employees and that thiscould adversely impact relationshipsbetween management and employees.

Response. Numerous briefings wereprovided to employees and unionrepresentatives prior to the publichearings. Employees were given anopportunity to provide oral comments atfive public hearings held between June9 and June 26, 1997. These hearingswere held in locations across thecountry that were accessible to mostemployees. In addition, the first FederalRegister Notice, published on May 2,1997, informed employees that writtencomments would be accepted throughJuly 10, 1997. As a result of commentsreceived from employees during thepublic comment period, several changeshave been made to the project plan.

(c) Project Evaluation

Comments. Several employeescommented on the design of the ProjectEvaluation Model. Specifically, it wassuggested that employee morale bemeasured since a direct link existsbetween morale and organizationalperformance, that employee opinions beone of the data sources for evaluation ofthe project, and that EEO complaintsand grievance patterns be incorporatedinto the evaluations.

Response. The Project EvaluationModel will include employee surveys asa source of data. The surveys willinclude criteria to measureorganizational climate and generalconcerns. In addition, as part of theevaluation process, data on EEOcomplaints and grievances will bemonitored.

(d) CommunicationComment. One employee commented

that the level of communication toemployees about the project had beeninadequate.

Response. All employees were invitedto attend general briefings on theproposed demonstration project inMarch, April, and early May of thisyear. At these briefings, employeesreceived handouts describing the keyfeatures of the project. The publicationof the first Federal Register Notice wasannounced in a general bulletin issuedto all employees during the week of May5, 1997. In that announcement,employees were informed that theFederal Register Notice wasimmediately available on the Office ofPersonnel Management Internet HomePage. Shortly thereafter, the publicationof the Federal Register Notice wasannounced on the Department ofCommerce Internet Home Page, andnumerous copies were distributed to allservicing human resources offices fordissemination to employees. An articleon the demonstration project appearedin the May/June 1997 issue of theDepartment’s Commerce Peoplemagazine. In addition, a video whichprovides an overview of the project wasdeveloped and made available toemployees, and several follow-upbriefings were conducted. To ensurethat employees are kept informed on theproject, the Department will issue aDemonstration Project Newsletterperiodically.

4. Demonstration Project SystemChanges

The following directs readers to thesubstantive changes and clarifications tothe project plan. The page numbersbelow refer to the pages of the proposedplan, published in the Federal Registeron May 2, 1997.

(1) Page 24256, 24258, and 24260: TheOffice of the Chief Financial Officer/Assistant Secretary for Administrationand the Office of the General Counselhave been deleted, as thoseorganizations will not participate in theproject.

(2) Page 24259: Two laboratories ofthe Office of Oceanic and AtmosphericResearch (OAR) that were inadvertentlylisted have been deleted since they willnot participate in the demonstrationproject. These are the Geophysical FluidDynamics Laboratory, in Princeton, NewJersey, and the Pacific MarineEnvironmental Laboratory, in Seattle,Washington. In addition, all of thelocations for each of the participatinglaboratories have been listed.

(3) Page 24262: Table 3 has beenchanged to correct an error introduced

by the printing process. Specifically thetable has been corrected to show no GS–15 positions in the GS–1340Meteorology Series and a total of 235positions in this occupation.

(4) Page 24262: MountainAdministrative Support Center (MASC)has been deleted from Table 4, sinceMASC will not participate in thedemonstration project.

(5) Page 24263: The definitions of thefour career paths have been expandedfor clarification.

(6) Page 24265: Paragraph B2(a) hasbeen revised to restrict directexamination and the associatedrequirement for Applicant Supply Filesto occupations for which there isdocumented evidence that skills are inshort supply.

(7) The requirement for all employeesin the Scientific and Engineering (ZP)Career Path to serve a three-yearprobationary period has been modified.The three-year probationary period willbe applicable to only those ZPemployees who are assigned to researchand development positions as identifiedby the functional code assigned inconjunction with the classificationprocess. All other ZP employees willserve a one-year probationary period.(For further explanation, see SectionIII(B)(10) Probationary Period.)

(8) Page 24266: The provisions forawarding performance-based RIFretention credit have been changed. Anemployee with an overall performancescore in the top 20 percent (as opposedto the top 10 percent) of scores withina career path in a pay pool will becredited with 10 additional years ofservice for retention purposes.

(9) Page 24267: The demonstrationproject definition of ‘‘supervisor’’ hasbeen clarified and expanded. Minimumcriteria for classification of a position as‘‘supervisory’’ have been included.

(10) Page 24267: The section ‘‘LocalityPay’’ has been clarified. Specifically, thesentence dealing with special rates andlocality rates has been rewritten toindicate that for bands affected byspecial rates, the maximum rate will bethe higher of the special rate or thelocality rate, rather than the special rateand the locality rate.

(11) Page 24267: The policy onsupervisory pay has been revised.Supervisors in the Scientific andEngineering (ZP) Career Path will not beeligible for immediate salary increasesupon conversion to the demonstrationproject. Supervisors in all career pathswill be eligible for salaries up to 6percent higher than the maximum ratesof their pay bands, and there will be nodifferentiation in the amount of theincrease based on supervisory level.


Any employee who meets thedemonstration project definition of‘‘supervisor’’ will be eligible for themaximum increase of 6 percent, whichmay be reached through performancepay increases granted through theregular performance appraisal process.

(12) Page 24268: In the sectionentitled ‘‘Pay Setting Upon Movementof an Employee to a Different Pay Area,’’the formula for determining the pay ratein the new area was printed incorrectlyand has been corrected.

(13) Page 24274: The ProjectEvaluation Model has been revised toinclude the objective of ‘‘Support forEEO and Diversity goals.’’

(14) Page 24276: In the ‘‘ProjectManagement’’ section, the role of theDoC Acting Chief Financial Officer/Assistant Secretary for Administration(now the Director of the NationalInstitute of Standards and Technology)as chairman has been clarified to showthat the role is specific to theindividual, who will serve as Chair ofthe DPMB through the first cycle of theproject’s operation. After the first cycle,chairmanship of the Board will beassumed by one of the members of theBoard.Janice R. Lachance,Director.

Table of ContentsI. Executive SummaryII. Introduction

A. PurposeB. Problems with the Present SystemC. Changes Required/Expected BenefitsD. Participating OrganizationsE. Participating EmployeesF. Labor ParticipationG. Project Design/Methodology

III. Personnel System ChangesA. Position ClassificationB. StaffingC. Reduction-in-ForceD. Pay AdministrationE. Performance Evaluation and Rewards

IV. Conversion or Movement from a ProjectPosition to a General Schedule Position

A. Grade-Setting ProvisionsB. Pay-Setting Provisions

V. Budget DisciplineA. Reprogramming CostsB. Base Cost AssessmentC. Funding Pools for Performance Pay

Increases and BonusesD. Budget Monitoring

VI. Project EvaluationVII. Project ManagementVIII. Training

A. Manager and Supervisor TrainingB. Employee TrainingC. Support Staff Training

IX. Experimentation and RevisionX. Authorities and Waiver of Laws and

Regulations Required

I. Executive SummaryThis project was designed by the

Department of Commerce with

participation and review by the Office ofPersonnel Management (OPM). Thedemonstration project will pursueseveral key objectives of the NationalPerformance Review: to simplify thecurrent classification system for greaterflexibility in classifying work andpaying employees; to establish aperformance management and rewardssystem for improving individual andorganizational performance; and toimprove recruiting and examining toattract highly qualified candidates andget new hires aboard faster. Theduration of the project will be 5 years,except that the project may be extendedby OPM if further testing and evaluationare warranted.

The proposed project will testwhether the interventions of the NISTproject can be successful in otherenvironments. Other reasons for testingthe NIST interventions in theDepartment are: (1) all of the diverseoperating units in the proposedcoverage are within the sameDepartment, the U.S. Department ofCommerce, which is also the parentagency of NIST; (2) several of theoperating units in the proposedcoverage have served for eight years ascomparison sites for the NIST project;and (3) during the implementation andoperation of the NIST project, DoC andNIST staff worked closely with the U.S.Department of Agriculture’s NationalFinance Center, which providespersonnel and payroll computing anddatabase services to all of DoC,including NIST and the units proposedfor the new project.

II. Introduction

A. Purpose

The purpose of the proposed projectis to strengthen the contribution ofhuman resources management inhelping to achieve the missions ofspecific operating units of theDepartment of Commerce. The projectconducted by NIST successfullydemonstrated that certain innovativechanges could improve humanresources management in the NISTenvironment. The proposed project willtest whether these same innovationswill produce similarly successful resultsin other DoC environments.

B. Problems With the Present System

The Department of Commerceencourages, serves, and promotes theNation’s international trade, economicgrowth, and technological advancement.Within this framework, and in theinterest of promoting the nationalinterest through the encouragement ofthe competitive free enterprise system,

the Department provides a wide varietyof programs, some of which areincluded in the proposed coverage ofthe project.

The current system has three majorimpediments to a manager’s ability toeffectively manage human resources andshape the workforce: (1) Hiringrestrictions, (2) an overly complex jobclassification system, and (3) poor toolsfor rewarding and motivatingemployees. These impediments,embedded in a system that does notassist managers in removing poorperformers, build stagnation in theworkforce and waste valuable time.

C. Changes Required/Expected Benefits

The innovations of the project andtheir objectives are:

1. Classification

Career paths will replace occupationalgroups, broad bands will replace grades,and Departmental broad-band standardswill replace OPM classificationstandards. The classification system willbe automated and classificationauthority will be delegated to linemanagers.

These changes are intended tosimplify and speed up the classificationprocess, make the process moreserviceable and understandable,improve the effectiveness ofclassification decision-making andaccountability, and facilitate pay forperformance. Broad bands providelarger classification targets that can bedefined by shorter, simpler, and moreunderstandable classification standards.This simpler system will be easier toautomate, will require fewer resourcesto operate, and will facilitate delegationto line managers.

By providing broader and moreflexible pay ranges for setting entry pay,broad banding will provide hiringofficials with an important tool forattracting high-quality candidates andthus contribute to the objective ofincreasing the quality of new hires.

By providing more flexible pay settingbased on performance, broad bandingwill give managers the ability toincrease the pay of good performers tohigher and more competitive levels,thus improving the retention of goodperformers. At the same time, thepotential for higher pay increases forgood performance, supported by thebroader pay ranges of broad banding,will contribute to the objective ofimproving organizational andindividual performance.

2. Staffing

Staffing methods will include twothat were implemented in the NIST


Demonstration Project and which arenow available to all agencies throughexamining authority delegated by OPM.For the sake of simplification and toparallel the NIST Demonstration Project,they are retained with the same titlesunder the Department of CommerceDemonstration Project: DirectExamination and Agency-BasedStaffing. In addition, there will beplacements under Merit Assignmentand various noncompetitive appointingauthorities. OPM registers will not beused, but positions in occupationscovered by the Luevano Consent Decree(Administrative Careers with Americaor successor programs) will be filledusing OPM guidance. Othersupplemental staffing tools will includesuch elements as paid advertising,flexible entry salaries, probation, localauthority for recruiting and retentionpayments, and more flexible payincreases associated with promotion.

These changes are intended to attracthigh-quality candidates, speed up therecruiting and examining process,increase the effectiveness of theprobationary review process, andincrease the retention of goodperformers.

Agency-based staffing, supported bypaid advertising, will allow hiringofficials to focus on more relevantrecruiting sources. Direct examinationwill allow managers to hire individualswith shortage skills as they find them,get them on board faster, and avoid theloss of good candidates who may growimpatient with a long hiring process,thus contributing to the objectives ofincreased quality of new hires andbetter fit between position requirementsand candidate skills.

The three-year probationary periodwill help ensure that scientists andengineers who are retained beyondprobation are capable of carrying out thefull cycle of research and development(R&D) work, thus contributing to theobjectives of high-quality hires and ahigh-performing workforce. (See SectionIII(B)(10) Probationary Period.) Localauthority for recruiting and retentionpayments will provide extra incentivesfor hiring and retaining individuals withshortage skills, thus contributing to theobjectives of increasing the quality ofnew hires, improving the fit betweenposition requirements and individualqualifications, and improving theretention of good performers.

3. PayThe most important change in pay

administration is the introduction ofpay for performance, which will governindividual pay progression withinbands. Funds currently applied to

within-grade increases, quality stepincreases, and promotions from onegrade to a higher grade when bothgrades are now in the same band, willbe used instead to grant performance-based pay increases within bands. Theamount of the basic pay and locality payincreases approved by Congress and thePresident, however, will continue to beapplied to pay schedules and to thesalaries of employees with aperformance rating of Eligible. Otherpay tools are supervisory performancepay, flexible pay setting for new hires,and more flexible pay setting uponpromotion.

Pay for performance promotes fairnessthrough the peer ranking process andprovides a motivational tool and aretention tool. As a motivational tool,the promise of higher pay increases forgood performance encourages highachievement. As a retention tool, pay forperformance allows the organization toquickly move the salaries of goodperformers to levels that are morecompetitive in the labor market.

Supervisory performance payprovides an incentive for supervisors,addressing the objective of improvedindividual and organizationalperformance. Supervisory performancepay also addresses the objective ofimproving retention by raising the payof high-performing supervisors to morecompetitive levels.

Flexible pay setting for new hires isa recruiting tool that gives hiringofficials greater flexibility to offer morecompetitive salaries to high-qualitycandidates, addressing the objective ofimproving the quality of new hires. Thegreater flexibility in setting pay uponpromotion gives managers anotherretention tool to help retain topperformers.

4. Performance AppraisalThe new system replaces the current

five-level rating system with a two-levelrating system, using Unsatisfactory andEligible labels. (Unsatisfactory isequivalent to Unacceptable, as used inPart 430 of Title 5, Code of FederalRegulations.) The most importantfeature of the proposed performanceappraisal system is that it is based onthe application of a weighted 100-pointscoring system linked to pay forperformance. As in the current system,each employee has an individualperformance plan composed of severalperformance elements (all of which arecritical elements) that are measuredwith the 100-point scoring system inconjunction with the application ofbenchmark performance standards.Based on the resulting total scores,supervisors rank employees by

performance within peer groups andgrant performance pay increasesaccording to the ranking. Highly rankedemployees within a peer group receiverelatively high pay increases and lowerranked employees receive relativelylower pay increases. Bonuses aregranted at the discretion of thesupervisor following the performanceappraisal process.

The performance appraisal process isintended to (1) promote goodperformance; (2) encourage a continuingdialogue between supervisors andemployees on organizational objectives,supervisory expectations, employeeperformance, employee needs forassistance and guidance, and employeedevelopment; and (3) provide a basis forperformance-related decisions inemployee development, pay, rewards,assignment, promotion, and retention.The system will more effectivelycommunicate to employees how theyare performing in relation to their peers,the rewards of good performance, andthe consequences of poor performance.

Performance-based pay increases givean operating unit the ability to raise thepay of good performers more rapidly,thus improving retention of goodperformers. The potential for higher payincreases for good performance willencourage achievement and promote theobjective of improved individual andorganizational performance.

5. Performance BonusesIn accordance with 5 CFR 451, at the

end of the annual performance period,Rating Officials, with the approval ofPay Pool Managers, will have theopportunity to reward employeeperformance with bonuses up to$10,000. Bonuses address twoobjectives. First, rewarding achievementwill make high achievers more likely toremain, thus improving retention of thebest performers. Second, the potentialfor bonuses for achievement willencourage improved individualperformance.

6. More Efficient SystemsThe Department will improve the

efficiency of human resource systems bystreamlining procedures, reducingpaperwork, and automating processeswherever possible.

7. Line Management AuthorityUnder the demonstration project,

greater authority and accountability willbe delegated to line managers. Thisdelegation is intended to improve theeffectiveness of human resourcesmanagement by strengthening the roleof line managers as the human resourcesmanagers of their units. The project will


be managed by the DepartmentalPersonnel Management Board (DPMB).Through the first cycle, the Board willbe chaired by the Director of theNational Institute of Standards andTechnology. Following that, one of theBoard members will assume the role ofChairman. Each major operating unitwill have its own Operating PersonnelManagement Board (OPMB) to manageand oversee local operations. (See thesection on Project Management.)

D. Participating OrganizationsThe Department of Commerce

encourages, serves, and promotes theNation’s international trade, economicgrowth, and technological advancement.Within this framework, and in theinterest of promoting the nationalinterest through the encouragement ofthe competitive free enterprise system,the Department provides a wide varietyof programs, some of which areincluded in the proposed coverage. Thefollowing organizations will participatein the project:

Technology Administration (TA)The Technology Administration,

which oversees NIST and the NationalTechnical Information Service (NTIS),was established by Congress in 1988 asthe premier technology agency workingwith U.S. industry in improvingcompetitiveness and increasing theimpact of technology on economicgrowth. The TA coverage would includeonly the Office of the Under Secretaryfor Technology Administration and theOffice of Technology Policy. Thiscoverage would be an opportunity toapply broad banding principles to apolicy, planning, and developmentenvironment dealing with issues vital tothe future of the U.S. economy as it isaffected by technology. TA offices in theproposed coverage are located at theDoC headquarters building inWashington, D.C.

The key occupations are: GeneralAdministration, Management Analyst,and General Business Specialist.

Bureau of Economic Analysis (BEA),Economics and StatisticsAdministration

BEA is responsible for providing acurrent picture of the U.S. economythrough the preparation, development,and interpretation of the nationalincome and product accounts showingthe gross domestic product, businessand other components of the nationalwealth accounts, industrial marketinterrelationships traced by the input-output accounts, and other accountsshowing such economic indicators aspersonal income, foreign investment,

and balance of payments. The bureaualso develops surveys and other toolsfor analyzing and forecasting economicdevelopments. This coverage provides atest of the NIST system in anenvironment that uses economists andaccountants as analysts, reporters, andforecasters. BEA is located at 1441 LStreet, N.W., Washington, D.C.

The economic analysis work of theorganization is reflected in the followingkey occupations: Economist,Accountant, Financial Administrator,Computer Specialist, Statistician, andStatistical Assistant.

Institute for TelecommunicationSciences (ITS), NationalTelecommunications and InformationAdministration

ITS is a major component of theNational Telecommunications andInformation Administration (NTIA). ITSis the principal Federaltelecommunications research andengineering laboratory. The Instituteconducts telecommunications researchin support of NTIA’s responsibilities inadvising the President ontelecommunications and informationpolicy; developing U.S. plans andpolicies in international forums; anddeveloping policy for Federal use of theradio frequency spectrum. Thisapplication will test how well the NISTinterventions work in a research anddevelopment (R&D) environment quitedifferent from the NIST environment.ITS is located in Boulder, Colorado.

The ITS R&D work is carried outprimarily by Electronics Engineers, withhelp from Mathematicians.

The remaining units are subunits ofthe National Oceanic and AtmosphericAdministration (NOAA):

Office of Oceanic and AtmosphericResearch (OAR)

OAR is the primary research anddevelopment unit of NOAA. OARprovides the science and technology tosupport improvements in NOAAservices and address current and futureproblems. OAR conducts researchprograms in coastal, marine,atmospheric, and space sciencesthrough its own laboratories and offices,as well as through networks ofuniversity-based programs. The workconsists of research, modeling, andenvironmental observations relating toweather, climate, and environmentalresources. The laboratory component ofOAR is the Environmental ResearchLaboratories (ERL). ERL includesresearch laboratories in spaceenvironment, aeronomy, environmentaltechnology, weather forecast systems,climate monitoring and diagnostics,

severe storms, air resources,oceanography, and geophysical fluiddynamics. This diversity provides a richnew R&D environment for the testing ofbroad banding principles. OAR and ERLheadquarters are located in SilverSpring, Maryland. All ERL laboratorieswill be included in the project, exceptthe Great Lakes Environmental ResearchLaboratory (Ann Arbor, MI), theGeophysical Fluid Dynamics Laboratory(Princeton, NJ), and the Pacific MarineEnvironmental Laboratory (Seattle,WA). The project laboratories are:Aeronomy Laboratory—Boulder, COAtlantic Oceanographic and

Meteorology Laboratory—Miami, FL;Silver Spring, MD; San Diego, CA;Norfolk, VA; and Seattle, WA.

Air Resources Laboratory—SilverSpring, MD; Boulder, CO; ResearchTriangle Park, NC; Oak Ridge, TN; LasVegas, NV; and Idaho Falls, ID

Climate Diagnostic Center—Boulder, COClimate Monitoring and Diagnostics

Laboratory—Boulder, CO; Hilo, HI;Barrow, AK; Pago Pago, AmericanSamoa; South Pole, Antarctica

Environmental TechnologyLaboratory—Boulder, CO ForecastSystems Laboratory—Boulder, CONational Severe Storms Laboratory—Norman, OK Space EnvironmentalLaboratory—Boulder, CO

The dominant occupation within OARis Meteorologist. Other key occupationsare Physical Scientist, Physicist,Electronics Engineer, ComputerSpecialist, Electronics Technician,Physical Science Technician, andMathematician.

National Environmental Satellite, Data,and Information Service (NESDIS)

NESDIS operates NOAA’s satellitesand ground facilities; collects,processes, and distributes remotelysensed data; conducts studies, plansnew systems, and carries out theengineering required to develop andimplement new or modified satellitesystems; carries out research anddevelopment on satellite products andservices; provides ocean datamanagement and services to researchersand other users; and acquires, stores,and disseminates worldwide datarelated to solid earth geophysics, solar-terrestrial physics, and marine geologyand geophysics. NESDIS provides botha technical operations environment anda new R&D environment for testing theNIST interventions. NESDISheadquarters and most of its offices arelocated in Suitland, Maryland. Groundstations are located at Wallops Island,Virginia, and Fairbanks, Alaska. TheNational Climatic Data Center is located


in Asheville, North Carolina. All ofNESDIS will be included in the project,except for the Wallops Island groundstation.

The key occupations within NESDISare Physical Scientist, Meteorologist,Computer Specialist, Oceanographer,Physical Science Technician,Meteorological Technician, ElectronicsEngineer, Engineering Technician,Geophysicist, and Mathematician.

National Marine Fisheries Service(NMFS)

The mission of the National MarineFisheries Service is the stewardship ofliving marine resources for the benefit ofthe Nation through their science-basedconservation and management andpromotion of the health of theirenvironment. NMFS supports domesticand international conservation andmanagement of living marine resources.The goals of NMFS are to rebuild andmaintain sustainable fisheries, topromote the recovery of protectedspecies, and to protect and maintain the

health of coastal marine habitats. NMFSbrings in a variety of work in thebiological sciences never beforeaddressed by broad banding principles.

In addition to the headquarters officein Silver Spring, Maryland, there arefive regions, each of which consists ofa Regional Office and a FisheriesScience Center. The regional offices arelocated in the following areas: Northeast(Gloucester, Massachusetts); Southeast(St. Petersburg, Florida); Northwest(Seattle, Washington); Southwest (LongBeach, California); and Alaska (Juneau).All the above units of NMFS will beincluded in the project except for thefollowing: in Headquarters, the Office ofEnforcement and the InspectionServices Division; and in the regions,the Fisheries Science Centers located inWoods Hole, Massachusetts; Miami,Florida; Seattle, Washington; La Jolla,California; and the Alaska Centerlocated in Seattle, Washington.

NMFS is supported mainly byoccupations in the biological sciences:

Fish Biologist, Biologist, Microbiologist,and Biology Technician. Otherimportant occupations are Chemist,Oceanographer, Wildlife Biologist,Computer Specialist, and GeneralBusiness Specialist.

E. Participating Employees

The project covers all positions thatwould otherwise be in the GeneralSchedule (GS) system. Wage Gradepositions are not included.

Table 1 shows the total number ofemployees in each operating unit to becovered by the project. Table 2 lists theoccupational series in which currentpositions are classified and shows thenumber of employees in each series.The OPM occupational series will beretained. The series are listed under thecareer path in which they will beplaced. (See Position Classification fordefinitions of the four career paths.)Table 3 shows the number of coveredemployees in each series, by GeneralSchedule grade.

TABLE 1.—NUMBER OF COVERED EMPLOYEES BY UNIT

Operating unit Number

TA ..................................................................................................................................................................................... .................... 35BEA, ESA ......................................................................................................................................................................... .................... 414ITS, NTIA ......................................................................................................................................................................... .................... 82NOAA ............................................................................................................................................................................... .................... 2114

OAR .......................................................................................................................................................................... (640)NESDIS ..................................................................................................................................................................... (736)NMFS ........................................................................................................................................................................ (738)

Total ................................................................................................................................................................... .................... 2645

TABLE 2.—OCCUPATIONAL SERIES, BY CAREER PATH

Series Title Number

Scientific and Engineering (ZP) Career Path

101 ............................ Social Scientist ................................................................................................................................................. 2110 ............................ Economist ........................................................................................................................................................ 247184 ............................ Sociologist * ...................................................................................................................................................... 1190 ............................ Anthropologist * ................................................................................................................................................ 1334 ............................ Computer Specialist ......................................................................................................................................... 267401 ............................ Biologist ............................................................................................................................................................ 51403 ............................ Microbiologist ................................................................................................................................................... 4408 ............................ Ecologist * ......................................................................................................................................................... 4480 ............................ Fish Administrator * .......................................................................................................................................... 43482 ............................ Fish Biologist * .................................................................................................................................................. 182486 ............................ Wildlife Biologist * ............................................................................................................................................. 2499 ............................ Biological Science Student .............................................................................................................................. 1701 ............................ Veterinary Medical Officer * ............................................................................................................................. 1801 ............................ General Engineer ............................................................................................................................................. 3810 ............................ Civil Engineer ................................................................................................................................................... 8830 ............................ Mechanical Engineer ....................................................................................................................................... 3850 ............................ Electrical Engineer ........................................................................................................................................... 1854 ............................ Computer Engineer .......................................................................................................................................... 2855 ............................ Electronics Engineer ........................................................................................................................................ 96861 ............................ Aerospace Engineer * ...................................................................................................................................... 1899 ............................ Engineering Trainee ......................................................................................................................................... 11301 .......................... Physical Scientist ............................................................................................................................................. 1981310 .......................... Physicist ........................................................................................................................................................... 711313 .......................... Geophysicist * ................................................................................................................................................... 121315 .......................... Hydrologist * ..................................................................................................................................................... 1


TABLE 2.—OCCUPATIONAL SERIES, BY CAREER PATH—Continued

Series Title Number

1320 .......................... Chemist ............................................................................................................................................................ 231330 .......................... Astronomer ....................................................................................................................................................... 81340 .......................... Meteorologist * .................................................................................................................................................. 2261350 .......................... Geologist .......................................................................................................................................................... 21360 .......................... Oceanographer ................................................................................................................................................ 771372 .......................... Geodesist ......................................................................................................................................................... 31382 .......................... Food Technologist * ......................................................................................................................................... 21399 .......................... Physical Science Student ................................................................................................................................ 11515 .......................... Operations Research Analyst .......................................................................................................................... 11520 .......................... Mathematician .................................................................................................................................................. 241529 .......................... Mathematical Statistician ................................................................................................................................. 11530 .......................... Statistician ........................................................................................................................................................ 131550 .......................... Computer Scientist ........................................................................................................................................... 7

ZP ....................... Total ................................................................................................................................................................. 1591

Scientific and Engineering Technician (ZT) Career Path

332 ............................ Computer Operator .......................................................................................................................................... 3392 ............................ Radio Frequency Technician ........................................................................................................................... 2404 ............................ Biology Technician ........................................................................................................................................... 9802 ............................ Engineering Technician ................................................................................................................................... 28856 ............................ Electronics Technician ..................................................................................................................................... 221311 .......................... Physical Science Technician ........................................................................................................................... 791341 .......................... Meteorological Technician * ............................................................................................................................. 411531 .......................... Statistical Clerk/Assistant * ............................................................................................................................... 21

ZT ....................... Total ................................................................................................................................................................. 205

Administrative (ZA) Career Path

130 ............................ Foreign Affairs Specialist * ............................................................................................................................... 11131 ............................ International Relations Specialist * ................................................................................................................... 7260 ............................ Equal Employment Specialist .......................................................................................................................... 4301 ............................ Miscellaneous Administration .......................................................................................................................... 77340 ............................ Program Manager ............................................................................................................................................ 2341 ............................ Administrative Officer ....................................................................................................................................... 22342 ............................ Support Services Specialist * ........................................................................................................................... 3343 ............................ Management Analyst ....................................................................................................................................... 76346 ............................ Logistics Management Specialist * .................................................................................................................. 2391 ............................ Telecommunications Specialist ........................................................................................................................ 1501 ............................ Financial Administrator .................................................................................................................................... 10510 ............................ Accountant ....................................................................................................................................................... 46560 ............................ Budget Analyst ................................................................................................................................................. 28610 ............................ Nurse * .............................................................................................................................................................. 1696 ............................ Consumer Safety Specialist * ........................................................................................................................... 1930 ............................ Appeals Officer * .............................................................................................................................................. 21001 .......................... General Arts and Information .......................................................................................................................... 31035 .......................... Public Affairs Specialist ................................................................................................................................... 61082 .......................... Writer/Editor ..................................................................................................................................................... 141083 .......................... Technical Writer/Editor ..................................................................................................................................... 41084 .......................... Visual Information Specialist ............................................................................................................................ 71101 .......................... General Business Specialist ............................................................................................................................ 721140 .......................... Trade Specialist ............................................................................................................................................... 81165 .......................... Loan Specialist * ............................................................................................................................................... 161410 .......................... Librarian ........................................................................................................................................................... 131412 .......................... Technical Information Specialist ...................................................................................................................... 51654 .......................... Printing Manager .............................................................................................................................................. 11670 .......................... Equipment Specialist ....................................................................................................................................... 11712 .......................... Training Instructor * .......................................................................................................................................... 11750 .......................... Instructional Systems Specialist * .................................................................................................................... 1

ZA ....................... Total ................................................................................................................................................................. 445Support (ZS) Career Path

29 .............................. Environmental Protection Assistant * ............................................................................................................... 1303 ............................ Miscellaneous Clerk/Assistant ......................................................................................................................... 72305 ............................ Mail and File Clerk ........................................................................................................................................... 3309 ............................ Correspondence Clerk/Assistant ..................................................................................................................... 1318 ............................ Secretary .......................................................................................................................................................... 190322 ............................ Clerk-Typist ...................................................................................................................................................... 2326 ............................ Office Automation Clerk/Assistant ................................................................................................................... 40335 ............................ Computer Clerk/Assistant ................................................................................................................................ 43


TABLE 2.—OCCUPATIONAL SERIES, BY CAREER PATH—Continued

Series Title Number

344 ............................ Management Clerk/Assistant ........................................................................................................................... 5399 ............................ Student Trainee ............................................................................................................................................... 8525 ............................ Accounting Technician ..................................................................................................................................... 8561 ............................ Budget Clerk/Assistant ..................................................................................................................................... 3963 ............................ Legal Instruments Examiner * .......................................................................................................................... 91087 .......................... Editorial Clerk/Assistant ................................................................................................................................... 11101 .......................... Trade Information/Financial Assistant * ........................................................................................................... 71105 .......................... Purchasing Agent ............................................................................................................................................. 41411 .......................... Library Technician ............................................................................................................................................ 42005 .......................... Supply Clerk/Assistant ..................................................................................................................................... 22102 .......................... Transportation Clerk/Assistant ......................................................................................................................... 1

ZS ....................... Total ................................................................................................................................................................. 404

* These occupations were not tested by the NIST project.

BILLING CODE 6325–01–P





BILLING CODE 6325–01–C

Senior Executive Service and ST–3104Positions

The personnel systems for SESpositions (see 5 U.S.C. 3131–3136 and 5U.S.C. 5381–5385) will not change forthe project. SES classification, staffing,compensation, performance appraisal,awards, and reduction-in-force will bebased on standard SES methods. Thepersonnel systems for ST–3104positions (see 5 U.S.C. 3104 and 5376)will change only to the extent that ST–3104 positions are in the sameperformance appraisal, awards, andreduction-in-force systems as GeneralSchedule positions. Classification,

staffing, and compensation, however,will not change. Neither SES nor ST–3104 employees will be subject to thepro rata share payouts upon conversionto the demonstration project. Payadjustments for their positions underthe project will be carried out inaccordance with existing Federal rulespertaining to SES and ST–3104 payadjustments.

General Schedule PositionsAll General Schedule (GS and GM)

positions are incorporated in the newcareer path/pay band system. Thewithin-grade increases of the GeneralSchedule will be replaced by the annualperformance pay increases. Except as

otherwise provided in the project plan,laws and regulations pertaining to GSemployees (e.g., overtime pay and cost-of living allowance provisions) continuein force for all project employees in thesame way as they do for GS employees.

F. Labor Participation

All unions affected by the project arelocal units of the American Federationof Government Employees (AFGE). Allof the AFGE representation is within theNational Oceanic and AtmosphericAdministration (NOAA). The followingtable shows the number of projectemployees represented by each unionlocal.

TABLE 4.—BARGAINING UNIT COVERAGE

Operating unit Location Union local Employeescovered

NESDIS ..................................................................... Camp Springs, MD .................................................. AFGE 3680 ............... 118Asheville, NC ........................................................... AFGE 146 ................. 146

NMFS ......................................................................... Silver Spring, MD ..................................................... AFGE 2703 ............... 169OAR ........................................................................... Research Triangle Park, NC ................................... AFGE 3347 ............... 39

The project operating units providednumerous briefings on the project toemployees and union representatives.Human resources representativestraveled to the various organizationallocations to conduct three-hourinformation briefings. In addition, eachbargaining unit covered was invited tosend a representative to Boulder,Colorado, at management’s cost toreceive further information on theproject and to interact with a panel ofNIST managers and employees currentlyin the NIST project. The projectoperating units offered Impact and

Implementation Bargaining to each ofthese unions on the conditions andprovisions of the proposed project. Allof the unions on the list have agreed tothe project.

G. Project Design/MethodologyThe project methodology is to

introduce into selected DoC operatingunits certain innovations in humanresources management, and to evaluateover time the effects of thoseinnovations on the ability of theoperating units to manage their humanresources. The methodology includesthe following steps:

1. Selection of Innovations: Afterreview of the innovations tested atNIST, the Department has determinedthat all would have potential benefit inother DoC units and therefore should beincluded in the proposed project. Theseinnovations, and the proceduresassociated with them, are describedbelow under Position Classification,Staffing, Reduction-in-Force, PayAdministration, and PerformanceEvaluation and Rewards.

2. Selection of Operating Units: TheDepartment has selected severaloperating units (See Participating


Organizations.) that will provide auseful test of whether the innovationssuccessfully tested at NIST will producesimilarly successful results in otherenvironments.

3. Establishment of Goals andObjectives: The following section onGoals and Objectives describes theoverall goals of the project and theobjectives associated with each of theinnovations.

4. Partnership: The Department hassought input on the proposal from eachaffected local union. (See LaborParticipation.) The Department will alsoensure that partnership in accordancewith Executive Order 12871 continuesto be an integral part of planning andimplementation.

5. Baseline Evaluation: To provide abasis of comparison between employeeopinions of the current system and theirfuture opinions of the project system,each employee in the covered operatingunits will be asked to complete anopinion questionnaire on the currentsystem prior to implementation of theproject. To establish a baseline costanalysis, each operating unit will berequired to analyze its personnel costsduring fiscal years 1994, 1995, and1996.

6. Training: The Department and theoperating units will provide training tohuman resources staff, managers, andemployees prior to implementation ofthe project and will provide additionaltraining to managers on the pay-for-performance system prior to the end ofthe first performance cycle. (SeeTraining.)

7. Implementation: To ensure asmooth implementation, the Departmentand the operating units will emphasizetop management support; thedevelopment of detailed operatingprocedures prior to implementation;thorough training of managers andhuman resources office staff; step-by-step implementation planning; adequatebackup systems, particularly inautomated personnel and payrollsystems; and sufficient operatingresources.

8. Operation: The Department willexercise continual oversight, under thedirection of the Departmental PersonnelManagement Board (See ProjectManagement.) to ensure that projectauthorities and procedures areadministered correctly.

9. Evaluation: The Department willarrange for an annual evaluation of theproject under an OPM-approvedevaluation plan. (See Project

Evaluation.) The evaluation will bedesigned to determine whether theinnovations are achieving the goals andobjectives described in the followingsections and are operating withinacceptable cost limits. (See BudgetDiscipline.)

III. Personnel System Changes

A. Position Classification

1. Introduction

Career paths will replace occupationalgroups, broad bands will replace grades,and Departmental broad-band standardswill replace OPM classificationstandards. The classification system willbe automated, and classificationauthority will be delegated to linemanagers.

These changes are intended tosimplify and speed up the classificationprocess, make the process moreserviceable and understandable,improve the effectiveness ofclassification decision-making andaccountability, and facilitate pay forperformance. Broad bands providelarger classification targets that can bedefined by shorter, simpler, and moreunderstandable classification standards.This simpler system will be easier toautomate, will require fewer resourcesto operate, and will facilitate delegationto line managers.

By providing broader and moreflexible pay ranges for setting entry pay,broad banding will provide hiringofficials with an important tool forattracting high-quality candidates andthus will contribute to the objectives ofincreasing the quality of new hires andimproving workforce performance.

By providing more flexible pay settingbased on performance, broad bandingwill give managers the ability toincrease the pay of good performers tohigher and more competitive levels,thus improving the retention of goodperformers. At the same time, thepromise of higher pay increases for goodperformance, supported by the broaderpay ranges of broad banding, willcontribute to the objective of improvingorganizational and individualperformance.

2. Career Paths

A career path aggregates comparableoccupations that have parallel careerpatterns and are suitable for similartreatment in staffing, classification, pay,and other personnel functions.

There are four career paths: (a)Scientific and Engineering (ZP): two-

grade interval professional technicalpositions in the physical, engineering,biological, mathematical, computer andsocial science occupations; and studenttrainee positions in these disciplines.

(b) Scientific and EngineeringTechnician (ZT): one-grade intervalpositions support scientific andengineering activities through theapplication of various skills andtechniques in the electrical, mechanical,physical science, biological,mathematical, and computer fields; andstudent trainee fields.

(c) Administrative (ZA): two-gradeinterval positions in such administrativeand managerial fields as finance,procurement, personnel, librarianship,public information and program andmanagement analysis; and studenttrainee positions in these fields.

(d) Support (ZS): one-grade intervalpositions that provide administrativesupport through the application oftyping, clerical, secretarial, assistant,and similar knowledge and skills;positions that provide specializedfacilities support, such as guards andfirefighters; and student traineepositions in these areas.

3. Bands

Each career path is divided into fivebands, which replace GS grades. Themaximum rate of a band is step 10 of thehighest GS grade in the band includinglocality rates in the 48 contiguous Statesand the District of Columbia. When aspecial rate for an occupation in theband is higher than the applicablelocality rate, the DepartmentalPersonnel Management Board will haveto use the maximum applicable specialrate to set the maximum rate of the bandfor specific occupations in certaingeographical areas. (See PayAdministration.) For each regular band,there is a corresponding supervisoryband for employees who receivesupervisory performance pay. Thesupervisory band has the sameminimum rate as the nonsupervisoryband, but has a maximum rate 6 percenthigher than the maximum rate of thenonsupervisory band. Positions in thesupervisory band include positions thatmeet the DoC Demonstration Projectdefinition of ‘‘supervisor’’. (See PayAdministration.) The following chartshows the four project career paths, thebands in each career path, and therelationship between bands and GeneralSchedule grades.

BILLING CODE 6325–01–P


BILLING CODE 6325–01–C

4. Occupational Series

The General Schedule occupationalseries will be retained. Existing OPMoccupational series may be added ordeleted in response to programmaticneeds.

5. Classification Standards

Each classification standard willdescribe each band in two factors: (1)general duties and responsibilities and(2) knowledge, skills, and abilities.These two factors complement eachother at each band in a career path andmay not be separated in classifying aposition. OPM classification standardswill not be used.

6. Position Descriptions

Line managers will follow anautomated menu-driven process toclassify positions and produce positiondescriptions.

7. Delegation of Classification Authority

The Operating Personnel ManagementBoards (OPMBs) will oversee thedelegation of classification authority toline managers. Under authoritydelegated by the DPMB, theDepartment’s human resources staff willmonitor and review classificationdecisions made by managers to ensure

consistent and uniform application ofclassification policies and guidelines.Under this authority, the Department’sDirector for Human ResourcesManagement will establish a plan toreview the accuracy of classificationdecisions made by line managers andmake periodic reports to the DPMB. Avariety of approaches will be used toconduct classification reviews, such asregularly scheduled Departmentaloversight reviews as well as ad hocreviews conducted to address specificclassification issues identified throughdata analysis, random sampling ofclassification actions, project evaluationreports, etc. The Governmentwidesystem of approval of SES and ST–3104positions will be maintained.

8. Classification Appeals

An employee covered by the DoCDemonstration Project may appeal thecareer path (when the position is in aseries that may be assigned to more thanone career path, e.g., GS–1101),occupational series, or pay band of hisor her position at any time. Anemployee wishing to formally appealmust first appeal to the Operating Unit(OU). If the employee is dissatisfiedwith the OU decision, he or she mayappeal further to the Department level

(DPMB or designee). The decision of theDepartment will be final.

Details pertaining to the classificationappeals process are found in the projectoperating procedures.

B. Staffing

1. Introduction

The project operating units will use avariety of staffing methods to fillpositions, including Direct Examination,Agency-Based Staffing, MeritAssignment, and variousnoncompetitive placements. Recruitingand examining will be carried outdirectly by the operating units exceptfor positions covered by the LuevanoConsent Decree. OPM registers will notbe used. These methods will besupplemented by other staffing tools,such as paid advertising, flexible entrysalaries, probation, recruitment andretention payments, and flexible payincreases associated with promotion.The Department will make necessaryadjustments in response to futurerevisions in staffing statutes. Thesechanges are intended to attract higherquality candidates, speed up therecruiting and examining process,increase the effectiveness of theprobationary review process, andimprove the retention of goodperformers.


Agency-based staffing, supported bypaid advertising, will allow hiringofficials to focus on more relevantrecruiting sources. Direct examinationwill allow managers to hire individualswith shortage skills as they find them,get them on board faster, and avoid theloss of good candidates who may growimpatient with a long hiring process,thus contributing to the objectives ofincreasing the quality of new hires andimproving the fit between positionrequirements and candidate skills. Thethree-year probationary period will helpensure that scientists and engineers whoare retained beyond probation arecapable of carrying out a full cycle ofR&D work, thus contributing to theobjectives of high-quality hires and ahigh-performing workforce (see SectionIII(B)(10)). Local authority for recruitingand retention payments will provideextra incentives for hiring and retainingindividuals with shortage skills, thuscontributing to the objectives ofincreasing the quality of new hires,improving the fit between positionrequirements and individualqualifications, and improving theretention of good performers.

2. Direct ExaminationThe project will apply two direct

examination authorities: (a) DirectExamination: Critical ShortageOccupations and (b) DirectExamination: Critical Shortage HighlyQualified Candidates. These vacancieswill normally be filled through directrecruiting by selecting officials,supplemented by a required search ofthe operating unit Applicant SupplyFile. Direct examination procedures arenot exempt from the application ofveteran preference rules.

(a) Direct Examination: Critical ShortageOccupations

Direct examination procedures will beused for categories of occupations thatrequire skills that are in short supply.Included in this group are specificoccupations in two categories listed inthe Project Operating Procedures: (1)some occupations for which there is aspecial rate under the General Schedulepay system, and (2) some occupations atPay Band III and above in the ZP CareerPath. Any position in these shortagecategories may be filled through directexamination procedures.

(b) Direct Examination: Critical ShortageHighly Qualified Candidates

Direct examination procedures will beused for additional positions for whichthere is a shortage of highly qualifiedcandidates. Candidates for positions atBand I or II of the ZP Career Path whohave a bachelor’s degree with at least a

2.9 GPA (on a 4.0 scale) in a job-relatedmajor or a master’s degree in a job-related field constitute a shortagecategory; candidates for positions atBand I of the ZT Career Path who haveat least a 2.9 GPA in a job-related fieldduring a minimum of at least 2 years inan accredited college, junior college, ortechnical institute constitute a shortagecategory; and candidates for positions atBand II of the ZT Career Path who haveat least a 2.9 GPA in a job-related fieldin 4 years of college study constitute ashortage category.

3. Agency-Based StaffingAgency-based staffing procedures will

be used to fill vacancies not covered bydirect examination or the projectoperating unit Merit Assignment Plan(MAP). Vacancies filled by agency-basedprocedures will be advertised at aminimum through the Governmentwideautomated employment informationsystem operated by OPM.

4. Merit Assignment Plan (MAP)MAP procedures will be used to fill

positions restricted to current or formerFederal employees with competitivestatus. These plans will be amended toinclude any demonstration projectflexibilities.

5. Applicant Supply FilesThe operating units will advertise the

availability of job opportunities indirect-examination occupations bycontinuous posting of an ApplicantSupply Bulletin (that conforms with therequirements of 5 U.S.C. 3327) on theGovernmentwide automatedemployment information systemoperated by OPM. The operating unitswill accept applications for this file onan open-continuous basis for all direct-hire authorities. Selecting officials willbe able to recruit directly for applicants,but any applicants they find mustcompete with applicants who applythrough the Applicant Supply Bulletinand other applicants whose applicationsare stored in the operating unitApplicant Supply File.

6. Referral Procedures for DirectExamination and Agency-Based StaffingAuthorities

Either direct referral or rating andranking will be used to refer applicantsfor vacancies under direct examinationand agency-based staffing authorities.

(a) Direct referralA qualified candidate may be referred

directly without rating and ranking:(1) When there are no more than three

qualified candidates and no preferenceeligibles; or

(2) If the candidate is a preferenceeligible with a compensable Service-

connected disability of 10 percent ormore. (These preference eligibles aregiven absolute preference except whenthe position is at Band III or above inthe Scientific and Engineering CareerPath.) Selecting officials may chooseany of these preference eligibles whenmore than one are referred.

(b) Rating and ranking

Rating and ranking (including veteranpreference and ‘‘rule-of-three’’procedures) will be used when the listof qualified candidates contains:

(1) More than three candidates; or(2) Two or more candidates including

at least one preference eligible (exceptwhen direct referral of a 10-pointveteran is made under (a)(2) above).

7. Priority Placement

All Department of Commerce andOPM priority placement programs willbe followed.

8. Paid Advertising

Paid advertising may be used as oneof the first steps in recruitment withouthaving to first try unpaid methods.

9. Private Sector Temporaries

Private sector temporary help servicesmay be used as appropriate.

10. Probationary Period

Probation under the project willfollow current law and regulations,except for employees in the Scientificand Engineering (ZP) Career Pathperforming research and development(R&D) work. ZP employees performingR&D work will be required to serve aprobationary period of three years,except that a supervisor may end theprobationary period of a subordinateR&D employee at any time after oneyear. Near the end of the first year of theR&D employee’s probationary period,the supervisor will be required to decidewhether to: (1) change the employeefrom probationary status to non-probationary status; (2) remove theemployee; or (3) continue the employeeon probation. If the employee iscontinued on probation, the supervisormust select from the same options nearthe end of the second year of probation.If probation is continued into the thirdyear, the supervisor must make a finaldecision on whether to retain or removethe employee near the end of the thirdand final year of probation.

The purpose of the three-yearprobationary period for scientists andengineers performing R&D work is toallow a hiring official to view the fullcycle of a research assignment before


making a final decision on retaining theemployee. The one-year probationaryperiod is insufficient to cover the fullcycle of research and development fromassignment of a research project topublication of results. For otherpositions, the one-year probationaryperiod is adequate.

11. Qualification StandardsThe qualifications required for

placement within a band and within acareer path will be based on the OPMQualification Standards for GeneralSchedule Positions, except that testingrequirements will not be used and theSuperior Academic Criterion will bedefined as a 2.9 GPA (on a 4.0 scale).The minimum qualifications for theoccupation and for the GS gradecorresponding to the lowest grade in theband will apply. The DPMB mayauthorize new or modified qualificationstandards based on current practices inthe scientific, engineering, andcomputer science fields and to reflectmodern curricula in recognized degreeprograms.

12. Recruitment and RetentionPayments

The project operating units may grantrecruiting and retention payments inappropriate circumstances, not toexceed $10,000 or 25 percent of basicpay, whichever is greater. Decisions onallowances will be based on marketfactors such as salary comparability andsalary offer issues, relocation anddislocation issues, programmaticurgency, emerging technologies,turnover rates, special qualifications,and shortage categories or scarcity ofpositions unique to the operating unit.All scientific, engineering, and otherhard-to-fill positions will be eligible.Recruitment and retention paymentswill not be considered part of basic pay.

13. Travel ExpensesTravel and transportation expenses,

advancement of funds, per diemexpenses incident to travel, and/orrelocation expenses may be provided tonew hires in the same manner as isauthorized in sections 5723, 5724,5724a, 5724b, and 5724c of title 5, U.S.Code. Recipients must sign serviceagreements indicating commitment to atleast 12 months of continued service.

14. PromotionA promotion is a change of an

employee to (1) a higher band in thesame career path, or (2) a band inanother career path in combination withan increase in pay. To be eligible forpromotion, an employee must have acurrent performance rating of Eligible.

The time-in-band requirement forpromotion eligibility is 52 weeks, withtwo exceptions: (1) an employee may bepromoted from Band I to Band II in theSupport Career Path without timerestriction; and (2) an employee may bepromoted from Band II to Band III in theSupport Career Path without timerestriction if the employee was notpromoted from a Band I to a Band IIposition during the previous 52 weeks.(For pay provisions related topromotion, see Pay Administration.)

C. Reduction-in-force

1. Introduction

The project operating units willfollow reduction-in-force procedurescontained in law and regulation, exceptthat career path will be added to thedefinition of competitive areas,retention credit for performance will bebased on performance ranking, andgrades will be converted to bands for thepurpose of interpreting reduction-in-force regulations.

The objective of the link betweencareer paths and competitive areas is toimprove the fit between the skills ofdisplaced employees and the positionsthey are offered through reduction-in-force procedures. The objective of thelink between performance and retentionstanding is to continue to makeperformance a factor in retention duringreduction-in-force.

2. Competitive Areas

Each of the four career paths in eachproject operating unit local commutingarea will be a separate competitivearea—separate from the other careerpaths and separate from the competitiveareas of other operating unit employees.

3. Link Between Performance andRetention

An employee with an overallperformance score in the top 20 percentof scores within a career path in a paypool (See Performance Evaluation andRewards below.) will be credited with10 additional years of service forretention purposes. The total credit willbe based on the employee’s three mostrecent annual performance scoresreceived during the 4-year period priorto an established cutoff date, for apotential total credit of 30 years. Careerstatus and veteran preference willcontinue to have the same effect onretention standing as they now haveunder current regulations. Noperformance-related retention creditwill convert to this system from anyother performance appraisal system.

4. Link Between Bands and GradesOPM reduction-in-force regulations

on assignment rights (5 CFR 351.701)will be applied to the project bysubstituting ‘‘one band’’ for ‘‘threegrades’’ and ‘‘two bands’’ for ‘‘fivegrades.’’

D. Pay Administration

1. IntroductionThe most important change in pay

administration is the introduction ofpay for performance, which will governindividual pay progression withinbands. The amount of the basic pay andlocality pay increases approved byCongress and the President willcontinue to be applied to pay schedulesand employee salaries, with thevariations described below. Other paytools are supervisory performance pay,flexible pay setting for new hires, andmore flexible pay setting uponpromotion.

Pay for performance promotes fairnessand provides a motivational tool and aretention tool. It is fair that higherachievement should produce higherrewards. In particular, the quality workthat arises from a commitment to thegoals and objectives of the organizationshould be rewarded by higher payincreases. As a motivational tool, thepromise of higher pay increases for goodperformance encourages highachievement. As a retention tool, pay forperformance allows the organization tomore quickly move the salaries of goodperformers to levels that are morecompetitive in the labor market.

Supervisory performance payprovides an extra performance incentivefor supervisors, addressing the objectiveof improved individual andorganizational performance.Supervisory performance pay alsoaddresses the objective of improvingretention by raising the pay of high-performing supervisors to morecompetitive levels. Flexible pay settingfor new hires is a recruiting tool thatgives hiring officials greater flexibility tooffer more competitive salaries to high-quality candidates, addressing theobjective of improving the quality ofnew hires. The greater flexibility insetting pay upon promotion givesmanagers another retention tool to helpretain top performers.

2. Pay for PerformancePay for performance has three

components: (a) the annual adjustmentto basic pay, which includes the annualgeneral increase and the locality payincrease; (b) annual performance payincreases; and (c) bonuses. The firstcomponent, the annual adjustment to


basic pay, is set according to thesubsections referring to general andlocality increases. The secondcomponent, performance pay increases,is set according to the procedures underPerformance Evaluation and Rewards.The third component, bonuses, ismanaged in accordance with thesubsection on Performance Bonusesunder Performance Evaluation andRewards.

3. Placement in a Lower BandAn employee whose performance

rating is Unsatisfactory does not receivethe annual adjustment to basic pay.Because the minimum pay rate for eachband is increased each year by theamount of the annual adjustment tobasic pay, it is possible that the newminimum rate of a band will exceed thebasic pay of an employee in that bandwho does not receive the annualadjustment to basic pay due tounsatisfactory performance. When thishappens, the employee is placed in thenext lower band. This placement shallnot be considered an adverse actionunder 5 U.S.C. 7512, nor shall grade(i.e., band) retention under 5 U.S.C.5362 be applicable.

4. Supervisory Performance PayEmployees who meet the

demonstration project definition of‘‘supervisor’’ will be eligible forsupervisory performance pay. Positionsthat require incumbents to spend 25percent or more of their time performingall of the following duties will be titled‘‘supervisory’’ for classification andother official purposes and will beeligible for supervisory performancepay.

1. Assign and review work daily,weekly, or monthly;

2. Assure that production andaccuracy requirements are met;

3. Approve leave;4. Evaluate work performance of

subordinates; and5. Exercise at least four of the

following authorities andresponsibilities: (a) plan work to beaccomplished by subordinates, set andadjust short-term priorities, and prepareschedules for completion of work; (b)assign work to subordinates based onpriorities, selective consideration of thedifficulty and requirements ofassignments, and the capabilities ofemployees; (c) give advice, counsel, orinstruction to employees on both workand administrative matters; (d)interview candidates for positions in theunit and recommend appointment,promotion, or reassignment to suchpositions; (e) hear and resolvecomplaints from employees, referring

group grievances and more seriousunresolved complaints to a higher levelsupervisor or manager; (f) effect minordisciplinary measures, such as warningsand reprimands, recommending otheraction in more serious cases; (g) identifydevelopmental and training needs ofemployees, providing or arranging forneeded development and training; (h)find ways to improve production orincrease the quality of the workdeveloped; and (i) develop performancestandards.

Supervisory performance pay will beconsidered a part of basic pay. Uponconversion to the project, all eligiblesupervisory positions will be placed inthe supervisory bands. The incumbentsof these positions will be converted attheir basic pay (including special ratesor locality pay) at the time ofconversion. New hires into supervisorypositions after the date of conversionwill have their pay set at thesupervisor’s discretion within the payrange of the applicable supervisoryband.

Supervisors in all career paths will beeligible for salaries up to 6 percenthigher than the maximum rate of theirpay bands. The amount by which asupervisor’s pay exceeds the maximumrate of the band constitutes supervisoryperformance pay. The higher salariesshall be reached through performancepay increases granted through theregular performance appraisal cycle.

The payment of supervisoryperformance pay is not considered apromotion or a competitive action.Supervisory performance pay will becanceled when an employee’ssupervisory responsibilities arediscontinued. The cancellation ofsupervisory pay does not constitute anadverse action, and there is no right ofappeal under 5 U.S.C. Chapter 75. Payretention under 5 U.S.C. 5363 is notapplicable. Before entering asupervisory position, an employee willbe required to sign a statementcertifying that the employeeunderstands that the supervisory paywill be canceled when the employeeceases to be a supervisor.

5. Pay and Compensation CeilingsThe maximum rate for a band

(excluding special bands established toallow for supervisory performance pay)will be equal to the maximum rate— GSrate, locality rate, or special rate, asapplicable—payable to GS employeesfor the grades corresponding to theband. An employee’s basic pay may notexceed the maximum rate of theemployee’s band (including asupervisory band), except for employeesreceiving retained rates of pay.

An employee’s rate of basic paypayable under any pay band may notexceed the rate of basic pay payable forLevel IV of the Executive Schedule. Anemployee’s aggregate monetarycompensation for a calendar year maynot exceed the basic rate of pay forLevel I of the Executive Schedule, asrequired by 5 U.S.C. 5307 and OPMregulations in Subpart B of 5 CFR 530.

6. Locality PayLocality pay is implemented as basic

pay for all purposes except as otherwiseprovided in this plan. The localityadjustment will be applied to theminimum and maximum rates of eachband, as applicable. For bands affectedby special rates, the maximum rate willbe the higher of the special rate or thelocality rate. A locality adjustment maybe applied to an eligible employee’sbasic pay only to the extent that it doesnot cause the employee’s basic pay toexceed the maximum rate of the band.

7. Special Salary RatesWhen appropriate, special salary rates

will be used to determine employees’maximum pay rates in lieu of thenormal pay band ceilings. Theprovisions of current regulations (5 CFR530.303) will be followed to determinethe appropriateness of special salaryrates. As provided for under theseregulations, special salary rates will berestricted to occupations and/orgeographic locations for which there isan existing or likely difficulty in therecruitment or retention of well-qualified personnel.

8. Effect of General and Locality PayIncreases on Bands

The minimum and maximum rates ofeach band will be increased at the timeof a general pay increase under 5 U.S.C.5303 and/or a locality pay increaseunder 5 U.S.C. 5304 or 5304a so thatthey equal the new locality-adjustedminimum and maximum rates of thegrades corresponding to the band. Themaximum rates of bands set accordingto special rates, however, may exceedthis amount to the extent necessary toequal the 10th step of the appropriatespecial rate scale if that rate is higher.

9. Effect of General and Locality PayIncreases on Individual Pay

Only employees with a current annualperformance rating of record of Eligiblemay receive an increase in their basicpay at the time of band adjustments.This increase in basic pay will reflectany applicable general and/or localitypay increase for General Scheduleemployees. The increase in basic pay foreligible employees whose basic pay is at


the ceiling of their band will equal theincrease in the ceiling.

The basic pay increase for eligibleemployees whose basic pay is below theceiling of their band will be calculatedby applying two factors to theemployee’s rate of pay. One factor is thegeneral increase factor representing the

increase in General Schedule ratesunder 5 U.S.C. 5303 (e.g., 1.02 if thegeneral increase is 2 percent). Thesecond factor is the locality pay increasefactor, which is derived by dividing thenewly applicable locality paypercentage factor by the formerlyapplicable locality pay percentage

factor. (For example, if the localitypayment percentage for an areaincreased from 4.23 percent to 5.48percent, the locality pay increase factorwould be 1.0548 divided by 1.0423, orapproximately 1.012.) Thus, the newrate of basic pay would be calculatedusing the following formula:

new pay rate = general increase factor1+ newly applicable locality pay percentage

1+ formerly applicable locality pay percentage rate× × former pay

However, a basic pay increase will beapplied only to the extent that it doesnot cause an employee’s basic pay toexceed the ceiling of the applicableband.

10. Basic Pay

Employees covered by the project willnot have separate basic pay rates andlocality pay rates, as do GeneralSchedule employees. Project basic payrates will be basic pay for all purposes,except as specifically provided in thedemonstration project plan.

11. Pay Setting Upon Promotion

The new basic pay rate uponpromotion may be set at any level in thenew band (If the move is to a differentcareer path, any band in the new careerpath would be considered a ‘‘newband.’’), except that the minimum payincrease upon promotion is 6 percent.OPMBs will establish operating unitguidelines and delegate approvalauthority for setting pay levels forpromotions.

12. Pay Setting for New Hires

The setting of initial salaries withinbands for new appointees will beflexible, particularly for hard-to-fillpositions in the Scientific andEngineering Career Path. OPMBs willestablish operating unit guidelines anddelegate approval authority for settingpay levels for new hires.

13. Conversion of Employees From theGeneral Schedule to the DemonstrationProject

For employees being converted fromthe GS pay system to the demonstration

project, GS grades will translate directlyto the project’s career path and bandstructure. Employees will be convertedat their current highest rate under theGS pay system (i.e., highest of localityrate or special rate or similar rate) at thetime of conversion. No one’s salary willbe reduced as a result of the conversion.When conversion of an employee intothe project is accompanied by ageographic move, the employee’s GSpay entitlements (including any localityrate or special rate) in the new area willbe determined before converting theemployee’s pay to the demonstrationproject pay system.

At the time of conversion, eachconverted employee will be given alump-sum cash payment for the timecredited to the employee toward whatwould have been the employee’s nextwithin-grade increase. The payment fora General Schedule employee will becomputed by (1) calculating the ratio of(a) the number of days the employeewill have spent in the employee’scurrent rate through the day prior to theday of conversion, to (b) the totalnumber of days in the employee’scurrent waiting period for a regularwithin-grade increase (364, 728, or 1092days), and (2) multiplying that ratio bythe dollar value of the employee’s nextwithin-grade increase, as in effect at thetime of conversion.

14. Movement of GS Employees FromOther Organizations to theDemonstration Project

GS employees can move into theproject from other organizations throughtransfer, reassignment, promotion, ornew appointment. When the movement

is by lateral transfer or lateralreassignment, the employee’s GS gradewill translate directly to the project’scareer path/band structure, and theemployee’s rate of basic pay under thedemonstration project will equal his orher current highest rate under the GSpay system (i.e., highest of locality rateor special rate or similar rate). When alateral transfer or lateral reassignment isaccompanied by a geographic move, theemployee’s GS pay entitlements(including any locality rate or specialrate) in the new area will be determinedbefore converting the employee’s pay tothe demonstration project pay system.When the movement is by newappointment, promotion, reassignmentwith pay adjustment (through meritassignment plan competition), ortransfer to ‘‘higher grade’’ (i.e., to a bandhigher than the band that corresponds tothe employee’s current GS grade), thenew pay rate is set according to projectpay setting flexibilities for new hiresand promotions.

15. Pay Setting Upon Movement of anEmployee to a Different Pay Area

Employees who move (voluntarily orinvoluntarily) from one geographic areato another within their operating unitwill have their pay adjusted to accountfor any change in the band maximumrates between the two areas. Thisadjustment ensures that the employee’srelative position in the band (measuredas a percentage of the band maximumrate) will be maintained uponmovement. The pay rate in the new areawill be derived using the followingformula:

new pay rate = former pay ratepay band maximum rate after movement

pay band maximum rate before movement×

The new pay rate is calculated beforeany other simultaneous pay action (e.g.,general pay adjustment or promotioneffective on the same date). Anyreduction in pay solely attributable to a

movement from one pay area to a lower-paying area shall not be considered areduction in basic pay under theadverse action provisions of 5 U.S.C.7512(4) or under the pay retention

provisions of 5 U.S.C. 5363. (Theemployee retains the right to grieve orfile a complaint regarding a geographicreassignment if there is an allegation of


a violation of nondiscrimination statutesor a prohibited personnel practice.)

16. Severance PayOPM severance pay regulations (5

CFR 550.703) will be applied to theproject by substituting ‘‘one band’’ for‘‘two grades’’ and ‘‘two grades or paylevels.’’

17. Grade and Pay RetentionGrade and pay retention will follow

current law and regulations, except asallowed by specific waiver (e.g., ‘‘careerpath and band’’ for ‘‘grade’’). Specificwaivers are listed in the section entitled,Authorities and Waiver of Laws andRegulations Required.

E. Performance Evaluation and Rewards

1. IntroductionThe most important feature of the

performance evaluation system is that itis based on the application of aweighted 100-point scoring system insupport of pay for performance. As inthe current system, each employee hasan individual performance plancomposed of several performanceelements. Through application ofbenchmark performance standards and a100-point scoring system, supervisorsrank employees by performance withinpeer groups and grant performance payincreases according to the ranking.Highly ranked employees within a peergroup receive relatively high payincreases and lower ranked employeesreceive relatively lower pay increases.

The performance appraisal process isintended to (1) promote goodperformance; (2) encourage a continuingdialogue between supervisors andemployees on organizational objectives,supervisory expectations, employeeperformance, employee needs forassistance and guidance, and employeedevelopment; and (3) provide a basis forperformance-related decisions inemployee development, pay, rewards,assignment, promotion, and retention.The system will more effectivelycommunicate to employees how theyare performing in relation to their peers,the rewards for good performance, andthe consequences of poor performance.

Performance-based pay increases givean operating unit the ability to raise thepay of good performers more rapidly,thus improving retention of goodperformers. The promise of higher payincreases for good performance willencourage achievement and promote theobjective of improved individual andorganizational performance.

2. CoverageAll employees covered by the project

will be covered by the project

performance evaluation and rewardssystem, except that the DepartmentalPersonnel Management Board mayremove from the system any positionnot filled by career or career conditionalappointment. ST–3104 employees willhave their performance evaluated underthe structure of the performanceevaluation system and may receivebonuses, but do not receive performancepay increases. Members of the SeniorExecutive Service will remain under thenon-demonstration DoC SESperformance appraisal, pay, and bonussystem.

Upon conversion to thedemonstration project, anyadministrative action already initiatedunder a previous appraisal program willcontinue to be processed in accordancewith the requirements and proceduresof the program in effect when the actionwas initiated.

3. Performance CycleThe performance year begins October

1 and ends September 30. The stages ofthe performance cycle are performanceplanning, performance review,performance appraisal, andperformance-related decisions.

4. Performance PlansPerformance plans will be developed

each year by supervisors with inputfrom employees. Critical performanceelements will be established for eachposition. (All elements are critical.) Thesupervisor weights each element so thatthe total weight of all elements is 100points. Benchmark performancestandards define the range ofperformance. A supervisor may addsupplemental standards to aperformance plan to further elaborate onthe benchmark performance standards.

5. Mid-Year ReviewA required mid-year review addresses

mid-year accomplishments,performance successes and deficiencies,and any need for performance planmodifications. Additional reviews maybe held as needed.

6. Performance AppraisalPerformance appraisals bring

supervisors and employees together todiscuss performance andaccomplishments during theperformance year. The appraisals lead todecisions by supervisors and Pay PoolManagers on performance scores,performance ratings, performance payincreases, and bonuses. Performanceappraisal is scheduled for the finalweeks of the performance year.However, at any time of the year, asupervisor may determine that an

employee’s performance is notsatisfactory on one or more criticalelements and place the employee on aPerformance Improvement Plan.

7. Performance RatingsThe demonstration project

performance ratings of record areEligible (for performance pay increase,bonus, and annual adjustment to basicpay) and Unsatisfactory. The Eligiblerating of record covers the sameperformance range as the former ratingsof Marginal, Fully Successful,Commendable, and Outstanding.Unsatisfactory covers the sameperformance range as the former ratingsof Unsatisfactory and Unacceptable. Anemployee whose performance is notsatisfactory is placed on a performanceimprovement plan and given anopportunity to improve before a finalrating of record is assigned.

8. Performance ScoresEach element is evaluated

individually against the benchmarkperformance standards and anysupplemental standards. If a singleelement in an employee’s plan is ratedUnsatisfactory, the rating of record isUnsatisfactory and there is noperformance score. If all elements meetat least the minimally acceptablebenchmark, the rating of record isEligible. Rating Officials score theperformance of employees rated Eligibleon a 100-point scale, which correspondsto the 100-point element weighted scale.An individual element score may be ashigh as the weight of that element. Thetotal performance score is the sum of theelement scores. A perfect score on eachelement would produce a total score of100 points.

9. Performance RankingEmployees are ranked, by

performance score, within a peer group.A peer group may involve no more thanone career path, but may be otherwiseorganized by any combination oforganization, occupation, band, orappointment type. Rating Officials ranktheir own employees, then Pay PoolManagers interleave the rankings ofsubordinate Rating Officials to producepeer group rankings at the pay poollevel. A Pay Pool Manager is a linemanager who manages his or herorganization’s pay increase and bonusfunds and has final decision authorityover the performance scores,performance pay increases, and bonusesof subordinate employees.

10. Performance Pay DecisionsThe Performance Pay Table divides

each band into three segments or


intervals. Each interval is linked to arange of potential percentage payincreases beginning at zero andprogressing to a maximum percentagepay increase. The maximumperformance pay increase an employeemay receive, therefore, depends on theinterval into which the employee’ssalary falls. The Pay Pool Managermakes a performance pay decision foreach employee in a peer group, based onthe Pay Pool Manager’s ranking and thepay increase ranges in the PerformancePay Table. Within a peer group, anemployee may not receive a higherproportion-of-range than a higher-ranking employee or a lower proportion-of-range than a lower-ranking employee.Proportion-of-range is the percentage ofthe maximum pay increase allowed fora particular interval of a pay band, i.e.,a percent of a percent. For example, ifthe pay increase range for the payinterval is 0–12 percent, and theemployee receives a 9 percent increase,that employee receives a proportion-of-range that equals 75 percent of themaximum 12 percent.

11. Performance BonusesBonuses are the only cash awards

directly linked to the projectperformance appraisal system, and areawarded at the end of the performanceyear in conjunction with decisions onperformance pay increases. A Pay PoolManager may award a bonus to anyemployee with an Eligible rating. TheOPMBs will determine the bonusauthority to be delegated to their paypool managers.

Bonuses address two objectives. First,the ability to reward theaccomplishments of good performerswill make them more likely to remain,thus improving the retention of highachievers. Second, the promise ofbonuses for achievement will encourageimproved individual performance.

12. Action Based on UnsatisfactoryPerformance

If, after an opportunity to improve, anemployee’s performance is still notsatisfactory, the operating unit will givea rating of Unsatisfactory and must takeaction to reassign or remove theemployee, or place the employee in alower band, in accordance withperformance action provisions in lawand regulation.

IV. Conversion or Movement From aProject Position to a General SchedulePosition

If a DoC Demonstration Projectemployee moves to a General Scheduleposition, the following procedures willbe used to convert the employee’s

project pay band to an equivalent GSgrade and the employee’s project rate ofpay to an equivalent GS rate of pay. Theconverted GS grade and rates of paymust be determined before movementout of the project and anyaccompanying geographic movement,promotion, or other simultaneousaction. For lateral reassignments andlateral transfers, the converted GS gradeand rates of pay will become theemployee’s actual GS grade and rates ofpay, unless immediately affected by asimultaneous geographic movement oranother pay action. For non-lateraltransfers, promotions, and other actions,the converted GS grade and rates of paywill be deemed to be the employee’sgrade and rates of pay at the time ofmovement out of the project and will beused in applying applicable pay settingrules (e.g., promotion rules.)

A. Grade-Setting ProvisionsAn employee in a band corresponding

to a single GS grade is converted to thatgrade. An employee in a bandcorresponding to two or more grades isconverted to one of those gradesaccording to the following rules:

1. The employee’s project basic rate ofpay is compared with step 4 rates in thehighest applicable GS rate range(including a rate range in the GS baseschedule, a rate range in the applicablelocality rate schedule, or a rate range ina special rate schedule for theemployee’s occupation). If the series isa two-grade interval series, only odd-numbered grades are considered belowGS–11.

2. If the employee’s pay rate equals orexceeds the applicable step 4 rate of thehighest GS grade in the band, theemployee is converted to that grade.

3. If the employee’s pay rate is lowerthan the applicable step 4 rate of thehighest grade, the pay rate is comparedwith the step 4 rate of the secondhighest grade in the employee’s band. Ifthe employee’s pay rate equals orexceeds step 4 of the second highestgrade, the employee is converted to thatgrade.

4. This process is repeated for eachsuccessively lower grade in the banduntil a grade is found in which theemployee’s rate of basic pay equals orexceeds the applicable step 4 rate of thegrade. The employee is then convertedat that grade. If the employee’s rate ofpay is below the step 4 rate of the lowestgrade in the band, the employee isconverted to the lowest grade.

5. Exceptions: (1) If the employee’spay rate exceeds the maximum rate ofthe grade assigned under the above-described ‘‘step 4’’ rule but fits in therate range for the next higher applicable

grade in the band (i.e., between step 1and step 4), then the employee shall beconverted to that next higher applicablegrade; (2) An employee will not beconverted to a lower grade than thegrade held by the employeeimmediately preceding a conversion,lateral reassignment, or lateral transferin the project unless since that time theemployee has undergone a reduction inband; (3) In Band I of the ZP and ZACareer Paths, students without abachelor’s degree or comparableexperience are converted no higher thanGS–4.

B. Pay-Setting ProvisionsAn employee’s pay within the

converted GS grade is set by convertingthe project rate to GS pay rates inaccordance with the following rules:

1. The pay conversion is done beforeany geographic movement or other pay-related action that coincides with theemployee’s movement out of thedemonstration project.

2. An employee’s project rate isconverted to a rate on the highestapplicable rate range for the convertedGS grade (including a rate range in theGS base schedule, a rate range in theapplicable locality rate schedule, or arate range in a special rate schedule forthe employee’s occupation).

3. If the highest applicable rate rangeis a locality pay rate range, the projectrate is converted to a GS locality rate ofpay. If this rate falls between two stepsin the locality-adjusted schedule, therate must be set at the higher step. Theconverted GS rate of basic pay is the GSbase rate corresponding to the convertedGS locality rate (i.e., same stepposition). (If this employee is alsocovered by a special rate schedule as aGS employee, the converted special ratewill be determined based on the GS stepposition. This underlying special ratewill be basic pay for certain purposesfor which the employee’s higher localityrate is not basic pay.)

4. If the highest applicable rate rangeis a special rate range, the project rateis converted to a special rate. If this ratefalls between two steps in the specialrate schedule, the rate must be set at thehigher step. The converted GS rate ofbasic pay will be the GS ratecorresponding to the converted specialrate (i.e., same step position).

5. Exception: If an employee’s projectrate exceeds the maximum rate of thehighest applicable rate range uponconversion to the General Schedule, theaffected employee’s project rate will beconverted to a retained rate under 5U.S.C. 5363. If an employee is entitledto a special rate under the GeneralSchedule, the project rate is converted


directly to a retained rate. If anemployee is only entitled to locality payunder the General Schedule, theretained rate is derived by dividing theproject rate by the applicable localitypay factor (i.e., 1 plus the localitypayment percentage). Thus, the locality-adjusted retained rate will equal theproject rate the employee had beenreceiving before conversion. Since theemployee’s total rate of pay is notreduced upon conversion, this change toconverted rates under the GeneralSchedule will not be considered areduction in basic pay under 5 U.S.C.5363 or 7512.

6. After conversion or movement outof the demonstration project, anemployee’s converted GS rates will beused in applying GS pay administrationrules, as necessary, in lieu of using hisor her demonstration project rate. Thus,for example, the converted GS rate ofbasic pay (or converted special rate, ifapplicable) will be used in applying GSrules for promotions, maximum payablerate determinations, and pay retention,as appropriate. For conversions upontermination of the project and for lateralreassignments, the converted GS rateswill become the employee’s GS ratesimmediately after movement out of thedemonstration project (beforeprocessing any accompanyinggeographic move).

C. Equivalent Increase Determination

Service under the demonstrationproject is creditable for within-gradeincrease purposes upon conversion backto the GS pay system. Performance payincreases (including a zero increase)under the demonstration project areequivalent increases for the purpose ofdetermining the commencement of awithin-grade increase waiting periodunder 5 CFR 531.405(b).

V. Budget Discipline

Each project operating unit willmaintain compensation during theproject at the level it would havereached under the current system.Current costs will be reallocated tocover project costs. To ensureappropriate carryover of costs from pre-project to project years, a baseassessment will be made using threebase years: Fiscal Years 1994, 1995, and1996. Budget discipline will be requiredand achieved by imposing specificfunding principles (described in detailin the section on Funding Pools forPerformance Pay Increases andBonuses). Finally, both longitudinal andsite comparisons will be used to ensurethat spending remains within acceptablelimits.

A. Reprogramming Costs

The following actions and their costswill be eliminated by the new system:

1. Promotions from one grade to ahigher grade where both grades are nowin the same broad band. For example,because Band III of both the ZP and ZAcareer paths will cover the same payrange as current grades GS–11 and GS–12, there will be no more promotionsfrom GS–11 to GS–12.

2. Regularly scheduled Within-GradeIncreases and Quality Step Increases.There are no steps in the broad bandsystem. These actions will beeliminated.

3. Cash awards related to theperformance appraisal cycle. (Thesefunds will be applied to bonus poolsonly—not to pay pools).

The cost savings from eliminatingthese actions will be used to finance thefollowing new actions:—Performance-based pay increases

within bands, including the ability toincrease the pay of supervisors,through performance-based payincreases, to a higher level than underthe current system. There is noguaranteed performance pay increasein the proposed system, however, forEligible performance; and

—Performance bonuses.

B. Base Cost Assessment

In order to determine whether projectcosts are being maintained at acceptablelevels, a base assessment of pre-projectcosts will be needed. Costs will becomputed as annual averages over threepre-project years: Fiscal Years 1994,1995, and 1996. The costs of allpersonnel actions of types that are beingreplaced by project systems will betotaled and averaged.

C. Funding Pools for Performance PayIncreases and Bonuses

The results of the base costassessment will provide a basis for: (1)setting maximum spending limits; and(2) constructing performance payincrease and bonus funding pools byorganization, career path, band, andsalary. Performance pay pools forproject employees will be subject to thesame budgetary constraints andreductions imposed on otherDepartment funding allocations. Neitherallocations nor authorizations conveyfunding. Therefore, managers will berequired to make payout decisions tiedto their individual budgets, withinallocations. The following principleswill be observed:

1. In terms of career paths and bands,costs will be kept for the most partwhere they are found in the base

assessment. That is, base costs forpromotions, within-grade increases, andcash awards in a particular band andcareer path will form the basis forproject spending in the same band andcareer path.

2. Formulas will be devised toauthorize pay increase and bonus poolsup to the limits calculated from base-year spending. For each pool, theauthorized spending ceiling will dependon the number of employees in the poolby career path, band, and salary.

3. No allocation will be placed inperformance pay increase pools foremployees who are not eligible for aperformance pay increase, such as thosewho have insufficient time in theposition to be rated and those whosesalaries are at the ceilings of their bands.No money will be placed in bonus poolsfor employees not eligible for a bonus,such as those not eligible for aperformance rating or who are not onthe payroll the last day of theperformance cycle.

4. The potential size of performancepay increases will be relatively high foremployees whose salaries are near theminimum rate of the band and relativelylow for those whose salaries are near themaximum rate of the band. Thisarrangement imposes a reduced rate ofsalary increases as an individualadvances in the band, similar to thereduced rate of within-grade increasesin a General Schedule grade imposed bythe one-year, two-year, and three-yearwaiting periods.

5. There will be no guaranteedperformance pay increase in theproposed system. An employee with anEligible performance rating may, ifranked at or near the bottom of a peergroup, get no performance pay increase.

6. Although Pay Pool Managers willnot be allowed, under normalcircumstances, to exceed their allocatedpay increase and bonus pools, they willbe allowed to spend less than the fullamounts of their pools.

7. Funds previously used to pay cashawards will be applied to bonus poolsonly—not to performance pay pools.

D. Budget MonitoringThese procedures permit changes in

operating unit expenditures whichresult from legislatively mandatedprogram changes and changes in Federalpay and benefits. The operating unitsmay offset selected salary increases withsavings by reducing turnover,eliminating unnecessary overhead, andcutting other personnel costs.

The operating units will measure theiradherence to cost control by preparingbudget estimates based on prescribedFederal budget processes and


monitoring actual spending under theproject against these budget estimates.Two cost comparisons will be used:

1. Longitudinal Comparisons

a. Project costs will be calculated onan established schedule.

b. Costs will be compared against thespending limits calculated from the baseyears to ensure that budget limitationsare not being exceeded.

c. Each year, the funding of theperformance pay increase and bonuspools will be used as an opportunity to‘‘balance the books.’’ That is, thefunding of the pools will be limited tothe amount that is judged to maintainbudget discipline.

2. Site Comparisons

a. A number of non-project units willbe selected from within the Departmentto serve as comparison sites. Thecomparison sites will be selected toreflect, as nearly as possible, the

missions and workforces of the projectunits.

b. Periodically, the rate of increase insalaries in the project units will becompared to the rate of increase insalaries in the comparison units.

c. When it is found that salaries inproject units are outpacing salaries incomparison units, and the differencescannot be explained by non-projectvariables, appropriate adjustments willbe made in project funding.

VI. Project Evaluation

The Department will arrange forannual evaluations of the project underan OPM-approved evaluation plan. Theevaluation will be designed todetermine whether the interventions areachieving the goals and objectives of theproject within acceptable cost limits.(See Costs.)

The following table lays out theproject evaluation model, beginningwith and flowing from the objectives

that the project is designed to achieve.The Objectives column and theInterventions column together serve asthe project hypotheses; i.e., thehypotheses to be tested are that theobjectives will be achieved by theinterventions linked to them. Mostobjectives are linked to more than oneintervention. Each intervention isassociated with at least one expectedresult. The Measures column listsmeans by which actual results will bemeasured. Other measures of resultsmay be used in order to fully evaluatethe hypotheses. The Data Sourcescolumn shows where data required forthe measurements can be found.

A hypothesis will be supported—thatis, the intervention will be deemed tohave achieved the objective—whenactual results are found to matchexpected results. Tests of hypotheseswill be made by comparing results toappropriately defined comparisongroups.

TABLE 5.—PROJECT EVALUATION MODEL

Objectives Interventions Expected results Measures Data sources

Increased quality of newhires; improved fit be-tween position require-ments and individualqualifications; greaterlikelihood of getting ahighly qualified candidate.

Agency-Based Staffing ..... Hiring officials will be ableto focus on more rel-evant recruiting sourcesand avoid losing can-didates who grow impa-tient with long hiringprocesses.

• Hiring officials’ judg-ments of the improve-ment in the quality ofnew hires.

• Hiring officials’ judg-ments of improvementsin the fit of qualificationsof new hires.

• Rate of acceptance ofoffers.

• Interviews with hiring of-ficials.

• Focus groups.• HRM office records on

offers and acceptances.• Periodic employee/su-

pervisor surveys.• Exit interviews.

Direct Examination ............ For skill areas in whichwell qualified individualsare hard to find, man-agers will be able to hiregood candidates as theyfind them, thus avoidingthe loss of well qualifiedindividuals throughdelays.







pervisor surveys.

Broad-band ClassificationSystem, in conjunctionwith Flexible Entry Sala-ries.

Broad bands and flexibleentry salaries withinbands provide a morecompetitive range ofentry salaries for man-agers to use in negotiat-ing with candidates, thusincreasing the ability tohire highly qualified can-didates.







pervisor surveys.

More Flexible Paid Adver-tising.

Managers will be able tomake greater use ofpaid advertising, thusexpanding the scope ofrecruiting efforts or fo-cusing the recruitmenteffort on specializedsources.

Number of selections re-sulting from paid adver-tising.

HRM office records.


TABLE 5.—PROJECT EVALUATION MODEL—Continued


3-Year Probationary Pe-riod for Scientists andEngineers.

Greater likelihood that sci-entists and engineerswho are retained afterprobation will be capa-ble of the full range ofR&D functions.

Number of scientists andengineers released dur-ing probation after thefirst year.

• Automated history filedata.

• HRM office records.

Local Authority for Recruit-ment Payments.

The ability of managers togrant recruitment pay-ments during negotia-tions with highly quali-fied candidates will in-crease competitiveness.

Number of selectionsmade for which the re-cruitment payment wasinstrumental in attractingthe candidate.

• HRM office records.• Interviews with hiring of-

ficials.• Focus groups.

Increased retention of goodperformers.

Broad-Band ClassificationSystem.

Broad-banding gives anoperating unit the abilityto raise the pay of goodperformers to higher andmore competitive levels,thus improving retentionof good performers.

Turnover rates amonggood performers.

Turnover rates of low per-formers.

Automated history filedata.

Performance-Based PayIncreases.

Performance-based payincreases give an oper-ating unit the ability toraise the pay of goodperformers more rapidly,thus improving retentionof good performers.

Turnover rates amonggood performers.

• Automated history filedata.


• Focus groups.

Bonuses ............................ The ability to reward theaccomplishments ofgood performers willmake them more likelyto remain.

Turnover rates comparedto size of bonus.


Local Authority for Reten-tion Payments.

The ability of managers togrant retention pay-ments will improve theirability to retain employ-ees in critical skill areasin a job-related courseof study.

A count of the instances inwhich a retention pay-ment is instrumental inretaining an employeewho would otherwisehave left.

• HRM office records.• Interviews with hiring of-

ficials.• Focus groups.

Supervisory PerformancePay.

The ability to raise the payof high-performance su-pervisors to higher lev-els will make their sala-ries more competitive,improving retention.

Turnover rates among su-pervisors in relation topay and performance.


More Flexible Pay In-crease Upon Promotion.

Flexible pay increasesupon promotion gives anoperating unit the abilityto raise the pay of high-performing employeesand employees in criticalskill areas to higher andmore competitive levels,thus improving their re-tention.

Turnover rates in relationto pay and performance.


Improved individual and or-ganizational performance.

Two-Level, 100-Point,Peer Group Perform-ance Appraisal System.

This system will more ef-fectively communicate toemployees how they areperforming in relation totheir peers, the con-sequences of poor per-formance, and the re-wards for good perform-ance.

Judgments of Pay PoolManagers, Rating Offi-cials, and Employees.


• Periodic employee/su-pervisor surveys.

• Focus groups.

Pay Increases Linked toPerformance.

The promise of higher payincreases for highachievement will encour-age improved perform-ance.

Judgments of managers,supervisors, and em-ployees.


• Focus groups.




Supervisory PerformancePay.

The promise of higher paylevels for effective su-pervision will encourageimproved supervisoryperformance.

Judgments of higher-levelmanagers.

• Management interviews.

Bonuses Linked to Per-formance.

The promise of bonusesfor good performancewill encourage improvedperformance.



• Focus groups.

Hiring interventions (listedabove).

By improving the quality ofnew hires, the hiringinterventions will gradu-ally produce a higher-performing workforce.

Judgments of managersand supervisors.


• Focus groups.

Retention Interventions(listed above).

By improving the retentionof good performers, thequality of the workforcewill be higher than it oth-erwise would be.



• Focus groups.

More effective human re-sources management.

Broad-Band Classification The broad-band classifica-tion system will be sim-pler to use, more under-standable to managersand employees, andmore accurate.


• Interviews with man-agers.


More effective human re-sources management(cont.)

Delegated ClassificationAuthority to Managers.

Line managers understandthe organizational mis-sion and the work relat-ed to the mission andare therefore better pre-pared to classify thework.




Focus groups.

Delegated Pay Authority toManagers.

Line managers are in abetter position to under-stand the labor marketforces related to thework they manage andwill therefore be moreeffective pay mangers.



• Focus groups.

More efficient human re-sources management.

Automated Broad-BandClassification System.

The broad-band classifica-tion system will be sim-pler, faster, easier toautomate, require fewerresources to operate,and involve fewer classi-fication decisions.

• Judgments of managersand supervisors.

• Time required toproduce position de-scriptions and classifypositions.

• Number of classificationdecisions.



• Focus groups.• HRM office records.• Automated history file.

Support for EEO/Diversitygoals in recruiting, re-warding, paying, and re-taining minorities; provid-ing opportunities for a di-verse workforce; and inmaximizing contributionsof all employees.

Hiring Interventions (listedabove).

Managers will be able tohire good minority can-didates as they findthem, thus avoiding theloss of well qualified mi-norities through delays.

• Increases in the num-bers of minorities hired.

• HRM and EEO recordson offers and accept-ances.

Performance-Based PayIncreases.

Performance-based payincreases give an oper-ating unit the ability toraise the pay of goodperformers.

Comparisons between payof minorities and non-minorities.

• HRM records.

Bonuses ............................ The ability to reward goodperformers will allowmanagers to more easilyrecognize the perform-ance of minorities.

Comparisons between thebonuses received by mi-norities and non-minori-ties.

• HRM records.




Pay Interventions (listedabove).

Supervisory pay bands,flexible pay increasesupon promotion, andflexible entry salarieswill allow managersgreater flexibilities inpaying minorities atcompetitive salaries.

Comparisons between thesalaries of minoritiesand non-minorities.

• HRM records.

Retention Interventions(listed above).

Broad-banding, flexibilitiesin setting pay, perform-ance pay increases, andbonuses, will make iteasier for supervisors toretain good performingminorities.

Turnover rates of minori-ties in relation to pay forperformance.

• Automated history filedata/EEO records.

VII. Project Management

The Office of Personnel Managementwill oversee the project under itsdemonstration project authority in 5U.S.C. 4703. The DoC DepartmentalPersonnel Management Board willmanage the project at the Departmentlevel. Each major operating unit willhave its own Operating Personnel

Management Board to oversee localoperations.

The Director of NIST will chair theDepartmental Personnel ManagementBoard through the first cycle. After thefirst cycle, chairmanship of the Boardwill be assumed by one of the membersof the Board. The DPMB members willbe senior managers of the operatingunits in the project. The DoC Director

for Human Resources Management willserve as Executive Secretary. EachOPMB will typically be chaired by thesenior manager designated to serve onthe DPMB. The operating units willappoint other key managers to theirboards as they think appropriate.

The following table lists the separateresponsibilities of these three bodies.

TABLE 6.—PROJECT AUTHORITIES

ArenaProject authorities

OPM DPMB OPMB

General ......................................... • Final approval authority for theProject Plan, operating proce-dures, and any future changesto the plan or operating proce-dures.

• Approval authority within theDepartment for the Project Planand operating procedures.

• Approval authority within theDepartment for proposingchanges in the Project Plan oroperating procedures to OPM.

• Establishing operating unitproject guidelines within theProject Plan, operating proce-dures, and DPMB policies.

• Management of authorities out-lined below and any additionalathorities delegated by theDPMB.

• Monitoring the success ofproject interventions so as topropose appropriate mid-coursecorrections to OPM.

• Setting project policies withinthe parameters of the ProjectPlan and operating procedures.

• Delegating authority to OPMBs,including the withdrawal of au-thority when warranted.

• Exercising the authority to makeexceptions to normal projectprocedures on a case-by-casebasis when it believes an ex-ception is warranted (theOPMBs will not have this au-thority).

• Delegating authority to man-agers within the operating unit,including the withdrawal of au-thority when warranted.

• Assuring adequate resourcesfor implementing and operatingthe project within the operatingunit.

• Overseeing training of operatingunit managers, employees, andsupport staff in project policiesand procedures.

• Assuring adequate resourcesfor designing, implementing,and operating the project.

• Establishing a training plan totrain managers, employees, andsupport staff in project policiesand procedures.


TABLE 6.—PROJECT AUTHORITIES—Continued


OPM DPMB OPMB

Position Classification ................... • Approval of the project Classi-fication Interventions.

• Setting project classification pol-icy within the Project Plan andoperating procedures.

• Approving automated classifica-tion systems and classificationstandards.

• Establishing operating unit clas-sification guidelines within theProject Plan, operating proce-dures, and DPMB policies.

• Delegating classification author-ity to operating unit managers.

• Establishing career ladders.• Ensuring proper classification of

positions within the operatingunit.

• Resolving issues in operatingunit classifications.

• Approving or delegating the ap-proval of new specialtydescriptors.

Staffing .......................................... • Approval of the project StaffingInterventions.

• Approving project staffing poli-cies.

• Establishing policy and criteriafor recruiting and retention pay-ments.

• Establishing operating unit staff-ing guidelines within the ProjectPlan, operating procedures, andDPMB policies.

• Approving or delegating the ap-proval of individual recruitingand retention payments.

• Establishing career ladders.• Approving use of recruiting

services.• Delegating and overseeing use

of paid advertising.• Overseeing the application of

the three-year probationary pe-riod.

• Establishing operating unit prac-tices on vacancy distribution,opening timeframes, and similarlocal issues.

Reduction in Force ........................ • Approval of the project reduc-tion-in-force Interventions.

• Approving project reduction-in-force policies.

• Establishing operating unit re-duction-in-force guidelines with-in the Project Plan, operatingprocedures, and DPMB policies.

• Establishing procedures on op-erating unit competitive levels.

• Establishing guidelines for, andoverseeing, reductions in forcewithin the operating unit.

Pay Administration ........................ • Approval of the project Pay Ad-ministration Interventions.

• Approving project pay adminis-tration and pay for performancepolices.

• Approving project pay tables ....• Approving performance pay in-

crease ranges.• Approving automated perform-

ance pay increase systems.• Approving formulas used to de-

velop performance pay increasepools.

• Establishing operating unit payguidelines within the ProjectPlan, operating procedures, andDPMB policies.

• Establishing operating unit per-formance pay increase pools.

• Establishing operating unitguidelines and delegating ap-proval authorities for setting paylevels for new hires and pro-motions.

Performance Evaluation ................ • Approval of the project Perform-ance Evaluation Interventions.

• Approving project performanceevaluation policies.

• Approving project-wide formsfor performance plans and ap-praisals and for recording out-comes.

• Establishing operating unit per-formance evaluation guidelineswithin the Project Plan, operat-ing procedures, and DPMB poli-cies.

• Overseeing the operating unitannual performance appraisalprocess, from development ofplans to individual pay in-creases and bonuses.

• • • Establishing operating unitguidelines on performance ele-ments.

• • • Delegating rating, review, andpay pool management authori-ties.


TABLE 6.—PROJECT AUTHORITIES—Continued


OPM DPMB OPMB

Bonuses ........................................ • Approval of the project BonusInterventions.

• Approving project bonus poli-cies.

• Delegating bonus limits toOPMBs.

• Establishing operating unitbonus guidelines within theProject Plan, operating proce-dures, and DPMB policies.

• Delegating bonus limits to paypool managers.

• Establishing operating unitbonus pools.

Costs and Budget Discipline ......... • Approval of the project costplan.

• Approving project budget poli-cies.

• Establishing and overseeing op-erating unit budget procedures.

• Assuring operating unit budgetdiscipline.

• Designating pay pool man-agers.

• Establishing and overseeing theuse of operating unit perform-ance pay increase and bonuspools.

Project Evaluation ......................... • Approval of the project Evalua-tion Model.

• Approval of evaluation reports ..

• Approving the approach for se-lecting an evaluator to carry outthe annual project evaluation.

• Assuring adequate resourcesfor project evaluation.

• Approving project policies for in-ternal Departmental assess-ments.

• Overseeing and assuring oper-ating unit participation in projectevaluations, including data col-lection, focus group participationby operating unit employees,and availability of managers forinterviews.

• Approving objectives and proce-dures for internal operating unitassessments.

VIII. Training

The project operating units willschedule training for managers,supervisors, employees, and supportstaff.

A. Manager and Supervisor Training

The operating units will givemanagers and supervisors generaltraining in the overall features of theproject and specific hands-on training inthe new authorities they are to exercise.Computer training facilities will be usedto teach managers and supervisors howto use the automated classificationsystem to produce position descriptions.The classification training willemphasize principles of projectclassification, such as the classificationlogic embedded in the automatedclassification system, career pathcoverage criteria, occupational seriesdefinitions and coverage, properclassification by bands in accordancewith project classification standards,sound titling practices, and economicand effective position management.

Managers and supervisors will also begiven specific training in performanceappraisal and pay for performance. Akey part of this training will be asimulation of the performanceevaluation and rewards system prior tothe actual end-of-year performanceevaluation. Prior to the simulation, each

Rating Official and Pay Pool Managerwill be trained in the automatedperformance pay increase system.During the simulation, Rating Officialsand Pay Pool Managers will carry outthe appraisal, scoring, rating, andperformance pay increase process just asthey would at the end of a performanceyear, but for training purposes only. Theresults will not be official and will notbe communicated to employees. Thistraining exercise was used in the firstyear of the NIST project and was foundto be an effective approach to revealingand correcting problems andmisunderstandings prior to the real end-of-year process.

B. Employee Training

Through general presentations,handouts, and direct training fromsupervisors, employees will be given anunderstanding of project systems andhow those systems affect them.

In the general presentationsscheduled for everyone covered by theproject, employees will be led throughall project systems, from classificationto pay administration to pay forperformance. As each system ispresented, it will be contrasted with theGeneral Schedule system so employeescan see how the system is changing andhow the changes affect them. Thepresentations will also cover employee

rights and grievance procedures.Employees will be given ampleopportunity to ask questions at thepresentations and will be given thenames and numbers of individuals tocall if they have questions later.

In addition to the generalpresentations that will be scheduled forall employees, supervisors will beinstructed to pass along moreindividualized information about thesystem in conjunction with theimplementation of those systems. Forexample, at the time supervisors giveemployees their new project positiondescriptions, the supervisors willexplain the position descriptions, theprocess that produced them, and theprocess for keeping them current. Also,at the time of the performance appraisalsimulation, supervisors will explain toemployees how they fit into theperformance scoring and peer-groupranking process and how the processleads to decisions on performance payincreases.

C. Support Staff Training

There are three categories of supportstaff: (1) Personnel specialists in thevarious HRM offices serving projectoperating units; (2) budget specialists inoperating unit budget offices assigned tomonitor and advise on budget disciplineissues and specifically to assist in


establishing performance pay increaseand bonus pools; and (3) administrativeofficers in the operating units, who willassist in processing personnel actions,distributing local performance payincrease and bonus pools, andelectronically transmitting Pay PoolManager decisions to the automatedpayroll system.

Two of the HRM offices that willserve project operating units haveserved the NIST Demonstration Projectsince its implementation in 1988. Thesetwo offices will help train personnelspecialists in the other HRM offices.Budget specialists in the operatingunits, besides receiving the generalemployee training, will receive advicefrom a NIST budget specialist and willreceive further training on thedistribution of performance pay increaseand bonus pools during the simulationof the performance evaluation andrewards system. Administrative officerswill be invited to take part in thesupervisory training sessions and willalso receive further training during thesimulation of the performanceevaluation and rewards system.

IX. Experimentation and RevisionMany aspects of a demonstration

project are experimental. Modificationsmust be made from time to time asexperience is gained, results areanalyzed, and conclusions are reachedon how the system is working. TheDPMB, with OPM approval, willauthorize minor modifications, such aschanges in the occupational series in acareer path, without further notice.Major changes, such as a change in thenumber of career paths, will requireOPM approval and will be published inthe Federal Register.

X. Authorities and Waiver of Laws andRegulations Required

The following waivers of law andregulation are necessary:

Title 5, U.S. CodeSection 3308 Competitive Service;

examinations, educational requirementsprohibited; exceptions

Section 3502(a)(4) Order of retention(Waiver is applicable to allow the use

of ‘‘performance scores’’ in lieu of‘‘efficiency or performance ratings.’’)Chapter 51 ClassificationSection 5303 Annual adjustments to

pay schedules

Section 5304 Locality-basedcomparability payments

Section 5305 Special Pay AuthoritySubchapter III of chapter 53 General

Schedule Pay RatesSubchapter VI of chapter 53 Grade

and Pay Retention(Waiver is applicable only to allow

the following modifications: (1) Usingbands in lieu of grades; (2) providing noband retention if reduction in band iscaused by employee’s pay beingexceeded by band minimum rate; (3)providing no pay retention uponreduction in pay caused solely bygeographic movement; (4) providing nopay retention upon conversion to theGeneral Schedule as long as theemployee’s total rate of pay is notreduced; and (5) providing no payretention upon cancellation ofsupervisory performance pay).

Section 5753–5754 Recruitment andrelocation bonuses; Retentionallowances (except that relocationbonuses under Section 5753 continue toapply)Section 7512(3) Actions covered

(Waiver is applicable only to usebands in lieu of grades and to excludefrom section 7512(3) reductions in bandnot accompanied by a reduction in pay,due to the employee’s pay beingexceeded by the band minimum rate.)Section 7512(4) Actions covered

(Waiver is applicable only to allowthe following modifications: (1) Excludereductions in pay that are solely due torecomputation upon geographicmovement; (2) exclude conversions toGS pay that do not result in a reductionin the employee’s total rate of pay; and(3) exclude reductions in pay due to thecancellation of supervisory performancepay.)

Title 5, Code of Federal Regulations

Section 315.801 Probationary period;when required(Waived only for research and

development positions in the Scientificand Engineering Career path).Section 315.802 Length of

probationary period(Waived only for positions in the

Scientific and Engineering Career path).Section 351.401 Determining retention

standingSection 351.402 Competitive area in

RIF

Section 351.403 Competitive level inRIF

Section 351.504 Credit forperformance

Section 351.701 Assignment involvingdisplacement

Part 511 Classification under theGeneral Schedule

Part 530 Subpart C, Special salary rateschedules

Part 531 Pay under the GeneralSchedule

Part 536 Grade and Pay Retention(Waived only to allow the following

modifications: (1) Using bands in lieu ofgrades; (2) providing no band retentionif reduction in band is caused byemployee’s pay being exceeded by bandminimum rate; (3) providing no payretention upon reduction in pay causedsolely by geographic movement; (4)providing no pay retention uponconversion to the General Schedule aslong as the employee’s total rate of payis not reduced; and (5) providing no payretention upon cancellation ofsupervisory performance pay.)Section 550.703 Definition of

reasonable offer(Waiver is applicable only to allow

substitution of (1) ‘‘one band’’ for ‘‘twograde or pay levels’’ and ‘‘two grades’’and (2) ‘‘band’’ for ‘‘grade.’’)Part 575, Subpart A, Recruitment

bonusesPart 575, Subpart C, Retention

allowancesSection 752.401(a)(3) Coverage,

Reductions in grade(Waiver is applicable only to use

bands in lieu of grades and to excludereductions in band not accompanied bya reduction in pay due to theemployee’s pay being exceeded by theband minimum rate.)Section 752.401(a)(4) Coverage,

Reductions in pay(Waiver is applicable only to exclude

reductions in pay that are solely due torecomputation upon geographicmovement; (2) exclude conversions toGS pay that do not result in a reductionin the employee’s total rate of pay; and(3) exclude reductions in pay due to thecancellation of supervisory performancepay.)

[FR Doc. 97–33458 Filed 12–23–97; 8:45 am]BILLING CODE 6325–01–P

Documents

December 24, 1997 federal register · 12/24/1997 · Federal Register/Vol. 62, No. 247/Wednesday, December 24, 1997/Notices 67435 organizations, and OPMBs will monitor authorities