[House Report 108-116]
[From the U.S. Government Publishing Office]



108th Congress                                            Rept. 108-116
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
     CIVIL SERVICE AND NATIONAL SECURITY PERSONNEL IMPROVEMENT ACT

                                _______
                                

                  May 19, 2003.--Ordered to be printed

                                _______
                                

  Mr. Tom Davis of Virginia, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1836]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform, to whom was referred the 
bill (H.R. 1836) to make changes to certain areas of the 
Federal civil service in order to improve the flexibility and 
competitiveness of Federal human resources management, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................    30
Section-by-Section Analysis......................................    32
Explanation of Amendments........................................    41
Committee Consideration..........................................    42
Rollcall Votes...................................................    42
Application of Law to the Legislative Branch.....................    50
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................    50
Statement of General Performance Goals and Objectives............    50
Constitutional Authority Statement...............................    50
Unfunded Mandate Statement.......................................    50
Committee Estimate...............................................    50
Budget Authority and Congressional Budget Office Cost Estimate...    51
Changes in Existing Law Made by the Bill, as Reported............    58
Minority Views...................................................   104

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Civil Service and 
National Security Personnel Improvement Act''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

   TITLE I--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

Sec. 101. Short title.
Sec. 102. Department of Defense national security personnel system.

           TITLE II--DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL

Sec. 201. Modification of the overtime pay cap.
Sec. 202. Civil Service Retirement System computation for part-time 
service.
Sec. 203. Military leave for mobilized Federal civilian employees.
Sec. 204. Common occupational and health standards for differential 
payments as a consequence of exposure to asbestos.
Sec. 205. Increase in annual student loan repayment authority.
Sec. 206. Authorization for cabinet secretaries, secretaries of 
military departments, and heads of executive agencies to be paid on a 
biweekly basis.
Sec. 207. Additional classes of individuals eligible to participate in 
the Federal long-term care insurance program.
Sec. 208. Clarification to Hatch Act; limitation on disclosure of 
certain records.
Sec. 209. Senior Executive Service and performance.
Sec. 210. Design elements of pay-for-performance systems in 
demonstration projects.
Sec. 211. Federal flexible benefits plan administrative costs.
Sec. 212. Nonreduction in pay while Federal employee is serving on 
active duty in a reserve component of the uniformed services.
Sec. 213. Employee surveys.

     TITLE III--PROVISIONS RELATING TO THE SECURITIES AND EXCHANGE 
    COMMISSION AND THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

             Subtitle A--Securities and Exchange Commission

Sec. 301. Securities and Exchange Commission.

       Subtitle B--National Aeronautics and Space Administration

Sec. 311. Workforce authorities and personnel provisions.

                TITLE IV--HUMAN CAPITAL PERFORMANCE FUND

Sec. 401. Human Capital Performance Fund.

                         TITLE V--MISCELLANEOUS

Sec. 501. Prohibition on use of quotas.

   TITLE I--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

SEC. 101. SHORT TITLE.

  This title may be cited as the ``National Security Personnel System 
Act''.

SEC. 102. DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM.

  (a) In General.--(1) Subpart I of part III of title 5, United States 
Code, is amended by adding at the end the following new chapter:

 ``CHAPTER 99--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

``Sec.
``9901. Definitions.
``9902. Establishment of human resources management system.
``9903. Attracting highly qualified experts.
``9904. Employment of older Americans.
``9905. Special pay and benefits for certain employees outside the 
United States.

``Sec. 9901. Definitions

  ``For purposes of this chapter--
          ``(1) the term `Director' means the Director of the Office of 
        Personnel Management; and
          ``(2) the term `Secretary' means the Secretary of Defense.

``Sec. 9902. Establishment of human resources management system

  ``(a) In General.--Notwithstanding any other provision of this part, 
the Secretary may, in regulations prescribed jointly with the Director, 
establish, and from time to time adjust, a human resources management 
system for some or all of the organizational or functional units of the 
Department of Defense. If the Secretary certifies that issuance or 
adjustment of a regulation, or the inclusion, exclusion, or 
modification of a particular provision therein, is essential to the 
national security, the Secretary may, subject to the decision of the 
President, waive the requirement in the preceding sentence that the 
regulation or adjustment be issued jointly with the Director.
  ``(b) System Requirements.--Any system established under subsection 
(a) shall--
          ``(1) be flexible;
          ``(2) be contemporary;
          ``(3) not waive, modify, or otherwise affect--
                  ``(A) the public employment principles of merit and 
                fitness set forth in section 2301, including the 
                principles of hiring based on merit, fair treatment 
                without regard to political affiliation or other 
                nonmerit considerations, equal pay for equal work, and 
                protection of employees against reprisal for 
                whistleblowing;
                  ``(B) any provision of section 2302, relating to 
                prohibited personnel practices;
                  ``(C)(i) any provision of law referred to in section 
                2302(b)(1), (8), and (9); or
                  ``(ii) any provision of law implementing any 
                provision of law referred to in section 2302(b)(1), 
                (8), and (9) by--
                          ``(I) providing for equal employment 
                        opportunity through affirmative action; or
                          ``(II) providing any right or remedy 
                        available to any employee or applicant for 
                        employment in the public service;
                  ``(D) any other provision of this part (as described 
                in subsection (c)); or
                  ``(E) any rule or regulation prescribed under any 
                provision of law referred to in this paragraph;
          ``(4) ensure that employees may organize, bargain 
        collectively as provided for in this chapter, and participate 
        through labor organizations of their own choosing in decisions 
        which affect them, subject to the provisions of this chapter 
        and any exclusion from coverage or limitation on negotiability 
        established pursuant to law;
          ``(5) not be limited by any specific law or authority under 
        this title that is waivable under this chapter or by any 
        provision of this chapter or any rule or regulation prescribed 
        under this title that is waivable under this chapter, except as 
        specifically provided for in this section; and
          ``(6) include a performance management system that 
        incorporates the following elements:
                  ``(A) adherence to merit principles set forth in 
                section 2301;
                  ``(B) a fair, credible, and transparent employee 
                performance appraisal system;
                  ``(C) a link between the performance management 
                system and the agency's strategic plan;
                  ``(D) a means for ensuring employee involvement in 
                the design and implementation of the system;
                  ``(E) adequate training and retraining for 
                supervisors, managers, and employees in the 
                implementation and operation of the performance 
                management system;
                  ``(F) a process for ensuring ongoing performance 
                feedback and dialogue between supervisors, managers, 
                and employees throughout the appraisal period, and 
                setting timetables for review;
                  ``(G) effective safeguards to ensure that the 
                management of the system is fair and equitable and 
                based on employee performance; and
                  ``(H) a means for ensuring that adequate agency 
                resources are allocated for the design, implementation, 
                and administration of the performance management 
                system.
  ``(c) Other Nonwaivable Provisions.--The other provisions of this 
part referred to in subsection (b)(3)(D) are (to the extent not 
otherwise specified in this title)--
          ``(1) subparts A, B, E, G, and H of this part; and
          ``(2) chapters 41, 45, 47, 55 (except subchapter V thereof), 
        57, 59, 72, 73, and 79, and this chapter.
  ``(d) Limitations Relating to Pay.--(1) Nothing in this section shall 
constitute authority to modify the pay of any employee who serves in an 
Executive Schedule position under subchapter II of chapter 53 of this 
title.
  ``(2) Except as provided for in paragraph (1), the total amount in a 
calendar year of allowances, differentials, bonuses, awards, or other 
similar cash payments paid under this title to any employee who is paid 
under section 5376 or 5383 of this title or under title 10 or under 
other comparable pay authority established for payment of Department of 
Defense senior executive or equivalent employees may not exceed the 
total annual compensation payable to the Vice President under section 
104 of title 3.
  ``(3) To the maximum extent practicable, the rates of compensation 
for civilian employees at the Department of Defense shall be adjusted 
at the same rate, and in the same proportion, as are rates of 
compensation for members of the uniformed services.
  ``(e) Provisions To Ensure Collaboration With Employee 
Representatives.--(1) In order to ensure that the authority of this 
section is exercised in collaboration with, and in a manner that 
ensures the participation of, employee representatives in the planning, 
development, and implementation of any human resources management 
system or adjustments to such system under this section, the Secretary 
and the Director shall provide for the following:
          ``(A) The Secretary and the Director shall, with respect to 
        any proposed system or adjustment--
                  ``(i) provide to the employee representatives 
                representing any employees who might be affected a 
                written description of the proposed system or 
                adjustment (including the reasons why it is considered 
                necessary);
                  ``(ii) give such representatives at least 30 calendar 
                days (unless extraordinary circumstances require 
                earlier action) to review and make recommendations with 
                respect to the proposal; and
                  ``(iii) give any recommendations received from such 
                representatives under clause (ii) full and fair 
                consideration in deciding whether or how to proceed 
                with the proposal.
          ``(B) Following receipt of recommendations, if any, from such 
        employee representatives with respect to a proposal described 
        in subparagraph (A), the Secretary and the Director shall 
        accept such modifications to the proposal in response to the 
        recommendations as they determine advisable and shall, with 
        respect to any parts of the proposal as to which they have not 
        accepted the recommendations--
                  ``(i) notify Congress of those parts of the proposal, 
                together with the recommendations of the employee 
                representatives;
                  ``(ii) meet and confer for not less than 30 calendar 
                days with the employee representatives, in order to 
                attempt to reach agreement on whether or how to proceed 
                with those parts of the proposal; and
                  ``(iii) at the Secretary's option, or if requested by 
                a majority of the employee representatives 
                participating, use the services of the Federal 
                Mediation and Conciliation Service during such meet and 
                confer period to facilitate the process of attempting 
                to reach agreement.
          ``(C)(i) Any part of the proposal as to which the 
        representatives do not make a recommendation, or as to which 
        the recommendations are accepted by the Secretary and the 
        Director, may be implemented immediately.
          ``(ii) With respect to any parts of the proposal as to which 
        recommendations have been made but not accepted by the 
        Secretary and the Director, at any time after 30 calendar days 
        have elapsed since the initiation of the congressional 
        notification, consultation, and mediation procedures set forth 
        in subparagraph (B), if the Secretary, in his discretion, 
        determines that further consultation and mediation is unlikely 
        to produce agreement, the Secretary may implement any or all of 
        such parts (including any modifications made in response to the 
        recommendations as the Secretary determines advisable), but 
        only after 30 days have elapsed after notifying Congress of the 
        decision to implement the part or parts involved (as so 
        modified, if applicable).
          ``(iii) The Secretary shall notify Congress promptly of the 
        implementation of any part of the proposal and shall furnish 
        with such notice an explanation of the proposal, any changes 
        made to the proposal as a result of recommendations from the 
        employee representatives, and of the reasons why implementation 
        is appropriate under this subparagraph.
          ``(D) If a proposal described in subparagraph (A) is 
        implemented, the Secretary and the Director shall--
                  ``(i) develop a method for the employee 
                representatives to participate in any further planning 
                or development which might become necessary; and
                  ``(ii) give the employee representatives adequate 
                access to information to make that participation 
                productive.
  ``(2) The Secretary may, at the Secretary's discretion, engage in any 
and all collaboration activities described in this subsection at an 
organizational level above the level of exclusive recognition.
  ``(3) In the case of any employees who are not within a unit with 
respect to which a labor organization is accorded exclusive 
recognition, the Secretary and the Director may develop procedures for 
representation by any appropriate organization which represents a 
substantial percentage of those employees or, if none, in such other 
manner as may be appropriate, consistent with the purposes of this 
subsection.
  ``(f) Provisions Regarding National Level Bargaining.--(1) Any human 
resources management system implemented or modified under this chapter 
may include employees of the Department of Defense from any bargaining 
unit with respect to which a labor organization has been accorded 
exclusive recognition under chapter 71 of this title.
  ``(2) For any bargaining unit so included under paragraph (1), the 
Secretary may bargain at an organizational level above the level of 
exclusive recognition. Any such bargaining shall--
          ``(A) be binding on all subordinate bargaining units at the 
        level of recognition and their exclusive representatives, and 
        the Department of Defense and its subcomponents, without regard 
        to levels of recognition;
          ``(B) supersede all other collective bargaining agreements, 
        including collective bargaining agreements negotiated with an 
        exclusive representative at the level of recognition, except as 
        otherwise determined by the Secretary;
          ``(C) not be subject to further negotiations for any purpose, 
        including bargaining at the level of recognition, except as 
        provided for by the Secretary; and
          ``(D) except as otherwise specified in this chapter, not be 
        subject to review or to statutory third-party dispute 
        resolution procedures outside the Department of Defense.
  ``(3) The National Guard Bureau and the Army and Air Force National 
Guard are excluded from coverage under this subsection.
  ``(4) Any bargaining completed pursuant to this subsection with a 
labor organization not otherwise having national consultation rights 
with the Department of Defense or its subcomponents shall not create 
any obligation on the Department of Defense or its subcomponents to 
confer national consultation rights on such a labor organization.
  ``(g) Provisions Relating to Appellate Procedures.--(1) The Secretary 
shall--
          ``(A) establish an appeals process that provides that 
        employees of the Department of Defense are entitled to fair 
        treatment in any appeals that they bring in decisions relating 
        to their employment; and
          ``(B) in prescribing regulations for any such appeals 
        process--
                  ``(i) ensure that employees of the Department of 
                Defense are afforded the protections of due process; 
                and
                  ``(ii) toward that end, be required to consult with 
                the Merit Systems Protection Board before issuing any 
                such regulations.
  ``(2) Any regulations establishing the appeals process required by 
paragraph (1) that relate to any matters within the purview of chapter 
77 shall--
          ``(A) provide for an independent review panel, appointed by 
        the President, which shall not include the Secretary or the 
        Deputy Secretary of Defense or any of their subordinates;
          ``(B) be issued only after--
                  ``(i) notification to the appropriate committees of 
                Congress; and
                  ``(ii) consultation with the Merit Systems Protection 
                Board and the Equal Employment Opportunity Commission;
          ``(C) ensure the availability of procedures that--
                  ``(i) are consistent with requirements of due 
                process; and
                  ``(ii) provide, to the maximum extent practicable, 
                for the expeditious handling of any matters involving 
                the Department of Defense; and
          ``(D) modify procedures under chapter 77 only insofar as such 
        modifications are designed to further the fair, efficient, and 
        expeditious resolution of matters involving the employees of 
        the Department of Defense.
  ``(h) Provisions Related to Separation and Retirement Incentives.--
(1) The Secretary may establish a program within the Department of 
Defense under which employees may be eligible for early retirement, 
offered separation incentive pay to separate from service voluntarily, 
or both. This authority may be used to reduce the number of personnel 
employed by the Department of Defense or to restructure the workforce 
to meet mission objectives without reducing the overall number of 
personnel. This authority is in addition to, and notwithstanding, any 
other authorities established by law or regulation for such programs.
  ``(2) For purposes of this section, the term `employee' means an 
employee of the Department of Defense, serving under an appointment 
without time limitation, except that such term does not include--
          ``(A) a reemployed annuitant under subchapter III of chapter 
        83 or chapter 84 of this title, or another retirement system 
        for employees of the Federal Government;
          ``(B) an employee having a disability on the basis of which 
        such employee is or would be eligible for disability retirement 
        under any of the retirement systems referred to in paragraph 
        (1); or
          ``(C) for purposes of eligibility for separation incentives 
        under this section, an employee who is in receipt of a decision 
        notice of involuntary separation for misconduct or unacceptable 
        performance.
  ``(3) An employee who is at least 50 years of age and has completed 
20 years of service, or has at least 25 years of service, may, pursuant 
to regulations promulgated under this section, apply and be retired 
from the Department of Defense and receive benefits in accordance with 
chapter 83 or 84 if the employee has been employed continuously within 
the Department of Defense for more than 30 days before the date on 
which the determination to conduct a reduction or restructuring within 
1 or more Department of Defense components is approved pursuant to the 
program established under subsection (a).
  ``(4)(A) Separation pay shall be paid in a lump sum or in 
installments and shall be equal to the lesser of--
          ``(i) an amount equal to the amount the employee would be 
        entitled to receive under section 5595(c) of this title, if the 
        employee were entitled to payment under such section; or
          ``(ii) $25,000.
  ``(B) Separation pay shall not be a basis for payment, and shall not 
be included in the computation, of any other type of Government 
benefit. Separation pay shall not be taken into account for the purpose 
of determining the amount of any severance pay to which an individual 
may be entitled under section 5595 of this title, based on any other 
separation.
  ``(C) Separation pay, if paid in installments, shall cease to be paid 
upon the recipient's acceptance of employment by the Federal 
Government, or commencement of work under a personal services contract 
as described in paragraph (5).
  ``(5)(A) An employee who receives separation pay under such program 
may not be reemployed by the Department of Defense for a 12-month 
period beginning on the effective date of the employee's separation, 
unless this prohibition is waived by the Secretary on a case-by-case 
basis.
  ``(B) An employee who receives separation pay under this section on 
the basis of a separation occurring on or after the date of the 
enactment of the Federal Workforce Restructuring Act of 1994 (Public 
Law 103-236; 108 Stat. 111) and accepts employment with the Government 
of the United States, or who commences work through a personal services 
contract with the United States within 5 years after the date of the 
separation on which payment of the separation pay is based, shall be 
required to repay the entire amount of the separation pay to the 
Department of Defense. If the employment is with an Executive agency 
(as defined by section 105 of this title) other than the Department of 
Defense, the Director may, at the request of the head of that agency, 
waive the repayment if the individual involved possesses unique 
abilities and is the only qualified applicant available for the 
position. If the employment is within the Department of Defense, the 
Secretary may waive the repayment if the individual involved is the 
only qualified applicant available for the position. If the employment 
is with an entity in the legislative branch, the head of the entity or 
the appointing official may waive the repayment if the individual 
involved possesses unique abilities and is the only qualified applicant 
available for the position. If the employment is with the judicial 
branch, the Director of the Administrative Office of the United States 
Courts may waive the repayment if the individual involved possesses 
unique abilities and is the only qualified applicant available for the 
position.
  ``(6) Under this program, early retirement and separation pay may be 
offered only pursuant to regulations established by the Secretary, 
subject to such limitations or conditions as the Secretary may require.
  ``(i) Provisions Relating to Reemployment.--If annuitant receiving an 
annuity from the Civil Service Retirement and Disability Fund becomes 
employed in a position within the Department of Defense, his annuity 
shall continue. An annuitant so reemployed shall not be considered an 
employee for purposes of chapter 83 or 84.
  ``(j) Provisions Relating to Hiring.--Notwithstanding subsection (c), 
the Secretary may exercise any hiring flexibilities that would 
otherwise be available to the Secretary under section 4703.

``Sec. 9903. Attracting highly qualified experts

  ``(a) In General.--The Secretary may carry out a program using the 
authority provided in subsection (b) in order to attract highly 
qualified experts in needed occupations, as determined by the 
Secretary.
  ``(b) Authority.--Under the program, the Secretary may--
          ``(1) appoint personnel from outside the civil service and 
        uniformed services (as such terms are defined in section 2101 
        of this title) to positions in the Department of Defense 
        without regard to any provision of this title governing the 
        appointment of employees to positions in the Department of 
        Defense;
          ``(2) prescribe the rates of basic pay for positions to which 
        employees are appointed under paragraph (1) at rates not in 
        excess of the maximum rate of basic pay authorized for senior-
        level positions under section 5376 of this title, as increased 
        by locality-based comparability payments under section 5304 of 
        this title, notwithstanding any provision of this title 
        governing the rates of pay or classification of employees in 
        the executive branch; and
          ``(3) pay any employee appointed under paragraph (1) payments 
        in addition to basic pay within the limits applicable to the 
        employee under subsection (d).
  ``(c) Limitation on Term of Appointment.--(1) Except as provided in 
paragraph (2), the service of an employee under an appointment made 
pursuant to this section may not exceed 5 years.
  ``(2) The Secretary may, in the case of a particular employee, extend 
the period to which service is limited under paragraph (1) by up to 1 
additional year if the Secretary determines that such action is 
necessary to promote the Department of Defense's national security 
missions.
  ``(d) Limitations on Additional Payments.--(1) The total amount of 
the additional payments paid to an employee under this section for any 
12-month period may not exceed the lesser of the following amounts:
          ``(A) $50,000 in fiscal year 2004, which may be adjusted 
        annually thereafter by the Secretary, with a percentage 
        increase equal to one-half of 1 percentage point less than the 
        percentage by which the Employment Cost Index, published 
        quarterly by the Bureau of Labor Statistics, for the base 
        quarter of the year before the preceding calendar year exceeds 
        the Employment Cost Index for the base quarter of the second 
        year before the preceding calendar year.
          ``(B) The amount equal to 50 percent of the employee's annual 
        rate of basic pay.
For purposes of this paragraph, the term `base quarter' has the meaning 
given such term by section 5302(3).
  ``(2) An employee appointed under this section is not eligible for 
any bonus, monetary award, or other monetary incentive for service 
except for payments authorized under this section.
  ``(3) Notwithstanding any other provision of this subsection or of 
section 5307, no additional payments may be paid to an employee under 
this section in any calendar year if, or to the extent that, the 
employee's total annual compensation will exceed the maximum amount of 
total annual compensation payable at the salary set in accordance with 
section 104 of title 3.
  ``(e) Savings Provisions.--In the event that the Secretary terminates 
this program, in the case of an employee who, on the day before the 
termination of the program, is serving in a position pursuant to an 
appointment under this section--
          ``(1) the termination of the program does not terminate the 
        employee's employment in that position before the expiration of 
        the lesser of--
                  ``(A) the period for which the employee was 
                appointed; or
                  ``(B) the period to which the employee's service is 
                limited under subsection (c), including any extension 
                made under this section before the termination of the 
                program; and
          ``(2) the rate of basic pay prescribed for the position under 
        this section may not be reduced as long as the employee 
        continues to serve in the position without a break in service.

``Sec. 9904. Employment of older Americans

  ``(a) In General.--Notwithstanding any other provision of law, the 
Secretary may appoint older Americans into positions in the excepted 
service for a period not to exceed 2 years, provided that--
          ``(1) any such appointment shall not result in--
                  ``(A) the displacement of individuals currently 
                employed by the Department of Defense (including 
                partial displacement through reduction of nonovertime 
                hours, wages, or employment benefits); or
                  ``(B) the employment of any individual when any other 
                person is in a reduction-in-force status from the same 
                or substantially equivalent job within the Department 
                of Defense; and
          ``(2) the individual to be appointed is otherwise qualified 
        for the position, as determined by the Secretary.
  ``(b) Effect on Existing Retirement Benefits.--Notwithstanding any 
other provision of law, an individual appointed pursuant to subsection 
(a) who otherwise is receiving an annuity, pension, social security 
payment, retired pay, or other similar payment shall not have the 
amount of said annuity, pension, social security, or other similar 
payment reduced as a result of such employment.
  ``(c) Extension of Appointment.--Notwithstanding subsection (a), the 
Secretary may extend an appointment made pursuant to this section for 
up to an additional 2 years if the individual employee possesses unique 
knowledge or abilities that are not otherwise available to the 
Department of Defense.
  ``(d) Definition.--For purposes of this section, the term `older 
American' means any citizen of the United States who is at least 55 
years of age.

``Sec. 9905. Special pay and benefits for certain employees outside the 
                    United States

  ``The Secretary may provide to certain civilian employees of the 
Department of Defense assigned to activities outside the United States 
as determined by the Secretary to be in support of Department of 
Defense activities abroad hazardous to life or health or so specialized 
because of security requirements as to be clearly distinguishable from 
normal Government employment--
          ``(1) allowances and benefits--
                  ``(A) comparable to those provided by the Secretary 
                of State to members of the Foreign Service under 
                chapter 9 of title I of the Foreign Service Act of 1980 
                (Public Law 96-465, 22 U.S.C. 4081 et seq.) or any 
                other provision of law; or
                  ``(B) comparable to those provided by the Director of 
                Central Intelligence to personnel of the Central 
                Intelligence Agency; and
          ``(2) special retirement accrual benefits and disability in 
        the same manner provided for by the Central Intelligence Agency 
        Retirement Act (50 U.S.C. 2001 et seq.) and in section 18 of 
        the Central Intelligence Agency Act of 1949 (50 U.S.C. 
        403r).''.
  (2) The table of chapters for part III of such title is amended by 
adding at the end of subpart I the following new item:

 ``99.  Department of Defense National Security Personnel System9901''.

  (b) Impact on Department of Defense Civilian Personnel.--(1) Any 
exercise of authority under chapter 99 of such title (as added by 
subsection (a)), including under any system established under such 
chapter, shall be in conformance with the requirements of this 
subsection.
  (2) No other provision of this Act or of any amendment made by this 
Act may be construed or applied in a manner so as to limit, supersede, 
or otherwise affect the provisions of this section, except to the 
extent that it does so by specific reference to this section.

           TITLE II--DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL

SEC. 201. MODIFICATION OF THE OVERTIME PAY CAP.

  Section 5542(a)(2) of title 5, United States Code, is amended--
          (1) by inserting ``the greater of'' before ``one and one-
        half''; and
          (2) by inserting ``or the hourly rate of basic pay of the 
        employee'' after ``law)'' the second place it appears.

SEC. 202. CIVIL SERVICE RETIREMENT SYSTEM COMPUTATION FOR PART-TIME 
                    SERVICE.

  Section 8339(p) of title 5, United States Code, is amended by adding 
at the end the following new paragraphs:
  ``(3) In the administration of paragraph (1)--
          ``(A) subparagraph (A) of such paragraph shall apply with 
        respect to pay for service performed before, on, or after April 
        7, 1986; and
          ``(B) subparagraph (B) of such paragraph--
                  ``(i) shall apply with respect to that portion of any 
                annuity which is attributable to service performed on 
                or after April 7, 1986; and
                  ``(ii) shall not apply with respect to that portion 
                of any annuity which is attributable to service 
                performed before April 7, 1986.
  ``(4) Paragraph (3) shall be effective with respect to any annuity 
entitlement to which is based on a separation from service occurring on 
or after the date of the enactment of this paragraph.''.

SEC. 203. MILITARY LEAVE FOR MOBILIZED FEDERAL CIVILIAN EMPLOYEES.

  (a) In General.--Subsection (b) of section 6323 of title 5, United 
States Code, is amended--
          (1) in paragraph (2)--
                  (A) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii), respectively, and at the end of 
                clause (ii), as so redesignated, by inserting ``or''; 
                and
                  (B) by inserting ``(A)'' after ``(2)''; and
          (2) by inserting the following before the text beginning with 
        ``is entitled'':
          ``(B) performs full-time military service as a result of a 
        call or order to active duty in support of a contingency 
        operation as defined in section 101(a)(13) of title 10;''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to military service performed on or after the date of the 
enactment of this Act.

SEC. 204. COMMON OCCUPATIONAL AND HEALTH STANDARDS FOR DIFFERENTIAL 
                    PAYMENTS AS A CONSEQUENCE OF EXPOSURE TO ASBESTOS.

  (a) Prevailing Rate Systems.--Section 5343(c)(4) of title 5, United 
States Code, is amended by inserting before the semicolon at the end 
the following: ``, and for any hardship or hazard related to asbestos, 
such differentials shall be determined by applying occupational safety 
and health standards consistent with the permissible exposure limit 
promulgated by the Secretary of Labor under the Occupational Safety and 
Health Act of 1970''.
  (b) General Schedule Pay Rates.--Section 5545(d) of such title is 
amended by inserting before the period at the end of the first sentence 
the following: ``, and for any hardship or hazard related to asbestos, 
such differentials shall be determined by applying occupational safety 
and health standards consistent with the permissible exposure limit 
promulgated by the Secretary of Labor under the Occupational Safety and 
Health Act of 1970''.
  (c) Applicability.--Subject to any vested constitutional property 
rights, any administrative or judicial determination after the date of 
enactment of this Act concerning backpay for a differential established 
under section 5343(c)(4) or 5545(d) of such title shall be based on 
occupational safety and health standards described in the amendments 
made by subsections (a) and (b).

SEC. 205. INCREASE IN ANNUAL STUDENT LOAN REPAYMENT AUTHORITY.

  Section 5379(b)(2)(A) of title 5, United States Code, is amended by 
striking ``$6,000'' and inserting ``$10,000''.

SEC. 206. AUTHORIZATION FOR CABINET SECRETARIES, SECRETARIES OF 
                    MILITARY DEPARTMENTS, AND HEADS OF EXECUTIVE 
                    AGENCIES TO BE PAID ON A BIWEEKLY BASIS.

  (a) Authorization.--Section 5504 of title 5, United States Code, is 
amended--
          (1) by redesignating subsection (c) as subsection (d);
          (2) by striking the last sentence of both subsection (a) and 
        subsection (b); and
          (3) by inserting after subsection (b) the following:
  ``(c) For the purposes of this section:
          ``(1) The term `employee' means--
                  ``(A) an employee in or under an Executive agency;
                  ``(B) an employee in or under the Office of the 
                Architect of the Capitol, the Botanic Garden, and the 
                Library of Congress, for whom a basic administrative 
                workweek is established under section 6101(a)(5) of 
                this title; and
                  ``(C) an individual employed by the government of the 
                District of Columbia.
          ``(2) The term `employee' does not include--
                  ``(A) an employee on the Isthmus of Panama in the 
                service of the Panama Canal Commission; or
                  ``(B) an employee or individual excluded from the 
                definition of employee in section 5541(2) of this title 
                other than an employee or individual excluded by 
                clauses (ii), (iii), and (xiv) through (xvii) of such 
                section.
          ``(3) Notwithstanding paragraph (2), an individual who 
        otherwise would be excluded from the definition of employee 
        shall be deemed to be an employee for purposes of this section 
        if the individual's employing agency so elects, under 
        guidelines in regulations promulgated by the Office of 
        Personnel Management under subsection (d)(2).''.
  (b) Guidelines.--Subsection (d) of section 5504 of such title, as 
redesignated by subsection (a), is amended--
          (1) by inserting ``(1)'' after ``(d)''; and
          (2) by adding at the end the following new paragraph:
  ``(2) The Office of Personnel Management shall provide guidelines by 
regulation for exemptions to be made by the heads of agencies under 
subsection (c)(3). Such guidelines shall provide for such exemptions 
only under exceptional circumstances.''.

SEC. 207. ADDITIONAL CLASSES OF INDIVIDUALS ELIGIBLE TO PARTICIPATE IN 
                    THE FEDERAL LONG-TERM CARE INSURANCE PROGRAM.

  (a) Certain Employees of the District of Columbia Government.--
Section 9001(1) of title 5, United States Code, is amended by striking 
``2105(c),'' and all that follows and inserting ``2105(c).''.
  (b) Former Federal Employees Who Would Be Eligible To Begin Receiving 
an Annuity Upon Attaining the Requisite Minimum Age.--Section 9001(2) 
of title 5, United States Code, is amended--
          (1) in subparagraph (A), by striking ``and'' at the end;
          (2) in subparagraph (B), by striking the period and inserting 
        ``; and''; and
          (3) by adding at the end the following:
                  ``(C) any former employee who, on the basis of his or 
                her service, would meet all requirements for being 
                considered an `annuitant' within the meaning of 
                subchapter III of chapter 83, chapter 84, or any other 
                retirement system for employees of the Government, but 
                for the fact that such former employee has not attained 
                the minimum age for title to annuity.''.
  (c) Reservists Transferred to the Retired Reserve Who Are Under Age 
60.--Section 9001(4) of title 5, United States Code, is amended by 
striking ``including'' and all that follows through ``who has'' and 
inserting ``and a member who has been transferred to the Retired 
Reserve and who would be entitled to retired pay under chapter 1223 of 
title 10 but for not having''.

SEC. 208. CLARIFICATION TO HATCH ACT; LIMITATION ON DISCLOSURE OF 
                    CERTAIN RECORDS.

  (a) Clarification to Hatch Act.--No Federal employee or individual 
who voluntarily separates from the civil service (including by 
transferring to an international organization in the circumstances 
described in section 3582(a) of title 5, United States Code) shall be 
subject to enforcement of the provisions of section 7326 of such title 
(including any loss of rights under subchapter IV of chapter 35 of such 
title resulting from any proceeding under such section 7326), except 
that this subsection shall not apply in the event that such employee or 
individual subsequently becomes reemployed in the civil service. The 
preceding sentence shall apply to any complaint which is filed with or 
pending before the Merit Systems Protection Board after the date of the 
enactment of this Act.
  (b) Limitation on Disclosure of Certain Records.--Notwithstanding any 
other provision of law, rule, or regulation, nothing described in 
paragraph (2) or (3) of use ``q'' of the proposed revisions published 
in the Federal Register on July 12, 2001 (66 Fed. Reg. 36613) shall be 
considered to constitute a routine use of records maintained by the 
Office of Special Counsel.
  (c) Definitions.--For purposes of this section--
          (1) the term ``Federal employee or individual'' means any 
        employee or individual, as referred to in section 7326 of title 
        5, United States Code;
          (2) the term ``civil service'' has the meaning given such 
        term by section 2101 of title 5, United States Code;
          (3) the term ``international organization'' has the meaning 
        given such term by section 3581 of title 5, United States Code; 
        and
          (4) the terms ``routine use'' and ``record'' have the 
        respective meanings given such terms under section 552a(a) of 
        title 5, United States Code.

SEC. 209. SENIOR EXECUTIVE SERVICE AND PERFORMANCE.

  (a) Senior Executive Pay.--Chapter 53 of title 5, United States Code, 
is amended--
          (1) in section 5304--
                  (A) in subsection (g)(2)--
                          (i) in subparagraph (A) by striking 
                        ``subparagraphs (A)-(E)'' and inserting 
                        ``subparagraphs (A)-(D)''; and
                          (ii) in subparagraph (B) by striking 
                        ``subsection (h)(1)(F)'' and inserting 
                        ``subsection (h)(1)(D)'';
                  (B) in subsection (h)(1)--
                          (i) by striking subparagraphs (B) and (C);
                          (ii) by redesignating subparagraphs (D), (E), 
                        and (F) as subparagraphs (B), (C), and (D), 
                        respectively;
                          (iii) in clause (ii) by striking ``or'' at 
                        the end;
                          (iv) in clause (iii) by striking the period 
                        and inserting a semicolon; and
                          (v) by adding at the end the following new 
                        clauses:
          ``(iv) a Senior Executive Service position under section 
        3132;
          ``(v) a position in the Federal Bureau of Investigation and 
        Drug Enforcement Administration Senior Executive Service under 
        section 3151; or
          ``(vi) a position in a system equivalent to the system in 
        clause (iv), as determined by the President's Pay Agent 
        designated under subsection (d).''; and
                  (C) in subsection (h)(2)(B)--
                          (i) in clause (i)--
                                  (I) by striking ``subparagraphs (A) 
                                through (E)'' and inserting 
                                ``subparagraphs (A) through (C)''; and
                                  (II) by striking ``clause (i) or 
                                (ii)'' and inserting ``clause (i), 
                                (ii), (iii), (iv), (v), or (vii)''; and
                          (ii) in clause (ii)--
                                  (I) by striking ``paragraph (1)(F)'' 
                                and inserting ``paragraph (1)(D)''; and
                                  (II) by striking ``clause (i) or 
                                (ii)'' and inserting ``clause (i), 
                                (ii), (iii), (iv), (v), or (vi)'';
          (2) by amending section 5382 to read as follows:

``Sec. 5382. Establishment of rates of pay for the Senior Executive 
                    Service

  ``(a) Subject to regulations prescribed by the Office of Personnel 
Management, there shall be established a range of rates of basic pay 
for the Senior Executive Service, and each senior executive shall be 
paid at one of the rates within the range, based on individual 
performance, contribution to the agency's performance, or both, as 
determined under a rigorous performance management system. The lowest 
rate of the range shall not be less than the minimum rate of basic pay 
payable under section 5376, and the highest rate, for any position 
under this system or an equivalent system as determined by the 
President's Pay Agent designated under section 5304(d), shall not 
exceed the rate for level III of the Executive Schedule. The payment of 
the rates shall not be subject to the pay limitation of section 5306(e) 
or 5373.
  ``(b) Notwithstanding the provisions of subsection (a), the 
applicable maximum shall be level II of the Executive Schedule for any 
agency that is certified under section 5307 as having a performance 
appraisal system which, as designed and applied, makes meaningful 
distinctions based on relative performance.
  ``(c) No employee may suffer a reduction in pay by reason of transfer 
from an agency with an applicable maximum rate of pay prescribed under 
subsection (b) to an agency with an applicable maximum rate of pay 
prescribed under subsection (a).''; and
          (3) in section 5383--
                  (A) in subsection (a) by striking ``which of the 
                rates established under section 5382 of this title'' 
                and inserting ``which of the rates within a range 
                established under section 5382''; and
                  (B) in subsection (c) by striking ``for any pay 
                adjustment under section 5382 of this title'' and 
                inserting ``as provided in regulations prescribed by 
                the Office under section 5385''.
  (b) Post-Employment Restrictions.--(1) Clause (ii) of section 
207(c)(2)(A) of title 18, United States Code is amended to read as 
follows:
                  ``(ii) employed in a position which is not referred 
                to in clause (i) and for which that person is paid at a 
                rate of basic pay which is equal to or greater than 96 
                percent of the rate of basic pay for level II of the 
                Executive Schedule, or, for a period of 2 years 
                following the enactment of the Federal Employees Pay 
                for Performance Act of 2003, a person who, on the day 
                prior to the enactment of that Act, was employed in a 
                position which is not referred to in clause (i) and for 
                which the rate of basic pay, exclusive of any locality-
                based pay adjustment under section 5304 or section 
                5304a of title 5, was equal to or greater than the rate 
                of basic pay payable for level 5 of the Senior 
                Executive Service on the day prior to the enactment of 
                that Act,''.
  (2) Subchapter I of chapter 73 of title 5, United States Code, is 
amended by inserting at the end the following new section:

``Sec. 7302. Post-employment notification

  ``(a) Not later than the effective date of the amendments made by 
sections 3 and 4 of the Federal Employees Pay for Performance Act of 
2003, or 180 days after the date of enactment of that Act, whichever is 
later, the Office of Personnel Management shall, in consultation with 
the Attorney General and the Office of Government Ethics, promulgate 
regulations requiring that each Executive branch agency notify any 
employee of that agency who is subject to the provisions of section 
207(c)(1) of title 18, as a result of the amendment to section 
207(c)(2)(A)(ii) of that title by that Act.
  ``(b) The regulations shall require that notice be given before, or 
as part of, the action that affects the employee's coverage under 
section 207(c)(1) of title 18, by virtue of the provisions of section 
207(c)(2)(A)(ii) of that title, and again when employment or service in 
the covered position is terminated.''.
  (c) Clerical Amendments.--(1) The table of sections for chapter 53 of 
title 5, United States Code, is amended by striking the item relating 
to section 5382 and inserting the following:

``5382. Establishment of rates of pay for the Senior Executive 
Service.''.

  (2) The table of sections for chapter 73 of title 5, United States 
Code, is amended by adding after the item relating to section 7301 the 
following:

``7302. Post-employment notification.''.

  (d) Effective Date and Applicability.--(1) The amendments made by 
this section shall take effect on the first day of the first pay period 
beginning on or after the first January 1 following the date of 
enactment of this section.
  (2) The amendments made by subsection (a) may not result in a 
reduction in the rate of basic pay for any senior executive during the 
first year after the effective date of those amendments.
  (3) For the purposes of paragraph (2), the rate of basic pay for a 
senior executive shall be deemed to be the rate of basic pay set for 
the senior executive under section 5383 of title 5, United States Code, 
plus applicable locality pay paid to that senior executive, as of the 
date of enactment of this Act.

SEC. 210. DESIGN ELEMENTS OF PAY-FOR-PERFORMANCE SYSTEMS IN 
                    DEMONSTRATION PROJECTS.

  A pay-for-performance system may not be initiated under chapter 47 of 
title 5, United States Code, after the date of enactment of this Act, 
unless it incorporates the following elements:
          (1) adherence to merit principles set forth in section 2301 
        of such title;
          (2) a fair, credible, and transparent employee performance 
        appraisal system;
          (3) a link between elements of the pay-for-performance 
        system, the employee performance appraisal system, and the 
        agency's strategic plan;
          (4) a means for ensuring employee involvement in the design 
        and implementation of the system;
          (5) adequate training and retraining for supervisors, 
        managers, and employees in the implementation and operation of 
        the pay-for-performance system;
          (6) a process for ensuring ongoing performance feedback and 
        dialogue between supervisors, managers, and employees 
        throughout the appraisal period, and setting timetables for 
        review;
          (7) effective safeguards to ensure that the management of the 
        system is fair and equitable and based on employee performance; 
        and
          (8) a means for ensuring that adequate agency resources are 
        allocated for the design, implementation, and administration of 
        the pay-for-performance system.

SEC. 211. FEDERAL FLEXIBLE BENEFITS PLAN ADMINISTRATIVE COSTS.

  (a) In General.--Notwithstanding any other provision of law, an 
agency or other employing entity of the Government which provides or 
plans to provide a flexible spending account option for its employees 
shall not impose any fee with respect to any of its employees in order 
to defray the administrative costs associated therewith.
  (b) Offset of Administrative Costs.--Each such agency or employing 
entity that offers a flexible spending account option under a program 
established or administered by the Office of Personnel Management shall 
periodically forward to such Office, or entity designated by such 
Office, the amount necessary to offset the administrative costs of such 
program which are attributable to such agency.
  (c) Reports.--(1) The Office shall submit a report to the Committee 
on Government Reform of the House of Representatives and the Committee 
on Governmental Affairs of the Senate no later than March 31, 2004, 
specifying the administrative costs associated with the Governmentwide 
program (referred to in subsection (b)) for fiscal year 2003, as well 
as the projected administrative costs of such program for each of the 5 
fiscal years thereafter.
  (2) At the end of each of the first 3 calendar years in which an 
agency or other employing entity offers a flexible spending account 
option under this section, such agency or entity shall submit a report 
to the Office of Management and Budget showing the amount of its 
employment tax savings in such year which are attributable to such 
option, net of administrative fees paid under section (b).

SEC. 212. NONREDUCTION IN PAY WHILE FEDERAL EMPLOYEE IS SERVING ON 
                    ACTIVE DUTY IN A RESERVE COMPONENT OF THE UNIFORMED 
                    SERVICES.

  (a) In General.--Subchapter IV of chapter 55 of title 5, United 
States Code, is amended by adding at the end the following new section:

``Sec. 5538. Nonreduction in pay while serving on active duty in a 
                    reserve component

  ``(a) An employee who is also a member of a reserve component and is 
absent from a position of employment with the Federal Government under 
a call or order to serve on active duty for a period of more than 30 
days shall be entitled to receive, for each pay period described in 
subsection (b), an amount equal to the difference (if any) between--
          ``(1) the amount of civilian basic pay that would otherwise 
        have been payable to the employee for such pay period if the 
        employee's civilian employment with the Government had not been 
        interrupted by the service on active duty; and
          ``(2) the amount of military compensation that is payable to 
        the employee for the service on active duty and is allocable to 
        such pay period.
  ``(b)(1) Amounts under this section shall be payable with respect to 
each pay period (which would otherwise apply if the employee's civilian 
employment had not been interrupted) that occurs--
          ``(A) while the employee serves on active duty for a period 
        of more than 30 days;
          ``(B) while the employee is hospitalized for, or convalescing 
        from, an illness or injury incurred in, or aggravated during, 
        the performance of such active duty; or
          ``(C) during the 14-day period beginning at the end of such 
        active duty or the end of the period referred to in 
        subparagraph (B).
  ``(2) Paragraph (1) shall not apply with respect to a pay period for 
which the employee receives civilian basic pay (including by taking any 
annual, military, or other paid leave) to which the employee is 
entitled by virtue of the employee's civilian employment with the 
Government.
  ``(c) Any amount payable under this section to an employee shall be 
paid--
          ``(1) by employing agency of the employee;
          ``(2) from the appropriations or fund that would be used to 
        pay the employee if the employee were in a pay status; and
          ``(3) to the extent practicable, at the same time and in the 
        same manner as would civilian basic pay if the employee's 
        civilian employment had not been interrupted.
  ``(d) In consultation with the Secretary of Defense, the Office of 
Personnel Management shall prescribe such regulations as may be 
necessary to carry out this section.
  ``(e) In consultation with the Office of Personnel Management, the 
head of each employing agency shall prescribe procedures to ensure that 
the rights under this section apply to the employees of such agency.
  ``(f) In this section:
          ``(1) The terms `active duty for a period of more than 30 
        days', `member', and `reserve component' have the meanings 
        given such terms in section 101 of title 37.
          ``(2) The term `civilian basic pay' includes any amount 
        payable under section 5304 of this title.
          ``(3) The term `employing agency', as used with respect to an 
        employee entitled to any payments under this section, means the 
        agency with respect to which the employee has reemployment 
        rights under chapter 43 of title 38. The term `agency' has the 
        meaning given such term in subparagraph (C) of section 
        2302(a)(2) of this title, except that the term includes 
        Government corporations and agencies excluded by clause (i) or 
        (ii) of such subparagraph.
          ``(4) The term `military compensation' has the meaning given 
        the term `pay' in section 101(21) of title 37, except that the 
        term includes allowances provided under chapter 7 of such 
        title.''.
  (b) Clerical Amendment.--The table of sections for chapter 55 of 
title 5, United States Code, is amended by inserting after the item 
relating to section 5537 the following:

``5538. Nonreduction in pay while serving on active duty in a reserve 
component.''.

  (c) Application of Amendment.--Section 5538 of title 5, United States 
Code, as added by subsection (a), shall apply with respect to pay 
periods (as described in subsection (b) of such section) beginning on 
or after the date of the enactment of this Act.

SEC. 213. EMPLOYEE SURVEYS.

  (a) In General.--Each agency shall conduct an annual survey of its 
employees (including survey questions unique to the agency and 
questions prescribed under subsection (b)) to assess--
          (1) leadership and management practices that contribute to 
        agency performance; and
          (2) employee satisfaction with--
                  (A) leadership policies and practices;
                  (B) work environment;
                  (C) rewards and recognition for professional 
                accomplishment and personal contributions to achieving 
                organizational mission;
                  (D) opportunity for professional development and 
                growth; and
                  (E) opportunity to contribute to achieving 
                organizational mission.
  (b) Regulations.--The Office of Personnel Management shall issue 
regulations prescribing survey questions that should appear on all 
agency surveys under subsection (a) in order to allow a comparison 
across agencies.
  (c) Availability of Results.--The results of the agency surveys under 
subsection (a) shall be made available to the public and posted on the 
website of the agency involved, unless the head of such agency 
determines that doing so would jeopardize or negatively impact national 
security.
  (d) Agency defined.--For purposes of this section, the term 
``agency'' means an Executive agency (as defined by section 105 of 
title 5, United States Code).

     TITLE III--PROVISIONS RELATING TO THE SECURITIES AND EXCHANGE 
    COMMISSION AND THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

             Subtitle A--Securities and Exchange Commission

SEC. 301. SECURITIES AND EXCHANGE COMMISSION.

  (a) In General.--Subchapter I of chapter 31 of title 5, United States 
Code, is amended by adding at the end the following:

``Sec. 3114. Appointment of accountants, economists, and examiners by 
                    the Securities and Exchange Commission

  ``(a) Applicability.--This section applies with respect to any 
position of accountant, economist, and securities compliance examiner 
at the Commission that is in the competitive service.
  ``(b) Appointment Authority.--
          ``(1) In general.--The Commission may appoint candidates to 
        any position described in subsection (a)--
                  ``(A) in accordance with the statutes, rules, and 
                regulations governing appointments in the excepted 
                service; and
                  ``(B) notwithstanding any statutes, rules, and 
                regulations governing appointments in the competitive 
                service.
          ``(2) Rule of construction.--The appointment of a candidate 
        to a position under authority of this subsection shall not be 
        considered to cause such position to be converted from the 
        competitive service to the excepted service.
  ``(c) Reports.--No later than 90 days after the end of fiscal year 
2003 (for fiscal year 2003) and 90 days after the end of fiscal year 
2005 (for fiscal years 2004 and 2005), the Commission shall submit a 
report with respect to its exercise of the authority granted by 
subsection (b) during such fiscal years to the Committee on Government 
Reform and the Committee on Financial Services of the House of 
Representatives and the Committee on Governmental Affairs and the 
Committee on Banking, Housing, and Urban Affairs of the Senate. Such 
reports shall describe the changes in the hiring process authorized by 
such subsection, including relevant information related to--
          ``(1) the quality of candidates;
          ``(2) the procedures used by the Commission to select 
        candidates through the streamlined hiring process;
          ``(3) the numbers, types, and grades of employees hired under 
        the authority;
          ``(4) any benefits or shortcomings associated with the use of 
        the authority;
          ``(5) the effect of the exercise of the authority on the 
        hiring of veterans and other demographic groups; and
          ``(6) the way in which managers were trained in the 
        administration of the streamlined hiring system.
  ``(d) Commission Defined.--For purposes of this section, the term 
`Commission' means the Security and Exchange Commission.''.
  (b) Clerical Amendment.--The table of sections for chapter 31 of 
title 5, United States Code, is amended by inserting after the item 
relating to section 3113 the following:

``3114. Appointment of accountants, economists, and examiners by the 
Securities and Exchange Commission.''.

       Subtitle B--National Aeronautics and Space Administration

SEC. 311. WORKFORCE AUTHORITIES AND PERSONNEL PROVISIONS.

  (a) In General.--Subpart I of part III of title 5, United States 
Code, is amended by inserting after chapter 97, as added by section 
841(a)(2) of the Homeland Security Act of 2002 (Public Law 107-296; 116 
Stat. 2229), the following:

      ``CHAPTER 98--NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

                 ``SUBCHAPTER I--WORKFORCE AUTHORITIES

``Sec.
``9801. Definitions.
``9802. Planning, notification, and reporting requirements.
``9803. Workforce authorities.
``9804. Recruitment, redesignation, and relocation bonuses.
``9805. Retention bonuses.
``9806. Term appointments.
``9807. Pay authority for critical positions.
``9808. Assignments of intergovernmental personnel.
``9809. Enhanced demonstration project authority.
``9810. Voluntary separation incentive payments.
``9811. Limitations relating to bonuses.

                 ``SUBCHAPTER II--PERSONNEL PROVISIONS

``9831. Definitions.
``9832. NASA-Industry exchange program.
``9833. Science and technology scholarship program.
``9834. Distinguished scholar appointment authority.
``9835. Travel and transportation expenses of certain new appointees.
``9836. Annual leave enhancements.
``9837. Limited appointments to Senior Executive Service positions.
``9838. Superior qualifications pay.

                 ``SUBCHAPTER I--WORKFORCE AUTHORITIES

``Sec. 9801. Definitions

  ``For purposes of this subchapter--
          ``(1) the term `Administration' means the National 
        Aeronautics and Space Administration;
          ``(2) the term `Administrator' means the Administrator of the 
        National Aeronautics and Space Administration;
          ``(3) the term `critical need' means a specific and important 
        requirement of the Administration's mission that the 
        Administration is unable to fulfill because the Administration 
        lacks the appropriate employees because--
                  ``(A) of the inability to fill positions; or
                  ``(B) employees do not possess the requisite skills;
          ``(4) the term `employee' means an individual employed in or 
        under the Administration;
          ``(5) the term `workforce plan' means the plan required under 
        section 9802(a);
          ``(6) the term `appropriate committees of Congress' means--
                  ``(A) the Committees on Government Reform, Science, 
                and Appropriations of the House of Representatives; and
                  ``(B) the Committees on Governmental Affairs, 
                Commerce, Science, and Transportation, and 
                Appropriations of the Senate; and
          ``(7) the term `redesignation bonus' means a bonus under 
        section 9804 paid to an individual described in subsection 
        (a)(2) thereof.

``Sec. 9802. Planning, notification, and reporting requirements

  ``(a) Not later than 90 days before exercising any of the workforce 
authorities under this subchapter, the Administrator shall submit a 
written plan to the appropriate committees of Congress. A plan under 
this subchapter may not be implemented without the approval of the 
Office of Personnel Management.
  ``(b) A workforce plan shall include a description of--
          ``(1) each critical need of the Administration and the 
        criteria used in the identification of that need;
          ``(2)(A) the functions, approximate number, and classes or 
        other categories of positions or employees that--
                  ``(i) address critical needs; and
                  ``(ii) would be eligible for each authority proposed 
                to be exercised under section 9803; and
          ``(B) how the exercise of those authorities with respect to 
        the eligible positions or employees involved would address each 
        critical need identified under paragraph (1);
          ``(3)(A) any critical need identified under paragraph (1) 
        which would not be addressed by the authorities made available 
        under this subchapter; and
          ``(B) the reasons why those needs would not be so addressed;
          ``(4) the specific criteria to be used in determining which 
        individuals may receive the benefits described under sections 
        9804, 9805 (including the criteria for granting bonuses in the 
        absence of a critical need), and 9810, and how the level of 
        those benefits will be determined;
          ``(5) the safeguards or other measures that will be applied 
        to ensure that this subchapter is carried out in a manner 
        consistent with merit system principles;
          ``(6) the means by which employees will be afforded the 
        notification required under subsections (c) and (d)(1)(B);
          ``(7) the methods that will be used to determine if the 
        authorities exercised under this subchapter have successfully 
        addressed each critical need identified under paragraph (1); 
        and
          ``(8)(A) the recruitment methods used by the Administration 
        before the enactment of this chapter to recruit highly 
        qualified individuals; and
          ``(B) the changes the Administration will implement after the 
        enactment of this chapter in order to improve its recruitment 
        of highly qualified individuals, including how it intends to 
        use--
                  ``(i) nongovernmental recruitment or placement 
                agencies; and
                  ``(ii) Internet technologies.
  ``(c) Not later than 60 days before first exercising any of the 
workforce authorities made available under this subchapter, the 
Administrator shall provide to all employees the workforce plan and any 
additional information which the Administrator considers appropriate.
  ``(d)(1)(A) The Administrator may submit any modifications to the 
workforce plan to the Office of Personnel Management. Modifications to 
the workforce plan may not be implemented without the approval of the 
Office of Personnel Management.
  ``(B) Not later than 60 days before implementing any such 
modifications, the Administrator shall provide an appropriately 
modified plan to all employees of the Administration and to the 
appropriate committees of Congress.
  ``(2) Any reference in this subchapter or any other provision of law 
to the workforce plan shall be considered to include any modification 
made in accordance with this subsection.
  ``(e) Before submitting any written plan under subsection (a) (or 
modification under subsection (d)) to the Office of Personnel 
Management, the Administrator shall--
          ``(1) provide to each employee representative representing 
        any employees who might be affected by such plan (or 
        modification) a copy of the proposed plan (or modification);
          ``(2) give each representative 30 calendar days (unless 
        extraordinary circumstances require earlier action) to review 
        and make recommendations with respect to the proposed plan (or 
        modification); and
          ``(3) give any recommendations received from any such 
        representatives under paragraph (2) full and fair consideration 
        in deciding whether or how to proceed with respect to the 
        proposed plan (or modification).
  ``(f) None of the workforce authorities made available under this 
subchapter may be exercised in a manner inconsistent with the workforce 
plan.
  ``(g) Whenever the Administration submits its performance plan under 
section 1115 of title 31 to the Office of Management and Budget for any 
year, the Administration shall at the same time submit a copy of such 
plan to the appropriate committees of Congress.
  ``(h) Not later than 6 years after date of enactment of this 
subchapter, the Administrator shall submit to the appropriate 
committees of Congress an evaluation and analysis of the actions taken 
by the Administration under this subchapter, including--
          ``(1) an evaluation, using the methods described in 
        subsection (b)(7), of whether the authorities exercised under 
        this subchapter successfully addressed each critical need 
        identified under subsection (b)(1);
          ``(2) to the extent that they did not, an explanation of the 
        reasons why any critical need (apart from the ones under 
        subsection (b)(3)) was not successfully addressed; and
          ``(3) recommendations for how the Administration could 
        address any remaining critical need and could prevent those 
        that have been addressed from recurring.

``Sec. 9803. Workforce authorities

  ``(a) The workforce authorities under this subchapter are the 
following:
          ``(1) The authority to pay recruitment, redesignation, and 
        relocation bonuses under section 9804.
          ``(2) The authority to pay retention bonuses under section 
        9805.
          ``(3) The authority to make term appointments and to take 
        related personnel actions under section 9806.
          ``(4) The authority to fix rates of basic pay for critical 
        positions under section 9807.
          ``(5) The authority to extend intergovernmental personnel act 
        assignments under section 9808.
          ``(6) The authority to apply subchapter II of chapter 35 in 
        accordance with section 9810.
  ``(b) No authority under this subchapter may be exercised with 
respect to any officer who is appointed by the President, by and with 
the advice and consent of the Senate.
  ``(c) Unless specifically stated otherwise, all authorities provided 
under this subchapter are subject to section 5307.

``Sec. 9804. Recruitment, redesignation, and relocation bonuses

  ``(a) Notwithstanding section 5753, the Administrator may pay a bonus 
to an individual, in accordance with the workforce plan and subject to 
the limitations in this section, if--
          ``(1) the Administrator determines that the Administration 
        would be likely, in the absence of a bonus, to encounter 
        difficulty in filling a position; and
          ``(2) the individual--
                  ``(A) is newly appointed as an employee of the 
                Federal Government;
                  ``(B) is currently employed by the Federal Government 
                and is newly appointed to another position in the same 
                geographic area; or
                  ``(C) is currently employed by the Federal Government 
                and is required to relocate to a different geographic 
                area to accept a position with the Administration.
  ``(b) If the position is described as addressing a critical need in 
the workforce plan under section 9802(b)(2)(A), the amount of a bonus 
may not exceed--
          ``(1) 50 percent of the employee's annual rate of basic pay 
        (including comparability payments under sections 5304 and 
        5304a) as of the beginning of the service period multiplied by 
        the service period specified under subsection (d)(1)(B)(i); or
          ``(2) 100 percent of the employee's annual rate of basic pay 
        (including comparability payments under sections 5304 and 
        5304a) as of the beginning of the service period.
  ``(c) If the position is not described as addressing a critical need 
in the workforce plan under section 9802(b)(2)(A), the amount of a 
bonus may not exceed--
          ``(1) 25 percent of the employee's annual rate of basic pay 
        (including comparability payments under sections 5304 and 
        5304a) as of the beginning of the service period multiplied by 
        the service period specified under subsection (d)(1)(B)(i); or
          ``(2) 100 percent of the employee's annual rate of basic pay 
        (including comparability payments under sections 5304 and 
        5304a) as of the beginning of the service period.
  ``(d)(1)(A) Payment of a bonus under this section shall be contingent 
upon the individual entering into a service agreement with the 
Administration.
  ``(B) At a minimum, the service agreement shall include--
          ``(i) the required service period;
          ``(ii) the method of payment, including a payment schedule, 
        which may include a lump-sum payment, installment payments, or 
        a combination thereof;
          ``(iii) the amount of the bonus and the basis for calculating 
        that amount; and
          ``(iv) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has been 
        completed, and the effect of the termination.
  ``(2) For purposes of determinations under subsections (b)(1) and 
(c)(1), the employee's service period shall be expressed as the number 
equal to the full years and twelfth parts thereof, rounding the 
fractional part of a month to the nearest twelfth part of a year. The 
service period may not be less than 6 months and may not exceed 4 
years.
  ``(3) A bonus under this section may not be considered to be part of 
the basic pay of an employee.
  ``(e) Before paying a bonus under this section, the Administration 
shall establish a plan for paying recruitment, redesignation, and 
relocation bonuses, subject to approval by the Office of Personnel 
Management.
  ``(f) The Administrator shall submit to the appropriate committees of 
Congress, not later than February 28 of each of the next 10 years 
beginning after the date of enactment of this subchapter, a summary of 
all bonuses paid under subsections (b) and (c) during the preceding 
year. Such summary shall include the number of bonuses paid, the total 
amount of bonuses paid, and the average percentage used in calculating 
the total average bonus amount, under each such subsection.

``Sec. 9805. Retention bonuses

  ``(a) Notwithstanding section 5754, the Administrator may pay a bonus 
to an employee, in accordance with the workforce plan and subject to 
the limitations in this section, if the Administrator determines that--
          ``(1) the unusually high or unique qualifications of the 
        employee or a special need of the Administration for the 
        employee's services makes it essential to retain the employee; 
        and
          ``(2) the employee would be likely to leave in the absence of 
        a retention bonus.
  ``(b) If the position is described as addressing a critical need in 
the workforce plan under section 9802(b)(2)(A), the amount of a bonus 
may not exceed 50 percent of the employee's annual rate of basic pay 
(including comparability payments under sections 5304 and 5304a).
  ``(c) If the position is not described as addressing a critical need 
in the workforce plan under section 9802(b)(2)(A), the amount of a 
bonus may not exceed 25 percent of the employee's annual rate of basic 
pay (including comparability payments under sections 5304 and 5304a).
  ``(d)(1)(A) Payment of a bonus under this section shall be contingent 
upon the employee entering into a service agreement with the 
Administration.
  ``(B) At a minimum, the service agreement shall include--
          ``(i) the required service period;
          ``(ii) the method of payment, including a payment schedule, 
        which may include a lump-sum payment, installment payments, or 
        a combination thereof;
          ``(iii) the amount of the bonus and the basis for calculating 
        the amount; and
          ``(iv) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has been 
        completed, and the effect of the termination.
  ``(2) The employee's service period shall be expressed as the number 
equal to the full years and twelfth parts thereof, rounding the 
fractional part of a month to the nearest twelfth part of a year. The 
service period may not be less than 6 months and may not exceed 4 
years.
  ``(3) Notwithstanding paragraph (1), a service agreement is not 
required if the Administration pays a bonus in biweekly installments 
and sets the installment payment at the full bonus percentage rate 
established for the employee, with no portion of the bonus deferred. In 
this case, the Administration shall inform the employee in writing of 
any decision to change the retention bonus payments. The employee shall 
continue to accrue entitlement to the retention bonus through the end 
of the pay period in which such written notice is provided.
  ``(e) A bonus under this section may not be considered to be part of 
the basic pay of an employee.
  ``(f) An employee is not entitled to a retention bonus under this 
section during a service period previously established for that 
employee under section 5753 or under section 9804.
  ``(g) The Administrator shall submit to the appropriate committees of 
Congress, not later than February 28 of each of the next 10 years 
beginning after the date of enactment of this subchapter, a summary of 
all bonuses paid under subsections (b) and (c) during the preceding 
year. Such summary shall include the number of bonuses paid, the total 
amount of bonuses paid, and the average percentage used in calculating 
the total average bonus amount, under each such subsection.

``Sec. 9806. Term appointments

  ``(a) The Administrator may authorize term appointments within the 
Administration under subchapter I of chapter 33, for a period of not 
less than 1 year and not more than 6 years.
  ``(b) Notwithstanding chapter 33 or any other provision of law 
relating to the examination, certification, and appointment of 
individuals in the competitive service, the Administrator may convert 
an employee serving under a term appointment to a permanent appointment 
in the competitive service within the Administration without further 
competition if--
          ``(1) such individual was appointed under open, competitive 
        examination under subchapter I of chapter 33 to the term 
        position;
          ``(2) the announcement for the term appointment from which 
        the conversion is made stated that there was potential for 
        subsequent conversion to a career-conditional or career 
        appointment;
          ``(3) the employee has completed at least 2 years of current 
        continuous service under a term appointment in the competitive 
        service;
          ``(4) the employee's performance under such term appointment 
        was at least fully successful or equivalent; and
          ``(5) the position to which such employee is being converted 
        under this section is in the same occupational series, is in 
        the same geographic location, and provides no greater promotion 
        potential than the term position for which the competitive 
        examination was conducted.
  ``(c) Notwithstanding chapter 33 or any other provision of law 
relating to the examination, certification, and appointment of 
individuals in the competitive service, the Administrator may convert 
an employee serving under a term appointment to a permanent appointment 
in the competitive service within the Administration through internal 
competitive promotion procedures if the conditions under paragraphs (1) 
through (4) of subsection (b) are met.
  ``(d) An employee converted under this section becomes a career-
conditional employee, unless the employee has otherwise completed the 
service requirements for career tenure.
  ``(e) An employee converted to career or career-conditional 
employment under this section acquires competitive status upon 
conversion.
  ``(f) The Administrator shall submit to the appropriate committees of 
Congress, not later than February 28 of each of the next 10 years 
beginning after the date of enactment of this subchapter--
          ``(1) the total number of term appointments converted during 
        the previous calendar year; and
          ``(2) of that total number, the number of conversions that 
        were made to address a critical need described in the Workforce 
        Plan pursuant to section 9802(b)(2).

``Sec. 9807. Pay authority for critical positions

  ``(a) In this section, the term `position' means--
          ``(1) a position to which chapter 51 applies, including a 
        position in the Senior Executive Service;
          ``(2) a position under the Executive Schedule under sections 
        5312 through 5317;
          ``(3) a position established under section 3104; or
          ``(4) a senior-level position to which section 5376(a)(1) 
        applies.
  ``(b) Authority under this section--
          ``(1) may be exercised only with respect to a position that--
                  ``(A) is described as addressing a critical need in 
                the workforce plan under section 9802(b)(2)(A); and
                  ``(B) requires expertise of an extremely high level 
                in a scientific, technical, professional, or 
                administrative field;
          ``(2) may be exercised only to the extent necessary to 
        recruit or retain an individual exceptionally well qualified 
        for the position; and
          ``(3) may be exercised only in retaining employees of the 
        Administration or in appointing individuals who were not 
        employees of another Federal agency as defined under section 
        5102(a)(1).
  ``(c)(1) Notwithstanding section 5377, the Administrator may fix the 
rate of basic pay for a position in the Administration in accordance 
with this section. The Administrator may not delegate this authority.
  ``(2) The number of positions with pay fixed under this section may 
not exceed 10 at any time.
  ``(d)(1) The rate of basic pay fixed under this section may not be 
less than the rate of basic pay (including any comparability payments) 
which would otherwise be payable for the position involved if this 
section had never been enacted.
  ``(2) The annual rate of basic pay fixed under this section may not 
exceed the per annum rate of salary payable under section 104 of title 
3.
  ``(3) Notwithstanding any provision of section 5307, in the case of 
an employee who, during any calendar year, is receiving pay at a rate 
fixed under this section, no allowance, differential, bonus, award, or 
similar cash payment may be paid to such employee if, or to the extent 
that, when added to basic pay paid or payable to such employee (for 
service performed in such calendar year as an employee in the executive 
branch or as an employee outside the executive branch to whom chapter 
51 applies), such payment would cause the total to exceed the per annum 
rate of salary which, as of the end of such calendar year, is payable 
under section 104 of title 3.
  ``(e) The Administrator shall submit to the appropriate committees of 
Congress, not later than February 28 of each of the next 10 years 
beginning after the date of enactment of this subchapter--
          ``(1) the number of positions for which the rate of basic pay 
        was fixed under this section during the preceding year; and
          ``(2) the number of positions for which a rate of basic pay 
        under this section was terminated during the preceding year.

``Sec. 9808. Assignments of intergovernmental personnel

  ``For purposes of applying the third sentence of section 3372(a) 
(relating to the authority of the head of a Federal agency to extend 
the period of an employee's assignment to or from a State or local 
government, institution of higher education, or other organization), 
the Administrator may, with the concurrence of the employee and the 
government or organization concerned, take any action which would be 
allowable if such sentence had been amended by striking `two' and 
inserting `four'.

``Sec. 9809. Enhanced demonstration project authority

  ``When conducting a demonstration project at the Administration, 
section 4703(d)(1)(A) may be applied by substituting `such numbers of 
individuals as determined by the Administrator' for `not more than 
5,000 individuals'.

``Sec. 9810. Voluntary separation incentive payments

  ``(a) In applying subchapter II of chapter 35, the Administrator may 
provide for voluntary separation incentive payments in excess of the 
dollar-amount limitation that would otherwise apply under section 
3523(b)(3)(B), subject to subsection (b).
  ``(b) Voluntary separation incentive payments described in subsection 
(a)--
          ``(1) may not exceed 50 percent of the annual rate of basic 
        pay of the employee receiving such payments (computed 
        disregarding any comparability payments under sections 5304-
        5304a);
          ``(2) may not, in any calendar year, be made to more than--
                  ``(A) 10 employees; or
                  ``(B) such greater number of employees as the 
                Administrator may, with the approval of the Office of 
                Management and Budget, establish in lieu of the number 
                specified in subparagraph (A) following notification to 
                the appropriate committees of Congress;
          ``(3) may not be made to an employee if the employee has 
        within the last 12 months received, or if the employee is then 
        receiving, a bonus or allowance under section 5753 or 5754 or 
        under section 9804 or 9805; and
          ``(4) may be made only if the position in which the employee 
        is serving addresses a critical need identified in the 
        workforce plan pursuant to section 9802(b)(2).
  ``(c)(1) The proposed use of workforce authorities in this section 
shall be included in the plan required by section 3522.
  ``(2) Whenever the Office of Personnel Management approves the 
Administration's plan required in such section 3522, the Administration 
shall submit a copy of the approved plan to the appropriate committees 
of Congress within 15 days after the date on which it is so approved.

``Sec. 9811. Limitations relating to bonuses

  ``(a) Of the total amount in bonuses awarded under sections 9804 and 
9805, respectively, in any year, not to exceed 15 percent of any such 
total amount may be awarded to supervisors (within the meaning of 
section 7103(a)(10)).
  ``(b) A separate appropriations account shall be maintained for such 
bonuses.

                 ``SUBCHAPTER II--PERSONNEL PROVISIONS

``Sec. 9831. Definitions

  ``For purposes of this subchapter, the terms `Administration' and 
`Administrator' have the meanings set forth in section 9801.

``Sec. 9832. NASA-Industry exchange program

  ``(a) For purposes of this section, the term `detail' means--
          ``(1) the assignment or loan of an employee of the 
        Administration to a private sector organization without a 
        change of position from the Administration, or
          ``(2) the assignment or loan of an employee of a private 
        sector organization to the Administration without a change of 
        position from the private sector organization that employs the 
        individual,
whichever is appropriate in the context in which such term is used.
  ``(b)(1) On request from or with the agreement of a private sector 
organization, and with the consent of the employee concerned, the 
Administrator may arrange for the assignment of an employee of the 
Administration to a private sector organization or an employee of a 
private sector organization to the Administration. An employee of the 
Administration shall be eligible to participate in this program only if 
the employee is employed at the GS-11 level or above (or equivalent) 
and is serving under a career or career-conditional appointment or an 
appointment of equivalent tenure in the excepted service.
  ``(2) The Administrator shall provide for a written agreement between 
the Administration and the employee concerned regarding the terms and 
conditions of the employee's assignment. The agreement shall--
          ``(A) require the employee to serve in the Administration, 
        upon completion of the assignment, for a period equal to the 
        length of the assignment; and
          ``(B) provide that, in the event the employee fails to carry 
        out the agreement (except for good and sufficient reason, as 
        determined by the Administrator), the employee shall be liable 
        to the United States for payment of all expenses of the 
        assignment.
An amount under subparagraph (B) shall be treated as a debt due the 
United States.
  ``(3) Assignments may be terminated by the Administration or the 
private sector organization concerned for any reason at any time.
  ``(4) Assignments under this section shall be for a period of between 
6 months and 1 year, and may be extended in 3-month increments for a 
total of not more than 1 additional year, except that no assignment 
under this section may commence after the end of the 5-year period 
beginning on the date of the enactment of this section.
  ``(c)(1) An employee of the Administration who is assigned to a 
private sector organization under this section is deemed, during the 
period of the assignment, to be on detail to a regular work assignment 
in the Administration.
  ``(2) Notwithstanding any other provision of law, an employee of the 
Administration who is assigned to a private sector organization under 
this section is entitled to retain coverage, rights, and benefits under 
subchapter I of chapter 81, and employment during the assignment is 
deemed employment by the United States, except that, if the employee or 
the employee's dependents receive from the private sector organization 
any payment under an insurance policy for which the premium is wholly 
paid by the private sector organization, or other benefit of any kind 
on account of the same injury or death, then, the amount of such 
payment or benefit shall be credited against any compensation otherwise 
payable under subchapter I of chapter 81.
  ``(3) The assignment of an employee to a private sector organization 
under this section may be made with or without reimbursement by the 
private sector organization for the travel and transportation expenses 
to or from the place of assignment, subject to the same terms and 
conditions as apply with respect to an employee of a Federal agency or 
a State or local government under section 3375, and for the pay, or a 
part thereof, of the employee during assignment. Any reimbursements 
shall be credited to the appropriation of the Administration used for 
paying the travel and transportation expenses or pay.
  ``(4) The Federal Tort Claims Act and any other Federal tort 
liability statute apply to an employee of the Administration assigned 
to a private sector organization under this section. The supervision of 
the duties of an employee of the Administration who is so assigned to a 
private sector organization may be governed by an agreement between the 
Administration and the organization.
  ``(d)(1) An employee of a private sector organization assigned to the 
Administration under this section is deemed, during the period of the 
assignment, to be on detail to the Administration.
  ``(2) An employee of a private sector organization assigned to the 
Administration under this section--
          ``(A) may continue to receive pay and benefits from the 
        private sector organization from which he is assigned;
          ``(B) is deemed, notwithstanding paragraph (1), to be an 
        employee of the Administration for the purposes of--
                  ``(i) chapter 73;
                  ``(ii) sections 201, 203, 205, 207, 208, 209, 603, 
                606, 607, 643, 654, 1905, and 1913 of title 18;
                  ``(iii) sections 1343, 1344, and 1349(b) of title 31;
                  ``(iv) the Federal Tort Claims Act and any other 
                Federal tort liability statute;
                  ``(v) the Ethics in Government Act of 1978; and
                  ``(vi) section 1043 of the Internal Revenue Code of 
                1986;
          ``(C) may not have access to any trade secrets or to any 
        other nonpublic information which is of commercial value to the 
        private sector organization from which he is assigned; and
          ``(D) is subject to such regulations as the President may 
        prescribe.
The supervision of an employee of a private sector organization 
assigned to the Administration under this section may be governed by 
agreement between the Administration and the private sector 
organization concerned. Such an assignment may be made with or without 
reimbursement by the Administration for the pay, or a part thereof, of 
the employee during the period of assignment, or for any contribution 
of the private sector organization to employee benefit systems.
  ``(3) An employee of a private sector organization assigned to the 
Administration under this section who suffers disability or dies as a 
result of personal injury sustained while performing duties during the 
assignment shall be treated, for the purpose of subchapter I of chapter 
81, as an employee as defined by section 8101 who had sustained the 
injury in the performance of duty, except that, if the employee or the 
employee's dependents receive from the private sector organization any 
payment under an insurance policy for which the premium is wholly paid 
by the private sector organization, or other benefit of any kind on 
account of the same injury or death, then, the amount of such payment 
or benefit shall be credited against any compensation otherwise payable 
under subchapter I of chapter 81.
  ``(4) A private sector organization may not charge the Federal 
Government, as direct or indirect costs under a Federal contract, the 
costs of pay or benefits paid by the organization to an employee 
assigned to the Administration under this section for the period of the 
assignment.
  ``(e)(1) The Administration shall, not later than February 28 of each 
year, prepare and submit to the appropriate committees of Congress a 
report summarizing the operation of this section during the preceding 
year.
  ``(2) Each report shall include, with respect to the period to which 
such report relates--
          ``(A) the total number of individuals assigned to, and the 
        total number of individuals assigned from, the Administration 
        during such period;
          ``(B) a brief description of each assignment included under 
        subparagraph (A), including--
                  ``(i) the name of the assigned individual, as well as 
                the private sector organization, to or from which such 
                individual was assigned;
                  ``(ii) the respective positions to and from which the 
                individual was assigned, including the duties and 
                responsibilities and the pay grade or level associated 
                with each; and
                  ``(iii) the duration and objectives of the 
                individual's assignment; and
          ``(C) such other information as the Administration considers 
        appropriate.
  ``(3) A copy of each report submitted under paragraph (1)--
          ``(A) shall be published in the Federal Register; and
          ``(B) shall be made publicly available on the Internet.
  ``(f) The Administrator, in consultation with the Director of the 
Office of Personnel Management, shall prescribe regulations for the 
administration of this section.
  ``(g) Not later than 4 years after the date of the enactment of this 
section, the General Accounting Office shall prepare and submit to the 
appropriate committees of Congress a report on the operation of this 
section. Such report shall include--
          ``(1) an evaluation of the effectiveness of the program 
        established by this section; and
          ``(2) a recommendation as to whether such program should be 
        continued (with or without modification) or allowed to lapse.

``Sec. 9833. Science and technology scholarship program

  ``(a)(1) The Administrator shall establish a National Aeronautics and 
Space Administration Science and Technology Scholarship Program to 
award scholarships to individuals that is designed to recruit and 
prepare students for careers in the Administration.
  ``(2) Individuals shall be selected to receive scholarships under 
this section through a competitive process primarily on the basis of 
academic merit, with consideration given to financial need and the goal 
of promoting the participation of individuals identified in section 33 
or 34 of the Science and Engineering Equal Opportunities Act.
  ``(3) To carry out the Program the Administrator shall enter into 
contractual agreements with individuals selected under paragraph (2) 
under which the individuals agree to serve as full-time employees of 
the Administration, for the period described in subsection (f)(1), in 
positions needed by the Administration and for which the individuals 
are qualified, in exchange for receiving a scholarship.
  ``(b) In order to be eligible to participate in the Program, an 
individual must--
          ``(1) be enrolled or accepted for enrollment as a full-time 
        student at an institution of higher education in an academic 
        field or discipline described in the list made available under 
        subsection (d);
          ``(2) be a United States citizen; and
          ``(3) at the time of the initial scholarship award, not be an 
        employee (as defined in section 2105).
  ``(c) An individual seeking a scholarship under this section shall 
submit an application to the Administrator at such time, in such 
manner, and containing such information, agreements, or assurances as 
the Administrator may require.
  ``(d) The Administrator shall make publicly available a list of 
academic programs and fields of study for which scholarships under the 
Program may be utilized and shall update the list as necessary.
  ``(e)(1) The Administrator may provide a scholarship under the 
Program for an academic year if the individual applying for the 
scholarship has submitted to the Administrator, as part of the 
application required under subsection (c), a proposed academic program 
leading to a degree in a program or field of study on the list made 
available under subsection (d).
  ``(2) An individual may not receive a scholarship under this section 
for more than 4 academic years, unless the Administrator grants a 
waiver.
  ``(3) The dollar amount of a scholarship under this section for an 
academic year shall be determined under regulations issued by the 
Administrator, but shall in no case exceed the cost of attendance.
  ``(4) A scholarship provided under this section may be expended for 
tuition, fees, and other authorized expenses as established by the 
Administrator by regulation.
  ``(5) The Administrator may enter into a contractual agreement with 
an institution of higher education under which the amounts provided for 
a scholarship under this section for tuition, fees, and other 
authorized expenses are paid directly to the institution with respect 
to which the scholarship is provided.
  ``(f)(1) The period of service for which an individual shall be 
obligated to serve as an employee of the Administration is, except as 
provided in subsection (h)(2), 24 months for each academic year for 
which a scholarship under this section is provided.
  ``(2)(A) Except as provided in subparagraph (B), obligated service 
under paragraph (1) shall begin not later than 60 days after the 
individual obtains the educational degree for which the scholarship was 
provided.
  ``(B) The Administrator may defer the obligation of an individual to 
provide a period of service under paragraph (1) if the Administrator 
determines that such a deferral is appropriate. The Administrator shall 
prescribe the terms and conditions under which a service obligation may 
be deferred through regulation.
  ``(g)(1) Scholarship recipients who fail to maintain a high level of 
academic standing, as defined by the Administrator by regulation, who 
are dismissed from their educational institutions for disciplinary 
reasons, or who voluntarily terminate academic training before 
graduation from the educational program for which the scholarship was 
awarded, shall be in breach of their contractual agreement and, in lieu 
of any service obligation arising under such agreement, shall be liable 
to the United States for repayment within 1 year after the date of 
default of all scholarship funds paid to them and to the institution of 
higher education on their behalf under the agreement, except as 
provided in subsection (h)(2). The repayment period may be extended by 
the Administrator when determined to be necessary, as established by 
regulation.
  ``(2) Scholarship recipients who, for any reason, fail to begin or 
complete their service obligation after completion of academic 
training, or fail to comply with the terms and conditions of deferment 
established by the Administrator pursuant to subsection (f)(2)(B), 
shall be in breach of their contractual agreement. When recipients 
breach their agreements for the reasons stated in the preceding 
sentence, the recipient shall be liable to the United States for an 
amount equal to--
          ``(A) the total amount of scholarships received by such 
        individual under this section; plus
          ``(B) the interest on the amounts of such awards which would 
        be payable if at the time the awards were received they were 
        loans bearing interest at the maximum legal prevailing rate, as 
        determined by the Treasurer of the United States,
multiplied by 3.
  ``(h)(1) Any obligation of an individual incurred under the Program 
(or a contractual agreement thereunder) for service or payment shall be 
canceled upon the death of the individual.
  ``(2) The Administrator shall by regulation provide for the partial 
or total waiver or suspension of any obligation of service or payment 
incurred by an individual under the Program (or a contractual agreement 
thereunder) whenever compliance by the individual is impossible or 
would involve extreme hardship to the individual, or if enforcement of 
such obligation with respect to the individual would be contrary to the 
best interests of the Government.
  ``(i) For purposes of this section--
          ``(1) the term `cost of attendance' has the meaning given 
        that term in section 472 of the Higher Education Act of 1965;
          ``(2) the term `institution of higher education' has the 
        meaning given that term in section 101(a) of the Higher 
        Education Act of 1965; and
          ``(3) the term `Program' means the National Aeronautics and 
        Space Administration Science and Technology Scholarship Program 
        established under this section.
  ``(j)(1) There is authorized to be appropriated to the Administration 
for the Program $10,000,000 for each fiscal year.
  ``(2) Amounts appropriated under this section shall remain available 
for 2 fiscal years.

``Sec. 9834. Distinguished scholar appointment authority

  ``(a) In this section--
          ``(1) the term `professional position' means a position that 
        is classified to an occupational series identified by the 
        Office of Personnel Management as a position that--
                  ``(A) requires education and training in the 
                principles, concepts, and theories of the occupation 
                that typically can be gained only through completion of 
                a specified curriculum at a recognized college or 
                university; and
                  ``(B) is covered by the Group Coverage Qualification 
                Standard for Professional and Scientific Positions; and
          ``(2) the term `research position' means a position in a 
        professional series that primarily involves scientific inquiry 
        or investigation, or research-type exploratory development of a 
        creative or scientific nature, where the knowledge required to 
        perform the work successfully is acquired typically and 
        primarily through graduate study.
  ``(b) The Administration may appoint, without regard to the 
provisions of sections 3304(b) and 3309 through 3318, candidates 
directly to General Schedule professional positions in the 
Administration for which public notice has been given, if--
          ``(1) with respect to a position at the GS-7 level, the 
        individual--
                  ``(A) received, from an accredited institution 
                authorized to grant baccalaureate degrees, a 
                baccalaureate degree in a field of study for which 
                possession of that degree in conjunction with academic 
                achievements meets the qualification standards as 
                prescribed by the Office of Personnel Management for 
                the position to which the individual is being 
                appointed; and
                  ``(B) achieved a cumulative grade point average of 
                3.0 or higher on a 4.0 scale and a grade point average 
                of 3.5 or higher for courses in the field of study 
                required to qualify for the position;
          ``(2) with respect to a position at the GS-9 level, the 
        individual--
                  ``(A) received, from an accredited institution 
                authorized to grant graduate degrees, a graduate degree 
                in a field of study for which possession of that degree 
                meets the qualification standards at this grade level 
                as prescribed by the Office of Personnel Management for 
                the position to which the individual is being 
                appointed; and
                  ``(B) achieved a cumulative grade point average of 
                3.5 or higher on a 4.0 scale in graduate coursework in 
                the field of study required for the position;
          ``(3) with respect to a position at the GS-11 level, the 
        individual--
                  ``(A) received, from an accredited institution 
                authorized to grant graduate degrees, a graduate degree 
                in a field of study for which possession of that degree 
                meets the qualification standards at this grade level 
                as prescribed by the Office of Personnel Management for 
                the position to which the individual is being 
                appointed; and
                  ``(B) achieved a cumulative grade point average of 
                3.5 or higher on a 4.0 scale in graduate coursework in 
                the field of study required for the position; or
          ``(4) with respect to a research position at the GS-12 level, 
        the individual--
                  ``(A) received, from an accredited institution 
                authorized to grant graduate degrees, a graduate degree 
                in a field of study for which possession of that degree 
                meets the qualification standards at this grade level 
                as prescribed by the Office of Personnel Management for 
                the position to which the individual is being 
                appointed; and
                  ``(B) achieved a cumulative grade point average of 
                3.5 or higher on a 4.0 scale in graduate coursework in 
                the field of study required for the position.
  ``(c) Veterans' preference procedures shall apply when selecting 
candidates under this section. Preference eligibles who meet the 
criteria for distinguished scholar appointments shall be considered 
ahead of nonpreference eligibles.
  ``(d) An appointment made under this authority shall be a career-
conditional appointment in the competitive civil service.

``Sec. 9835. Travel and transportation expenses of certain new 
                    appointees

  ``(a) In this section, the term `new appointee' means--
          ``(1) a person newly appointed or reinstated to Federal 
        service to the Administration to--
                  ``(A) a career or career-conditional appointment;
                  ``(B) a term appointment;
                  ``(C) an excepted service appointment that provides 
                for noncompetitive conversion to a career or career-
                conditional appointment;
                  ``(D) a career or limited term Senior Executive 
                Service appointment;
                  ``(E) an appointment made under section 203(c)(2)(A) 
                of the National Aeronautics and Space Act of 1958 (42 
                U.S.C. 2473(c)(2)(A));
                  ``(F) an appointment to a position established under 
                section 3104; or
                  ``(G) an appointment to a position established under 
                section 5108; or
          ``(2) a student trainee who, upon completion of academic 
        work, is converted to an appointment in the Administration that 
        is identified in paragraph (1) in accordance with an 
        appropriate authority.
  ``(b) The Administrator may pay the travel, transportation, and 
relocation expenses of a new appointee to the same extent, in the same 
manner, and subject to the same conditions as the payment of such 
expenses under sections 5724, 5724a, 5724b, and 5724c to an employee 
transferred in the interests of the United States Government.
  ``(c) The Administrator shall submit to the appropriate committees of 
Congress, not later than February 28 of each of the next 10 years 
beginning after the date of enactment of this subchapter--
          ``(1) the average payment for travel and transportation 
        expenses of certain new appointees provided under this section 
        during the preceding year; and
          ``(2) the highest payment for travel and transportation 
        expenses to an individual appointee provided under this section 
        during the preceding year.

``Sec. 9836. Annual leave enhancements

  ``(a)(1) In this subsection--
          ``(A) the term `newly appointed employee' means an individual 
        who is first appointed--
                  ``(i) regardless of tenure, as an employee of the 
                Federal Government; or
                  ``(ii) as an employee of the Federal Government 
                following a break in service of at least 90 days after 
                that individual's last period of Federal employment, 
                other than--
                          ``(I) employment under the Student 
                        Educational Employment Program administered by 
                        the Office of Personnel Management;
                          ``(II) employment as a law clerk trainee;
                          ``(III) employment under a short-term 
                        temporary appointing authority while a student 
                        during periods of vacation from the educational 
                        institution at which the student is enrolled;
                          ``(IV) employment under a provisional 
                        appointment if the new appointment is permanent 
                        and immediately follows the provisional 
                        appointment; or
                          ``(V) employment under a temporary 
                        appointment that is neither full-time nor the 
                        principal employment of the individual;
          ``(B) the term `period of qualified non-Federal service' 
        means any period of service performed by an individual that--
                  ``(i) was performed in a position the duties of which 
                were directly related to the duties of the position in 
                the Administration to which that individual will fill 
                as a newly appointed employee; and
                  ``(ii) except for this section, would not otherwise 
                be service performed by an employee for purposes of 
                section 6303; and
          ``(C) the term `directly related to the duties of the 
        position' means duties and responsibilities in the same line of 
        work which require similar qualifications.
  ``(2)(A) For purposes of section 6303, the Administrator may deem a 
period of qualified non-Federal service performed by a newly appointed 
employee to be a period of service of equal length performed as an 
employee.
  ``(B) A period deemed by the Administrator under subparagraph (A) 
shall continue to apply to the employee during--
          ``(i) the period of Federal service in which the deeming is 
        made; and
          ``(ii) any subsequent period of Federal service.
  ``(3)(A) Notwithstanding section 6303(a), the annual leave accrual 
rate for an employee of the Administration in a position paid under 
section 5376 or 5383, or for an employee in an equivalent category 
whose rate of basic pay is greater than the rate payable at GS-15, step 
10, shall be 1 day for each full biweekly pay period.
  ``(B) The accrual rate established under this paragraph shall 
continue to apply to the employee during--
          ``(i) the period of Federal service in which such accrual 
        rate first applies; and
          ``(ii) any subsequent period of Federal service.

``Sec. 9837. Limited appointments to Senior Executive Service positions

  ``(a) In this section--
          ``(1) the term `career reserved position' means a position in 
        the Administration designated under section 3132(b) which may 
        be filled only by--
                  ``(A) a career appointee; or
                  ``(B) a limited emergency appointee or a limited term 
                appointee--
                          ``(i) who, immediately before entering the 
                        career reserved position, was serving under a 
                        career or career-conditional appointment 
                        outside the Senior Executive Service; or
                          ``(ii) whose limited emergency or limited 
                        term appointment is approved in advance by the 
                        Office of Personnel Management;
          ``(2) the term `limited emergency appointee' has the meaning 
        given under section 3132; and
          ``(3) the term `limited term appointee' means an individual 
        appointed to a Senior Executive Service position in the 
        Administration to meet a bona fide temporary need, as 
        determined by the Administrator.
  ``(b) The number of career reserved positions which are filled by an 
appointee as described under subsection (a)(1)(B) may not exceed 10 
percent of the total number of Senior Executive Service positions 
allocated to the Administration.
  ``(c) Notwithstanding sections 3132 and 3394(b)--
          ``(1) the Administrator may appoint an individual to any 
        Senior Executive Service position in the Administration as a 
        limited term appointee under this section for a period of--
                  ``(A) 4 years or less to a position the duties of 
                which will expire at the end of such term; or
                  ``(B) 1 year or less to a position the duties of 
                which are continuing; and
          ``(2) in rare circumstances, the Administrator may authorize 
        an extension of a limited appointment under--
                  ``(A) paragraph (1)(A) for a period not to exceed 2 
                years; and
                  ``(B) paragraph (1)(B) for a period not to exceed 1 
                year.
  ``(d) A limited term appointee who has been appointed in the 
Administration from a career or career-conditional appointment outside 
the Senior Executive Service shall have reemployment rights in the 
agency from which appointed, or in another agency, under requirements 
and conditions established by the Office of Personnel Management. The 
Office shall have the authority to direct such placement in any agency.
  ``(e) Notwithstanding section 3394(b) and section 3395--
          ``(1) a limited term appointee serving under a term 
        prescribed under this section may be reassigned to another 
        Senior Executive Service position in the Administration, the 
        duties of which will expire at the end of a term of 4 years or 
        less; and
          ``(2) a limited term appointee serving under a term 
        prescribed under this section may be reassigned to another 
        continuing Senior Executive Service position in the 
        Administration, except that the appointee may not serve in 1 or 
        more positions in the Administration under such appointment in 
        excess of 1 year, except that in rare circumstances, the 
        Administrator may approve an extension up to an additional 1 
        year.
  ``(f) A limited term appointee may not serve more than 7 consecutive 
years under any combination of limited appointments.
  ``(g) Notwithstanding section 5384, the Administrator may authorize 
performance awards to limited term appointees in the Administration in 
the same amounts and in the same manner as career appointees.

``Sec. 9838. Superior qualifications pay

  ``(a) In this section the term `employee' means an employee as 
defined under section 2105 who is employed by the Administration.
  ``(b) Notwithstanding section 5334, the Administrator may set the pay 
of an employee paid under the General Schedule at any step within the 
pay range for the grade of the position, based on the superior 
qualifications of the employee, or the special need of the 
Administration.
  ``(c) If an exercise of the authority under this section relates to a 
current employee selected for another position within the 
Administration, a determination shall be made that the employee's 
contribution in the new position will exceed that in the former 
position, before setting pay under this section.
  ``(d) Pay as set under this section is basic pay for such purposes as 
pay set under section 5334.
  ``(e) If the employee serves for at least 1 year in the position for 
which the pay determination under this section was made, or a successor 
position, the pay earned under such position may be used in succeeding 
actions to set pay under chapter 53.
  ``(f) The Administrator may waive the restrictions in subsection (e), 
based on criteria established in the plan required under subsection 
(g).
  ``(g) Before setting any employee's pay under this section, the 
Administrator shall submit a plan to the Office of Personnel 
Management, that includes--
          ``(1) criteria for approval of actions to set pay under this 
        section;
          ``(2) the level of approval required to set pay under this 
        section;
          ``(3) all types of actions and positions to be covered;
          ``(4) the relationship between the exercise of authority 
        under this section and the use of other pay incentives; and
          ``(5) a process to evaluate the effectiveness of this 
        section.''.
  (b) Technical and Conforming Amendments.--
          (1) Table of chapters.--The table of chapters for subchapter 
        I of part III of title 5, United States Code, is amended by 
        adding after the item relating to chapter 97 the following:

 ``98.  National Aeronautics and Space Administration           9801''.

          (2) Compensation for certain excepted personnel.--
        Subparagraph (A) of section 203(c)(2) of the National 
        Aeronautics and Space Act of 1958 (42 U.S.C. 2473(c)(2)(A)) is 
        amended by striking ``the highest rate of grade 18 of the 
        General Schedule of the Classification Act of 1949, as 
        amended,'' and inserting ``the rate of basic pay payable for 
        level III of the Executive Schedule,''.
          (3) Compensation clarification.--Section 209 of title 18, 
        United States Code, as amended by section 209(g)(2) of the E-
        Government Act of 2002 (Public Law 107-347; 116 Stat. 2932), is 
        amended by adding at the end the following:
  ``(h) This section does not prohibit an employee of a private sector 
organization, while assigned to the National Aeronautics and Space 
Administration under section 9832 of title 5, from continuing to 
receive pay and benefits from that organization in accordance with 
section 9832 of that title.''.
          (4) Continued tsp eligibility.--Section 125(c)(1) of Public 
        Law 100-238 (5 U.S.C. 8432 note), as amended by section 
        209(g)(3) of the E-Government Act of 2002 (Public Law 107-347; 
        116 Stat. 2932), is amended--
                  (A) in subparagraph (C), by striking ``or'' at the 
                end;
                  (B) in subparagraph (D), by striking ``and'' at the 
                end and inserting ``or''; and
                  (C) by adding at the end the following:
                  ``(E) an individual assigned from the National 
                Aeronautics and Space Administration to a private 
                sector organization under section 9832 of title 5, 
                United States Code; and''.
          (5) Ethics provisions.--
                  (A) One-year restriction on certain communications.--
                Section 207(c)(2)(A)(v) of title 18, United States 
                Code, is amended by inserting ``or section 9832'' after 
                ``chapter 37''.
                  (B) Disclosure of confidential information.--Section 
                1905 of title 18, United States Code, is amended by 
                inserting ``or section 9832'' after ``chapter 37''.
          (6) Contract advice.--Section 207(l) of title 18, United 
        States Code, is amended by inserting ``or section 9832'' after 
        ``chapter 37''.
          (7) Amendments to title 5, united states code.--Title 5, 
        United States Code, is amended--
                  (A) in section 3111(d), by inserting ``or section 
                9832'' after ``chapter 37''; and
                  (B) in section 7353(b)(4), by inserting ``or section 
                9832'' after ``chapter 37''.

                TITLE IV--HUMAN CAPITAL PERFORMANCE FUND

SEC. 401. HUMAN CAPITAL PERFORMANCE FUND.

  (a) In General.--Subpart D of part III of title 5, United States 
Code, is amended by inserting after chapter 53 the following:

              ``CHAPTER 54--HUMAN CAPITAL PERFORMANCE FUND

  ``Sec.
  ``5401. Purpose.
  ``5402. Definitions.
  ``5403. Human Capital Performance Fund.
  ``5404. Human capital performance payments.
  ``5405. Regulations.
  ``5406. Agency plan.
  ``5407. Nature of payment.
  ``5408. Appropriations.

``Sec. 5401. Purpose

  ``The purpose of this chapter is to promote, through the creation of 
a Human Capital Performance Fund, greater performance in the Federal 
Government. Monies from the Fund will be used to reward agencies' 
highest performing and most valuable employees. This Fund will offer 
Federal managers a new tool to recognize employee performance that is 
critical to the achievement of agency missions.

``Sec. 5402. Definitions

  ``For the purpose of this chapter--
          ``(1) `agency' means an Executive agency under section 105, 
        but does not include the General Accounting Office;
          ``(2) `employee' includes--
                  ``(A) an individual paid under a statutory pay system 
                defined in section 5302(1);
                  ``(B) a prevailing rate employee, as defined in 
                section 5342(a)(2); and
                  ``(C) a category of employees included by the Office 
                of Personnel Management following the review of an 
                agency plan under section 5403(b)(1);
        but does not include--
                  ``(i) an individual paid at an annual rate of basic 
                pay for a level of the Executive Schedule, under 
                subchapter II of chapter 53, or at a rate provided for 
                one of those levels under another provision of law;
                  ``(ii) a member of the Senior Executive Service paid 
                under subchapter VIII of chapter 53, or an equivalent 
                system;
                  ``(iii) an administrative law judge paid under 
                section 5372;
                  ``(iv) a contract appeals board member paid under 
                section 5372a;
                  ``(v) an administrative appeals judge paid under 
                section 5372b; and
                  ``(vi) an individual in a position which is excepted 
                from the competitive service because of its 
                confidential, policy-determining, policy-making, or 
                policy-advocating character; and
          ``(3) `Office' means the Office of Personnel Management.

``Sec. 5403. Human Capital Performance Fund

  ``(a) There is hereby established the Human Capital Performance Fund, 
to be administered by the Office for the purpose of this chapter.
  ``(b)(1)(A) An agency shall submit a plan as described in section 
5406 to be eligible for consideration by the Office for an allocation 
under this section. An allocation shall be made only upon approval by 
the Office of an agency's plan.
  ``(B)(i) After the reduction for training required under section 
5408, ninety percent of the remaining amount appropriated to the Fund 
may be allocated by the Office to the agencies. Of the amount to be 
allocated, an agency's pro rata distribution may not exceed its pro 
rata share of Executive branch payroll.
  ``(ii) If the Office does not allocate an agency's full pro rata 
share, the undistributed amount remaining from that share will become 
available for distribution to other agencies, as provided in 
subparagraph (C).
  ``(C)(i) After the reduction for training under section 5408, ten 
percent of the remaining amount appropriated to the Fund, as well as 
the amount of the pro rata share not distributed because of an agency's 
failure to submit a satisfactory plan, shall be allocated among 
agencies with exceptionally high-quality plans.
  ``(ii) An agency with an exceptionally high-quality plan is eligible 
to receive an additional distribution in addition to its full pro rata 
distribution.
  ``(2) Each agency is required to provide to the Office such payroll 
information as the Office specifies necessary to determine the 
Executive branch payroll.

``Sec. 5404. Human capital performance payments

  ``(a)(1) Notwithstanding any other provision of law, the Office may 
authorize an agency to provide human capital performance payments to 
individual employees based on exceptional performance contributing to 
the achievement of the agency mission.
  ``(2) The number of employees in an agency receiving payments from 
the Fund, in any year, shall not be more than the number equal to 15 
percent of the agency's average total civilian full- and part-time 
permanent employment for the previous fiscal year.
  ``(b)(1) A human capital performance payment provided to an 
individual employee from the Fund, in any year, shall not exceed 10 
percent of the employee's rate of basic pay.
  ``(2) The aggregate of an employee's rate of basic pay, adjusted by 
any locality-based comparability payments, and human capital 
performance pay, as defined by regulation, may not exceed the rate of 
basic pay for Executive Level IV in any year.
  ``(3) Any human capital performance payment provided to an employee 
from the Fund is in addition to any annual pay adjustment (under 
section 5303 or any similar provision of law) and any locality-based 
comparability payment that may apply.
  ``(c) No monies from the Human Capital Performance Fund may be used 
to pay for a new position, for other performance-related payments, or 
for recruitment or retention incentives paid under sections 5753 and 
5754.
  ``(d)(1) An agency may finance initial human capital performance 
payments using monies from the Human Capital Performance Fund, as 
available.
  ``(2) In subsequent years, continuation of previously awarded human 
capital performance payments shall be financed from other agency funds 
available for salaries and expenses.

``Sec. 5405. Regulations

  ``The Office shall issue such regulations as it determines to be 
necessary for the administration of this chapter, including the 
administration of the Fund. The Office's regulations shall include 
criteria governing--
          ``(1) an agency plan under section 5406;
          ``(2) the allocation of monies from the Fund to agencies;
          ``(3) the nature, extent, duration, and adjustment of, and 
        approval processes for, payments to individual employees under 
        this chapter;
          ``(4) the relationship to this chapter of agency performance 
        management systems;
          ``(5) training of supervisors, managers, and other 
        individuals involved in the process of making performance 
        distinctions; and
          ``(6) the circumstances under which funds may be allocated by 
        the Office to an agency in amounts below or in excess of the 
        agency's pro rata share.

``Sec. 5406. Agency plan

  ``(a) To be eligible for consideration by the Office for an 
allocation under this section, an agency shall--
          ``(1) develop a plan that incorporates the following 
        elements:
                  ``(A) adherence to merit principles set forth in 
                section 2301;
                  ``(B) a fair, credible, and transparent employee 
                performance appraisal system;
                  ``(C) a link between the pay-for-performance system, 
                the employee performance appraisal system, and the 
                agency's strategic plan;
                  ``(D) a means for ensuring employee involvement in 
                the design and implementation of the system;
                  ``(E) adequate training and retraining for 
                supervisors, managers, and employees in the 
                implementation and operation of the pay-for-performance 
                system;
                  ``(F) a process for ensuring ongoing performance 
                feedback and dialogue between supervisors, managers, 
                and employees throughout the appraisal period, and 
                setting timetables for review;
                  ``(G) effective safeguards to ensure that the 
                management of the system is fair and equitable and 
                based on employee performance; and
                  ``(H) a means for ensuring that adequate agency 
                resources are allocated for the design, implementation, 
                and administration of the pay-for-performance system;
          ``(2) upon approval, receive an allocation of funding from 
        the Office;
          ``(3) make payments to individual employees in accordance 
        with the agency's approved plan; and
          ``(4) provide such information to the Office regarding 
        payments made and use of funds received under this section as 
        the Office may specify.
  ``(b) The Office, in consultation with the Chief Human Capital 
Officers Council, shall review and approve an agency's plan before the 
agency is eligible to receive an allocation of funding from the Office.
  ``(c) The Chief Human Capital Officers Council shall include in its 
annual report to Congress under section 1303(d) of the Homeland 
Security Act of 2002 an evaluation of the formulation and 
implementation of agency performance management systems.

``Sec. 5407. Nature of payment

  ``Any payment to an employee under this section shall be part of the 
employee's basic pay for the purposes of subchapter III of chapter 83, 
and chapters 84 and 87, and for such other purposes (other than chapter 
75) as the Office shall determine by regulation.

``Sec. 5408. Appropriations

  ``There is authorized to be appropriated $500,000,000 for fiscal year 
2004, and, for each subsequent fiscal year, such sums as may be 
necessary to carry out the provisions of this chapter. In the first 
year of implementation, up to 10 percent of the amount appropriated to 
the Fund shall be available to participating agencies to train 
supervisors, managers, and other individuals involved in the appraisal 
process on using performance management systems to make meaningful 
distinctions in employee performance and on the use of the Fund.''.
  (b) Clerical Amendment.--The table of chapters for part III of title 
5, United States Code, is amended by inserting after the item relating 
to chapter 53 the following:

 ``54.  Human Capital Performance Fund                          5401''.

                         TITLE V--MISCELLANEOUS

SEC. 501. PROHIBITION ON USE OF QUOTAS.

  (a) In General.--After the date of enactment of this Act, the Office 
of Management and Budget may not establish, apply, or enforce any 
numerical goal, target, or quota for subjecting the employees of a 
department or agency of the Government to public-private competitions 
or converting such employees or the work performed by such employees to 
contractor performance under Office of Management and Budget Circular 
A-76 or any other administrative regulation, directive, or policy, 
unless the goal, target, or quota is based on considered research and 
sound analysis of past activities and is consistent with the stated 
mission of the department or agency.
  (b) Limitations.--Subsection (a) shall not--
          (1) otherwise affect the implementation or enforcement of the 
        Government Performance and Results Act of 1993 (107 Stat. 285); 
        or
          (2) prevent any agency of the Executive branch from 
        subjecting work performed by Federal employees or private 
        contractors to public-private competition or conversions.

                     Committee Statement and Views


                          PURPOSE AND SUMMARY

    H.R. 1836, as amended, would make changes to certain areas 
of federal civil service, such as the Department of Defense 
(DOD) civilian workforce, the National Aeronautics and Space 
Administration (NASA), the Securities and Exchange Commission 
(SEC), and government-wide improvements, in order to improve 
the flexibility and competitiveness of federal human resources 
management.

                BACKGROUND AND NEED FOR THE LEGISLATION

    One of the top priorities for the Government Reform 
Committee in the 108th Congress is to advance comprehensive 
civil service reform for the federal government. The current 
system, put in place more than fifty years ago, does not 
adequately address the priorities of a 21st century federal 
workforce. Although comprehensive reform is still the 
Committee's top priority, this legislation seeks to address 
some critical needs that face certain federal agencies and 
could be used as a model for other agencies while we continue 
to work on government-wide civil service reforms.
    The primary focus of this legislation is to address the 
human capital management challenges facing three key federal 
agencies: the Department of Defense, the Securities and 
Exchange Commission and the National Aeronautics and Space 
Administration. In addition, the legislation includes a number 
of government-wide improvements to the civil service system, 
including a modification of the overtime pay cap, an increase 
in the annual student loan repayment authority and an increase 
in the pay cap for the Senior Executive Service. Finally, H.R. 
1836 includes language authorizing the creation of a human 
capital performance fund.

                                HEARINGS

    In addition to a year-long debate in Congress over granting 
almost identical human resources management flexibility to the 
Department of Homeland Security, followed by a months-long 
discussion within the Administration on what flexibilities to 
request for DOD, Congress has held a number of hearings to 
discuss the proposal since it was submitted to Congress last 
month.
    On April 29, 2003, the Subcommittee on Civil Service and 
Agency Organization of the House Committee on Government Reform 
held a hearing entitled ``Transforming the Defense Department: 
Exploring the Merits of the Proposed National Security 
Personnel System.'' The purpose of the hearing was to discuss 
the merits of the proposal to create a National Security 
Personnel System and to provide DOD the opportunity to discuss 
the individual elements of the proposal with Members of the 
Subcommittee. Witnesses at the hearing included: the Honorable 
David S. Chu, Under Secretary of Defense for Personnel and 
Readiness, Department of Defense; the Honorable Dan G. Blair, 
Deputy Director, Office of Personnel Management; the Honorable 
David M. Walker, Comptroller General, General Accounting 
Office; Mr. Bobby Harnage, National President, American 
Federation of Government Employees, AFL-CIO; and Mr. G. Jerry 
Shaw, General Counsel, Senior Executives Association.
    On May 1, 2003, the House Committee on Armed Services held 
a hearing on the ``Defense Transformation for the 21st Century 
Act'' that was submitted to the Congress by the Administration. 
The hearing addressed the provisions in the proposal that 
related to civilian personnel and acquisition policy, 
provisions that were being considered in preparation for the 
fiscal year 2004 defense authorization act. Witnesses at the 
hearing included: the Honorable David S. Chu, Under Secretary 
of Defense for Personnel and Readiness, Department of Defense; 
the Honorable E.C. ``Pete'' Aldridge, Under Secretary of 
Defense for Acquisition, Technology and Logistics, Department 
of Defense; the Honorable David M. Walker, Comptroller General, 
General Accounting Office; and Mr. Bobby Harnage, National 
President, American Federation of Government Employees, AFL-
CIO.
    On May 6, 2003, the House Committee on Government Reform 
held a hearing entitled ``Instilling Agility, Flexibility and a 
Culture of Achievement in Critical Federal Agencies: A Review 
of H.R. 1836, the Civil Service and National Security Personnel 
Improvement Act of 2003.'' The primary focus of this hearing 
was to discuss the Defense Department's National Security 
Personnel System proposal. The hearing also focused on the 
civil service flexibility proposals for NASA, the SEC, the 
government-wide personnel provisions, and the proposal to 
create a human capital performance fund. All of these elements 
were included in H.R. 1836, which was introduced by Government 
Reform Committee Chairman Tom Davis (R-VA) and Armed Services 
Committee Chairman Duncan Hunter (R-CA) on April 29, 2003. 
Witnesses at the hearing included: the Honorable Paul 
Wolfowitz, Deputy Secretary, Department of Defense (accompanied 
by General Peter Pace, Vice Chairman of the Joint Chiefs of 
Staff and Admiral Vern Clark, Chief of Naval Operations); the 
Honorable Kay Coles James, Director, Office ofPersonnel 
Management; the Honorable Sean O'Keefe, Administration, National 
Aeronautics and Space Administration; the Honorable William Donaldson, 
Chairman, Securities and Exchange Commission; Dr. Paul Light, Director, 
Center for Public Service, the Brookings Institution; Mr. Bobby 
Harnage, National President, American Federation of Government 
Employees, AFL-CIO; Ms. Colleen Kelley, President, National Treasury 
Employees Union; and Ms. Mildred Turner, Member of the Department of 
Agriculture Conference of the Federal Managers Association.

                      Section-by-Section Analysis


Section 1. Short title; table of contents

    This Act may be cited as the ``Civil Service and National 
Security Personnel Improvement Act.''

   TITLE I--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM


Section 101. Short title

    This section may be cited as the ``National Security 
Personnel System Act.''

Section 102. Department of Defense National Security Personnel System

    This title would amend title 5 of the United States Code by 
adding a new chapter 99 at the end of subpart I of part III. 
The new chapter would contain the following sections:
    Section 9901: This section would provide definitions of 
various terms used throughout the new chapter.
    Section 9902: This section would authorize the Secretary of 
Defense, along with the Director of the Office of Personnel 
Management (OPM), to establish a civilian human resources 
management system through regulations for some or all of the 
organizational or functional units of the Department of Defense 
(DOD), which would enable the Department to fulfill its 
national security mission. In developing this system, the 
Director of OPM would serve as a strategic and collaborative 
partner. If the Secretary certified that an issuance or 
adjustment of a regulation, or the inclusion, exclusion, or 
modification or a particular provision therein, would be 
essential to the national security, the Secretary would be able 
to, subject to the decision of the President, waive the 
requirement that the provision(s) be issued jointly with OPM. 
This system would have to be consistent with the merit system 
principles as set forth in title 5. It also would protect 
veterans' preference, ensure that employees may organize and 
bargain collectively, and allow the Secretary to engage in 
bargaining at the national level, in addition to local 
collective bargaining. The section would further:
          (1) provide for a collaborative process, based on the 
        model established in the Homeland Security Act, Public 
        Law 107-296, for ensuring inclusion of employee 
        representatives in the planning, development, and 
        implementation of the human resources management 
        system, while allowing the Secretary to conduct such 
        collaboration at the national level;
          (2) require the establishment of an appeals process 
        that provides that employees of the Department of 
        Defense are entitled to fair treatment in any appeals 
        that they bring in decisions relating to their 
        employment, which would include an independent review 
        panel;
          (3) establish a program under which employees would 
        be eligible for early retirement, offered separation 
        pay to separate from the service voluntarily, or both 
        for purposes of reducing or restructuring the 
        workforce;
          (4) require the system developed under this chapter 
        to comply with provisions in current law relating to 
        political activity, oath of office, access to criminal 
        history records for national security and other 
        purposes, the Ethics in Government Act, and Inspector 
        General Act;
          (5) allow annuitants who become employed in the 
        Department to retain their annuities;
          (6) cap DOD Senior Executive Service pay, allowances, 
        differentials, bonuses, awards and other payments at no 
        more than the Vice President's total annual 
        compensation;
          (7) authorize the Secretary of Defense to waive those 
        provisions of title 5, U.S. Code including chapters 71, 
        75, and 77, not specifically listed in the section as 
        unwaivable; and
          (8) allow the Secretary of Defense to include in the 
        regulations issued jointly with OPM the hiring 
        flexibilities that are currently available to the 
        Secretary under section 4703 of title 5, which governs 
        personnel demonstration projects.
    Section 9903: This section would authorize DOD to hire 
highly qualified experts for up to five years, with the 
possibility of a one-year extension, and to prescribe the 
appropriate pay rates. It is consistent with the authority now 
available to the Defense Advanced Research Projects Agency and 
Military Departments for hiring scientists and engineers.
    Section 9904: This section would authorize the Secretary of 
Defense to hire American citizens 55 years of age and older to 
work for the Department of Defense for up to two years, without 
a reduction in any annuity, pension, retirement pay, of similar 
payment, to fill needs that are not otherwise met by civilian 
employees.
    Section 9905: This section would authorize DOD to align the 
allowances and benefits of certain employees outside the United 
States with those of the Foreign Service and the Central 
Intelligence Agency.

           TITLE II--DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL

    This title includes a number of government-wide civil 
service provisions.

Section 201. Modification of the overtime pay cap

    Under current law, overtime pay is capped at 150% of GS-10, 
step 1. Employees whose regular pay exceeds this overtime cap 
are paid at a rate lesser than their regular hourly rate for 
their overtime work. This section would authorize the Secretary 
toprovide overtime pay at a rate of either 150% of GS-10, step 
1, or the employee's hourly rate of pay, whichever is greater.

Section 202. Civil Service Retirement System computation for part-time 
        service

    This section would amend 5 U.S.C. 8339(p) to provide a 
special annuity computation formula for employees who performed 
part-time service after April 6, 1986. For these employees, the 
section would extend application of the full-time rates of pay 
in computing average salary to all service, regardless of when 
it was performed. This would correct the anomaly in the current 
computation scheme; eliminate a disincentive for employees 
nearing the end of their careers who would like to phase into 
retirement by working part-time schedules; and allow agencies 
to keep senior staff on board as part of a succession planning 
effort.

Section 203. Military leave for mobilized Federal civilian employees

    This section would help Federal civilian employees whose 
military pay is less than their Federal civilian salary 
``transition'' to military service by allowing them to receive 
22 additional workdays of military leave when mobilized. Such 
leave would help alleviate the difference in pay for the first 
month of service by enabling them to receive the difference 
between their Federal civilian pay and their military pay. 
Current law only entitles Reserve component members to the 
additional military leave.

Section 204. Common occupational and health standards for differential 
        payments as a consequence of exposure to asbestos

    This section would standardize the current law that allows 
employees to be paid differentials for duty involving severe 
working conditions or hazards. This provision specifies that 
for ``any hardship or hazard related to asbestos, such 
differentials shall be determined by applying occupational 
safety and health standards consistent with the permissible 
exposure limit promulgated by the Secretary of Labor under the 
Occupational Safety and Health Act of 1970.''

Section 205. Increase in annual student loan repayment authority

    Current law authorizes the head of an agency to repay 
student loans for highly qualified personnel. The current 
repayment amount for an employee is limited to $6,000 per year 
and $40,000 total. This provision would raise the $6,000 amount 
to $10,000 per year, responding to the increases in annual 
college tuition costs since the enactment of the original 
statute. The $40,000 total cap would remain.

Section 206. Authorization for Cabinet secretaries, secretaries of 
        military departments, and heads of executive agencies to be 
        paid on a biweekly basis

    This section would allow cabinet secretaries, secretaries 
of military departments and heads of executive agencies to be 
paid bi-weekly like most Federal employees. This proposal would 
save time and cost resources by relieving civilian pay and 
disbursing operations from having to utilize special manual 
procedures to accommodate these personnel.

Section 207. Additional classes of individuals eligible to participate 
        in the Federal Long-Term Care Insurance Program

    This section would amend title 5, United States Code, by 
enabling certain additional eligible classes of individuals to 
participate in the Federal Long-Term Care Insurance Program 
(FLTCIP). These classes are: (1) individuals who were employed 
by the District of Columbia Government before October 1, 1987, 
and who are covered by the Civil Service Retirement System; (2) 
former Federal employees who have met the service requirements 
for a deferred annuity but do not meet the age requirement to 
receive retirement annuity; (3) reservists who are now in the 
retired reserves, having completed the service requirements of 
retirement, but have not reached the age to receive retirement 
annuity.

Section 208. Clarification to Hatch Act; limitation on disclosure of 
        certain records

    This section includes legislation introduced by Chairman 
Davis (H.R. 1509) that would clarify that a Federal employee 
who voluntarily separates from the civil service shall not be 
subject to the enforcement provisions of the Hatch Act unless 
he or she re-enters the civil service.

Section 209. Senior Executive Service and performance

    This section would amend provisions of chapter 53 of title 
5, United States Code, relating to pay of senior executives. 
First, this section would add positions in the Senior Executive 
Service, and in any equivalent system determined by the 
President's Pay Agent, to the list of positions for which 
locality pay is unavailable. This section would also provide 
that there will be a range of rates of basic pay for the Senior 
Executive Service, established according to OPM regulations. 
Each senior executive's pay would be set by the employing 
agency at one of the rates of the range on the basis of 
individual performance, contribution to agency performance, or 
both, as determined under a rigorous performance management 
system. The provision in current law that sets the minimum rate 
of the range at the minimum rate for senior-level positions 
would be retained. However, the maximum rate for such positions 
would be raised from level IV to level III of the Executive 
Schedule. This section would also provide for the adjustment of 
the applicable maximum to level II of the Executive Schedule 
for any agency that is certified as having a performance 
appraisal system that makes meaningful distinctions among 
senior executives, based on their relative performance, as that 
system is both designed and applied. No employee would suffer a 
reduction in pay by reason of transfer from an agency with the 
higher, level II maximum, to an agency with the lower level III 
maximum. This section would also provide a new standard for 
determining the applicability of one of the post-employment 
restrictions to those who are in the Senior Executive Service 
or equivalent positions in other pay systems. In this regard, 
that restriction would apply to those individuals whose rate of 
basic pay exceeds 96 percent of the rate for level II of the 
Executive Schedule. Employees in positions currently described 
by section 207(c)(2)(A)(ii) of title 18, U.S. Code, would 
continue to be subject to the one-year post-employment 
restriction upon leaving that senior position at any time 
during the two years following enactment of this Act. When that 
two-year period is complete, any such individual who is still 
an officer or employee in the executive branch in a position 
other than that described in clauses (i), (iii), and (iv) of 
section 207(c)(2)(A), will be a senior employee only if he or 
she meets the new salary threshold in clause (ii) of that 
section. Finally, this section would specify that the 
amendments concerning pay for senior executives could not 
result in a reduction in basic pay for any senior 
executiveduring the first year after enactment. The rate of basic pay 
which could not be reduced would be deemed to be the rate of basic pay 
for the senior executive.

Section 210. Design elements of pay-for-performance systems in 
        demonstration projects

    This section would provide specific elements to be 
incorporated into any pay-for-performance system established in 
a demonstration project under chapter 47, such as, among other 
things, adherence to merit principles, a fair, credible and 
transparent employee appraisal system, a link between the pay-
for-performance system and the agency's strategic plan, 
adequate training, a means for ensuring employee feedback, and 
effective safeguards.

Section 211. Federal flexible benefits plan administrative costs

    This section would prohibit agencies that provide or plan 
to provide flexible benefits plans for its employees from 
imposing any fees related to the program on its employees in 
order to defray the administrative costs associated with such 
option. This section would also require a number of reporting 
requirements associated with the benefits plans.

Section 212. Non-reduction in pay while Federal employee is serving on 
        active duty in a Reserve Component of the uniformed services

    This section would entitle a Federal employee who is also a 
member of the reserves and who is absent from his or her 
civilian employment position under a call or order for active 
duty service of more than 30 days, to receive an amount equal 
to the difference in pay between the military compensation 
received and the civilian compensation that otherwise would 
have been received during such period, to be paid by the 
individual's employing agency. This section would also make 
such amounts also payable during: (1) any period of 
hospitalization or convalescence required as a result of such 
service; and (2) the 14-day period following such service.

Section 213. Employee surveys

    This section would authorize executive agencies to conduct 
annual surveys of their employees in order to assess: the 
leadership and management practices that contribute to agency 
performance; employee satisfaction with leadership policies and 
practices, work environment and rewards and recognition for 
professional accomplishment and personal contributions to 
achieving organization mission; opportunity for professional 
development and growth; and opportunity to contribute to 
achieving organizational mission. OPM would issue regulations 
prescribing survey questions to address these issues. Results 
of such surveys would be available to the public and posted on 
agency Web sites, unless the head of an agency determines that 
doing so would jeopardize or negatively impact national 
security.

     TITLE III--PROVISIONS RELATING TO THE SECURITIES AND EXCHANGE 
    COMMISSION AND THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    This title includes human resources management 
flexibilities for the Securities and Exchange Commission and 
the National Aeronautics and Space Administration.

             Subtitle A--Securities and Exchange Commission

    This section would add a new section 3114 to subchapter I 
of chapter 31 of title 5, United States Code.

Section 301. Securities and Exchange Commission

    Section 3114: This subtitle would include a provision that 
would grant the Securities and Exchange Commission the 
flexibility to circumvent federal hiring procedures in hiring 
accountants, economists and compliance examiners at the 
Commission.

       Subtitle B--National Aeronautics and Space Administration

    This section would add a new chapter 98 to subpart I of 
part III of title 5, United States Code.

Section 311. Workforce authorities and personnel provisions

                  Subchapter I--Workforce Authorities

    Section 9801: The section would provide definitions of 
various terms used throughout the new chapter.
    Section 9802: This section would require that ninety days 
prior to exercising any of the workforce authorities under this 
subchapter, the NASA Administrator is required to submit to 
Congress a written plan for approval, and OPM must approve this 
workforce plan. The plan, and any subsequent modifications, 
must be circulated to employees 60 days prior to submission to 
OPM, and employee representatives must be given 30 calendar 
days to review and make recommendations to the plan or 
modifications.
    Section 9803: Workforce authorities under this subchapter 
would include: authority to pay recruitment, redesignation and 
relocation bonuses; authority to pay retention bonuses; 
authority to make term appointments; authority to extend 
intergovernmental personnel assignments; term appointments; and 
critical pay.
    Section 9804: Under this section, bonuses would be 
available for new employees, redesignated employees and 
relocated employees. Different bonus authorities would be 
authorized based on whether such position is determined to be 
critical or non-critical. A service agreement (which factors in 
length of service, form of payment, amount of the bonus, and 
termination conditions) would be required before a bonus could 
be granted.
    Section 9805: This section would authorize retention 
bonuses to be given to employees whose qualifications are 
unique and essential and who might potentially leave NASA 
without the bonus. Again, different bonus authorities would be 
authorized based on whether such position is determined to be 
critical or non-critical, and a service agreement would be 
required for the bonus (unless it is paid on a biweekly basis 
along with the employee's salary).
    Section 9806: This section would authorize NASA to offer 
term appointments for 1-6 years. The NASA Administrator would 
be able to convert appointees into the civil service without 
competing the position, provided that (1) the appointment was 
made in compliance with chapter 33 of title 5, (2) the 
potential for conversion was clearly stated in the original 
announcement, (3) the individual has been there for more than 
two yearsand has demonstrated good performance, and (4) the 
civil service position is at the same level as the appointed position.
    Section 9807: Under this section, the NASA Administrator 
would be authorized to offer enhanced pay for positions at an 
``extremely high level'' in a scientific, technical, 
professional, or administrative field. Such authority would 
only be utilized to retain existing NASA personnel or to bring 
in someone from outside the federal government, and only 10 
employees would be able to receive such pay under this section. 
The total pay received by such individuals would not be able to 
exceed the rate of pay of the Vice President.
    Section 9808: This section would allow NASA to retain 
inter-governmental personnel up to six years.
    Section 9809: This section would authorize NASA to 
establish personnel demonstration projects that encompass such 
numbers of employees as determined by the Administration (as 
opposed to the current government-wide limit of 5,000 employees 
in any demo project).
    Section 9810: This section would authorize ``voluntary 
separation incentive payments'' for NASA of up to 50% of salary 
(subject to the availability of funds), allowing NASA to 
streamline its workforce.
    Section 9811: This section would limit bonuses awarded to 
supervisors under sections 9804 and 9805 to 15% of total 
bonuses, and it would require the Administration to maintain a 
separate account for bonuses.

                  Subchapter II--Personnel Provisions

    Section 9831: This section would include necessary 
definitions for the subchapter.
    Section 9832: This section would provide a new exchange 
program that would limit the length of employee exchanges to 
one year, with authority for extensions of up to an additional 
year. This section sets forth ethical standard requirements for 
employees involved in the assignments. Employees would only be 
able to serve in the exchange program if they commit to return 
to NASA after the assignment. This language closely resembles 
the exchange programs that Chairman Davis included in the 
Digital Tech Corps Act and the Services Acquisition Reform Act.
    Section 9833: This section would provide a new science and 
technology scholarship program, added at the request of the 
Science Committee. The new language would require employees to 
serve as an employee of NASA for 2 years for each year of the 
scholarship.
    Section 9834: This section would authorize the 
Administrator to appoint qualified individuals to professional 
or research positions within NASA without employing competitive 
service hiring procedures, provided that the individual 
graduated from an accredited university with a GPA of 3.5 or 
higher. Appointments would be career-conditional appointments 
in the competitive service. The terms ``professional'' position 
and ``research'' position would subsequently be defined.
    Section 9835: This section would authorize the 
Administrator to pay the travel, transportation and relocation 
expenses of certain new appointees. Such benefits are available 
to current federal employees who accept a new position within 
the Federal government.
    Section 9836: Under this section, NASA would be able to 
deem a period of qualified non-federal career experience for an 
individual an equal period of service performed as a federal 
employee for purposes of calculating leave accrual. It would 
also provide that all senior executives and other senior level 
employees at NASA accrue annual leave at the maximum rate: one 
day for each bi-weekly pay period.
    Section 9837: This provision would permit limited SES 
appointees to be appointed to career reserved positions, 
provided that the limited appointee, immediately before the 
limited appointment, was serving under a career or career-
conditional appointment outside of the SES. The limited 
appointment authority would be expanded to include any bona 
fide temporary need as determined by the Administrator. It 
would also authorize payment of performance bonuses for NASA 
limited term employees in the same amounts and in the same 
manner as career SES appointees.
    Section 9838: Under this section, NASA would be able to set 
a GS employee at any step within the pay range based on the 
superior qualifications of the employee or special need of NASA 
(this authority exists for new hires, but not for current 
employees).

                TITLE IV--HUMAN CAPITAL PERFORMANCE FUND

    This title would insert a new chapter 54 in subpart D of 
part III, United States Code, authorizing the establishment of 
a Human Capital Performance Fund.

Section 401. Human Capital Performance Fund

    This section would add a new chapter 54 to title 5, United 
States Code that would authorize $500 million annually for a 
human capital performance fund.
    Section 5401: This section would explain the purpose of the 
new chapter, which would be to promote, through the creation of 
a Human Capital Performance Fund, greater performance in the 
federal government. Monies from the fund would be used to 
reward agencies' highest performance and most valuable 
employees. This fund would offer federal managers a new tool to 
recognize employee performance that is critical to the 
achievement of agency missions.
    Section 5402: This section would provide definitions 
necessary for the chapter.
    Section 5403: This section would establish, and require OPM 
to administer, the new Human Capital Performance Fund, which 
would be used to make human capital performance payments. An 
agency would have to submit a plan for OPM's approval before it 
could receive allocations from the Fund. In FY 2004, up to 10 
percent of the Fund would be set aside for agency training on 
the operation of the Fund plan, as well as on performance 
evaluation in general. Thereafter, the remainder of the Fund 
would be allocated by OPM to agencies, with up to 90 percent of 
that amount allocated on the basis of an agency's pro rata 
share of Executive branch payroll; OPM would have discretion 
over the distribution of the remaining 10 percent, and an 
agency with an exceptionally high-quality plan would be 
eligible to receive an additional distribution. In FY 2005 
andbeyond, OPM would allocate 90 percent of the amounts appropriated 
for the Fund to agencies on a pro rata basis, and would have discretion 
over allocation of the remainder. Each agency would be required to 
provide payroll information to OPM to facilitate the determination of 
the Executive branch payroll and the pro rata shares.
    Section 5404: This section would permit OPM to allow an 
agency to provide human capital performance payments to 
employees, based on exceptional performance or contributions to 
the agency's mission, in a manner specified in the agency's 
approved plan.
    Human Capital Performance Fund payments would not affect 
the operation of current basic pay systems such as the General 
Schedule. No more than 15 percent of an agency's eligible 
employees would be permitted to receive a Fund payment in any 
given year. Individual payments would be limited to no more 
than 10 percent of an employee's basic rate of pay in any given 
year, and in the aggregate, when combined with an employee's 
rate of basic pay as adjusted by any locality-based 
comparability payments, would not be permitted to exceed 
Executive Level IV. This section would also bar the use of the 
Fund to pay for a new position or for other types of 
performance-related payments or for any other payment not 
otherwise authorized by the new chapter, including recruitment 
and retention authorized under sections 5753 and 5754 of Title 
5. Further, this section would provide that initial human 
capital performance payments could be made to individual 
employees using monies from the Human Capital Performance Fund, 
but, in subsequent years, agencies would be required to budget 
for and fund the continuation of those previously granted 
individual payments as part of their overall salaries and 
expenses budget.
    Section 5405: This section would require OPM to prescribe 
regulations to administer the provisions of the new chapter 54 
and the Fund. The regulations would have to include criteria 
governing agency plans, allocations to agencies from the Fund, 
payments to individual employees, and the various circumstances 
permitting allocations that are either less than or greater 
than the agency's pro rata share of the Fund. These criteria 
could include limits on the aggregate annualized value of human 
capital performance payments authorized by each agency. In 
addition, the relationship of agency performance management 
systems to this chapter and the parameters of training for 
supervisors, managers, and other individuals involved in the 
process of making performance distinctions would be specified 
in the regulations.
    Section 5406: This section would require an agency to 
submit to OPM a plan for making payments to employees under 
chapter 54. The plan would have to be approved by OPM before 
the agency could receive an allocation from the Fund. Each 
agency with an approved plan would have to give OPM whatever 
information OPM requires concerning how the agency has used its 
allocation from the Fund. Each agency would also be required to 
demonstrate that its performance management system supports its 
strategic goals and objectives, and is used to make meaningful 
distinctions in performance. This section would also require 
appropriate training.
    Section 5407: This section would provide that any payment 
to an employee under chapter 54 is part of the employee's basic 
pay for retirement and life insurance purposes, and for any 
other purposes OPM determines by regulation. However, a payment 
under chapter 54 could not be part of basic pay for purposes of 
chapter 75 of title 5 (regarding adverse actions).
    Section 5408: This section would authorize appropriations 
to implement chapter 54 in the amount of $500 million for FY 
2004, and, for each subsequent fiscal year, such sums as may be 
necessary to carry out the provisions of that chapter.

                         TITLE V--MISCELLANEOUS

    This title would prohibit the use of quotas in public-
private competitions unless it is based on considered research 
and sound analysis of past activities and is consistent with 
the stated mission of the department or agency.

Section 501. Prohibition on use of quotas

    This section would prohibit the Office of Management and 
Budget from establishing, applying or enforcing any numerical 
goal, target, or quota for subjecting the employees of a 
department or agency of the Government to public-private 
competitions or converting such employees to contractor 
performance under OMB Circular A-76 or any other administrative 
regulation, directive or policy, unless the goal, target or 
quota is based on considered research and sound analysis of 
past analysis and is consistent with the stated mission of the 
department or agency. Such prohibition would not limit the 
implementation or enforcement of the Government Performance and 
Results Act or prevent any agency of the executive branch from 
subjecting work performed by federal employees or private 
contractors to public-private competitions or conversions.

                       Explanation of Amendments

    The provisions of the substitute are explained in this 
report.

                        Committee Consideration

    On May 8, 2003, the Committee met in open session and 
ordered reported favorably the bill, H.R. 1836, as amended, by 
roll call vote, a quorum being present.

                             Rollcall Votes



              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of this bill to the legislative branch. This bill 
would make changes to certain areas of Federal civil service, 
such as the Department of Defense civilian workforce, the 
National Aeronautics and Space Administration, the Securities 
and Exchange Commission, and government-wide improvements, in 
order to improve the flexibility and competitiveness of Federal 
human resources management. The government wide provisions 
would apply to civil service positions within the legislative 
branch.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(2) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    Clause 3(c)(4) of rule XIII of the Rules of the House of 
Representatives requires a statement of the Committee's general 
performance goals and objectives for reported measures that 
authorize funding. This bill does not authorize funding.

                   Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress to enact the law 
proposed by H.R. 1836. The constitutional authority to regulate 
the civil service of the Federal government lies within the 
Necessary and Proper clause of Article I, Section Eight of the 
United States Constitution.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement whether 
the provisions of the reported include unfunded mandates. In 
compliance with this requirement the Committee has received a 
letter from the Congressional Budget Office included herein.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 1836. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 1836 from the Director of 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 15, 2003.
Hon. Tom Davis,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1836, the Civil 
Service and National Security Personnel Improvement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 1836--Civil Service and National Security Personnel Improvement 
        Act

    Summary: H.R. 1836 would make governmentwide and agency-
specific amendments to civil service law. Major provisions of 
the bill with budgetary impacts would:
           Establish a Human Capital Performance Fund 
        across executive agencies to award high-performing 
        employees;
           Apply Occupation Safety and Health 
        Administration (OSHA) standards concerning asbestos 
        exposure when determining the eligibility of certain 
        Federal employees for hazardous pay;
           Prohibit fees from being charged to Federal 
        employees to administer flexible spending accounts;
           Raise the current limit on overtime pay for 
        certain Federal employees;
           Raise the pay cap for Senior Executive 
        Service employees;
           Authorize funds to pay any difference 
        between civilian and military compensation for Federal 
        employees called to active military duty; and
           Grant broad new personnel authorities to the 
        National Aeronautics and Space Administration (NASA) 
        and the Department of Defense (DoD).
    Most of the costs of implementing the bill would be funded 
through appropriations. Assuming appropriation of the necessary 
amounts, CBO estimates that such costs would total about $300 
million in 2004 and about $7.6 billion over the 2004-2008 
period. Thoseamounts assume a savings of $1.5 billion over the 
2004-2008 period from applying OSHA regulations on asbestos exposure to 
cases involving back pay for DoD workers. This estimate does not 
include costs for implementing section 102, which would provide DoD 
with additional flexibility to operate its human resources management 
system. CBO does not have sufficient information about how DoD might 
implement those authorities to estimate their cost.
    We also estimate the enacting H.R. 1836 would increase 
direct spending by about $200 million over the 2004-2013 period 
because the bill would increase retirement benefits for certain 
workers with part-time service.
    H.R. 1836 contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA). However, CBO 
estimates that any costs to state, local, or tribal governments 
from that mandate would be insignificant and would not, 
therefore, exceed the threshold established in UMRA ($59 
million in 2003, adjusted annually for inflation). The bill 
contains no new private-sector mandates as defined in UMRA.
    Estimated costs to the Federal Government: The estimated 
budgetary impact of H.R. 1836 is shown in the following table. 
The costs of this legislation fall within many budget 
functions.

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                               -------------------------------------------------
                                                                  2004      2005      2006      2007      2008
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Human Capital Performance Fund:
    Estimated Authorization Level.............................       500       509       520       531       545
    Estimated Outlays.........................................       400       507       518       529       542
Continue Human Capital Performance Fund Raises:
    Estimated Authorized Level................................         0       473     1,035     1,640     2,291
    Estimated Outlays.........................................         0       454     1,012     1,616     2,265
Asbestos Differential Pay Savings:
    Estimated Authorization Level.............................      -290      -290      -290      -290      -290
    Estimated Outlays.........................................      -290      -290      -290      -290      -290
Modification of Overtime Pay Cap:
    Estimated Authorization Level.............................       107       147       151       156       161
    Estimated Outlays.........................................       103       145       151       156       161
Administration of Flexible Spending Accounts:
    Estimated Authorization Level.............................        22        28        33        39        44
    Estimated Outlays.........................................        20        27        33        38        44
Senior Executive Service and Performance:
    Estimated Authorization Level.............................        23        31        31        31        31
    Estimated Outlays.........................................        21        31        31        31        31
Reservists Pay:
    Estimated Authorization Level.............................        40        18        14        10         7
    Estimated Outlays.........................................        37        21        14        10         7
NASA Personnel and Workforce Practices:
    Estimated Authorization Level.............................        15        17        19        22        22
    Estimated Outlays.........................................         6        13        18        21        22
Total:
    Estimated Authorization Level.............................       417       933     1,513     2,139     2,811
    Estimated Outlays.........................................       297       908     1,487     2,111     2,782

                                         CHANGES IN DIRECT SPENDINIG

CSRS computation for part-time service:
    Estimated Authorization Level.............................         4        10        14        18        21
    Estimated Outlays.........................................         4        10        14        18        21
----------------------------------------------------------------------------------------------------------------
Note.--NASA = National Aeronautics and Space Administration; CSRS = Civil Service Retirement System.

    This estimate excludes any costs for implementing section 
102, which would create a new human resources management system 
for DoD; allow DoD to give certain employees outside the United 
States the same pay and benefits as the Foreign Service or 
Central Intelligence Agency; require DoD, to the maximum extend 
practicable, to adjust rates of compensation for civilian 
employees at the same rate as military personnel; and allow DoD 
to provide additional pay to attract highly qualified experts. 
All of these authorities could potentially affect federal 
spending.
    CBO cannot estimate the budgetary impact of implementing 
these provisions because DoD has not indicated how it would 
supplant--or improve upon--the personnel system currently 
governing the department; how many employees would benefit from 
receiving the same pay and benefits as the Foreign Service or 
Central Intelligence Agency (the number is classified); whether 
or how it might institute pay parity between its civilian 
employees and militarymembers; or how many people it might hire 
under the authority to provide additional pay to attract highly 
qualified experts.
    Basis of estimate: For the estimate, CBO assumes that H.R. 
1836 will be enacted by the end of fiscal year 2003. We assume 
that the necessary amounts will be appropriated for each year 
and that outlays will occur at historical rates for similar 
programs.

Spending subject to appropriation

    CBO estimates that seven sections of the bill would have 
significant impacts on spending subject to appropriation. The 
following paragraphs discuss those costs.
    Human Capital Performance Fund. Section 401 of the bill 
would authorize the appropriation of $500 million in 2004 and 
such sums as necessary for each subsequent year for the Office 
of Personnel Management (OPM) to establish a Human Capital 
Performance Fund. The fund would be available for agencies to 
give pay raises to employees based on superior performance or 
the possession of skills critical to an agency's mission. Those 
increases in pay would be in addition to regular cost-of-living 
pay raises given to civilian federal employees and would 
represent permanent increases in an employee's base pay. 
Federal civilian pay and benefits currently cost about $140 
billion governmentwide.
    H.R. 1836 would allow only the initial pay raise to be made 
from the Human Capital Performance Fund. For this estimate, CBO 
assumes that the Human Capital Performance Fund would be 
continued at $500 million a year, adjusted for anticipated 
inflation, for the next five years. We estimate that the 
program would cost $2.5 billion over the 2004-2008 period.
    In subsequent years, after pay raises made through the 
Human Capital Performance Fund are in place, each federal 
agency would have to cover the cost of continuing the pay raise 
from its regular appropriation. CBO estimates that maintaining 
the resulting higher pay levels and adjusting them for 
anticipated cost-of-living increases would cost participating 
agencies $5.2 billion over the 2005-2008 period. Thus, in 
total, we estimate that implementing this provision would cost 
$7.7 billion over the next five years.
    Asbestos Differential Pay. Under Section 204, federal wage-
grade employees would be subject to the same standards as 
general schedule employees when determining eligibility for 
environmental differential pay (EDP) due to exposure to 
asbestos. Under current law,general schedule employees are 
entitled to 8 percent hazard differential pay if they are exposed to 
asbestos that exceeds the permissible exposure limits established by 
OSHA. The current EDP standard for wage-grade employees entitles them 
to the same 8 percent of pay but does not set an objective measure for 
determining the level of asbestos exposure necessary to qualify for 
EDP. In several instances when wage-grade employees have sought back 
pay for EDP, arbitrators have found in favor of the employees when 
asbestos levels were below those consistent with OSHA standards. Based 
on information from DoD on prior and pending arbitration rulings, CBO 
expects that implementing section 204 would reduce the amount of back 
pay federal agencies would be required to pay for EDP due to asbestos 
exposure. Assuming those cases would be handled administratively, CBO 
estimates that establishing OSHA standards for asbestos EDP would save 
$290 million in 2004 and $1.5 billion over the 2004-2008 period, 
assuming appropriations to DoD and other affected agencies are reduced 
by the estimated amounts.
    Modification of the Overtime Pay Cap. Under current law, 
overtime pay for work in excess of 40 hours per week for 
federal managers, supervisors, and other employees exempted 
under the Fair Labor Standards Act (FLSA) is limited to a set 
rate of roughly $32 an hour (one and a half times the normal 
rate for a general schedule (GS) grade 10 (GS-10), step 1, 
employee). Employees who earn salaries above GS-12, step 5, 
receive overtime pay at a rate that is, on an hourly basis, 
less than their regular pay.
    Section 201 would raise the overtime pay rate to either one 
and one-half times the hourly rate of a GS-10, step 1, or the 
hourly rate of the basic pay of the employee, whichever is 
greater. Although this change would not affect employees at GS-
12, step 5, and lower, those above this pay rate would earn 
their hourly rate of pay for overtime work. Based on 
information from the Office of Personnel Management (OPM) on 
the number of FLSA-exempted employees at each grade and 
information on overtime worked, CBO estimates that implementing 
the proposal would cost approximately $100 million in 2004 and 
$0.7 billion over the 2004-2008 period.
    About 680,000 federal employees at GS-10 and above are 
exempt from the FLSA, which is about 36.7 percent of the 
general schedule (and related) workforce. For this estimate, 
CBO assumes that this employee group worked 37 percent of all 
overtime performed by FLSA-exempt employees. We also assume 
that those overtime hours are distributed proportionately 
across GS-10 through GS-13 employees, with GS-14 and GS-15 
employees working one-third of the hours. CBO estimated the 
cost of the proposal by calculating the cost of those overtime 
hours at the set rate under current law and then calculating 
the cost of that same amount of overtime at the set rate or the 
employee's hourly rate, whichever is greater.
    Federal Flexible Benefits Plan Administrative Costs. Under 
current law, federal employees will be allowed to enroll in a 
flexible spending account (FSA) program offeredthrough the 
Office of Personnel Management (OPM) beginning in May 2003. A FSA is an 
employee benefit that allows employees to set aside money, on a pre-tax 
basis, for health care and dependent care expenses. The administrative 
costs to the program will be paid by participating employees based on a 
formula to collect $48 annually for each health care account and 1.5 
percent of the total dependent care account.
    Section 211 would prevent any fees from being charged to 
Federal employees for the administrative costs to operate the 
FSAs. Based on information from the Federal judiciary's FSA 
program and the operation of private FSAs, CBO estimates that 
about 10 percent of Federal employees will initially enroll in 
the plan, and we expect participation to grow to about 20 
percent of Federal employees over the next five years. Under 
the bill, administrative costs of operating the plans would be 
subject to appropriation of the necessary amounts. Based on the 
fees OPM plans to charge participants and expected employee 
participation rates, we estimate that implementing this 
provision of the bill would cost about $160 million over the 
2004-2008 period.
    Senior Executive Service (SES) Performance Provisions. 
Under current law, SES employees are paid at six different pay 
levels. Base pay is capped at Level IV of the Executive 
Schedule ($134,000) and the maximum pay with the locality-based 
comparability adjustment is set at Level III of the Executive 
Schedule ($142,500). SES employees receive the same annual 
across-the board pay raises and locality-based comparability 
adjustments that GS employees receive.
    Effective January 1, 2004, section 209 would eliminate the 
six SES pay levels and raise the cap on base pay to $142,500. 
Locality adjustment to SES pay would be eliminated. The 
proposal would affect roughly 7,900 employees.
    The legislation specifies that no SES employee would 
experience a reduction in the rate of basic pay in the first 
year after this legislation is enacted, and CBO assumes that 
this would continue to be true after the first year. Because 
the salaries of many SES employees are at the current caps (or 
are expected to reach such caps over the next few years), 
raising the cap on base pay would allow those employees to get 
pay raises. Assuming that executive level salaries (and thus 
the caps) are raised by the full amount authorized under 
current law by the Ethics Reform Act, CBO estimates that the 
legislation would cost $145 million over the 2004-2008 period.
    Federal Employee Reservists Pay. Section 212 would 
authorize an increase in Federal salaries to pay for any 
difference between civilian and military compensation for 
Federal employees called to active duty in the uniformed 
service or National Guard following enactment of the bill. CBO 
estimates that implementing this provision would cost$37 
million in 2004 and $89 million over the 2004-2008 period. Those 
payments would be subject to the availability of appropriated funds.
    Based on information from DoD, CBO estimates that Federal 
employees account for approximately 120,000 positions or almost 
15 percent of the total Ready Reserve (which includes the 
Selected Reserve and the Individual Ready Reserve/Inactive 
National Guard). For this estimate, we assume that 15 percent 
of those reserves called to active service at any time are 
Federal employees.
    In a 2000 DoD survey of 35,000 reserve personnel, 59 
percent of all reservists (including Federal employees) 
reported either no difference in their income while on active-
duty military status, or an increase in their income while on 
active duty. Forty-one percent reported a loss of income during 
mobilization and deployment. For this estimate, CBO assumes 
that these self-reported survey data are accurate and 
applicable to the current call-up of reservists and National 
Guard forces.
    Of the 41 percent of survey respondents who reported a loss 
of income during military reserve service, most (about 70 
percent) said their income was reduced by $3,750 or less while 
on active duty. One the other hand, some reported much larger 
losses. For example, approximately 7 percent of those reporting 
an income loss indicated a loss of $37,000 to $50,000 annually. 
Considering the loss in income reported by all survey 
respondents and the number who reported no loss or an increase 
in salary, CBO estimates that the average annual reduction in 
salary while serving in the active-duty military is about 
$3,000.
    The cost of implementing the legislation following 
enactment depends on the size of the future reserve force, 
which in turn depends on the duration of the military operation 
in Iraq and the force size required for it, as well as the size 
and duration of any future military conflicts, all of which are 
very uncertain. For this estimate, CBO assumes that the total 
number of reservists on active duty will decline to 88,000 
person-years in fiscal year 2004 and to about 15,000 person-
years by 2008. If the number of reservists called to active 
duty were to remain at current levels over the 2004-2008 
period, the cost of implementing section 208 would be 
significantly greater. Based on the above assumptions about the 
future size of the reserve force, CBO estimates that an average 
of about 13,000 federal employees will be on active-duty 
military service in fiscal year 2004, diminishing to 
approximately 2,000 by 2008.
    NASA Personnel and Workforce Practices. Subtitle B would 
allow NASA to modify its personnel and workforce practices in 
several ways. NASA would be allowed to pay higher amounts to 
attract and retain individuals with special expertise, exchange 
personnel with industrial firms, and expand the use of limited 
term appointments. In addition, the bill would authorize the 
appropriation of $10 million a year for a new science and 
technologyscholarship program. Based on information from NASA, 
CBO estimates that implementing this subtitle would cost $15 million a 
year, depending on how extensively the agency uses some of the new 
authorities.

Direct spending

    CBO estimates that one section of H.R. 1836 would increase 
direct spending by $206 million over the 2004-2013 period. That 
cost is displayed in the following table and described below.

                                  ESTIMATED DIRECT SPENDING EFFECT OF H.R. 1836
----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2004   2005   2006   2007   2008   2009   2010   2011   2012   2013
----------------------------------------------------------------------------------------------------------------
Change in Civil Service Retirement
 Benefits:
  Estimated Budget Authority..............      4     10     14     18     21     24     26     28     30     31
  Estimated Outlays.......................      4      0     14     18     21     24     26     28     30     31
----------------------------------------------------------------------------------------------------------------

    Civil Service Retirement Benefits for Part-Time Service. 
Section 202 would alter the way retirement benefits under the 
Civil Service Retirement System (CSRS) are calculated for 
workers with part-time service. The bill would apply to workers 
who performed work prior to April 7, 1986, have some part-time 
service, and retire after the bill is enacted. Based on 
information from OPM, CBO estimates that this provision would 
cost $4 million in 2004, $67 million over the 2004-2008 period, 
and $206 million over the 2004-2013 period.
    Under current law, benefits for CSRS workers with part-time 
service are calculated using a two-step process. For workers 
with service prior to April 7, 1986, the current formula uses 
the highest salary the worker actually earned to reflect the 
part-time employment. For work on or after April 7, 1986, the 
formula uses a deemed salary (what the worker would have been 
earning if the worker had been working full time) to determine 
benefits and applies a pro-rata factor to adjust for part-time 
service. In effect the current formula tends to treat new 
retirees with part-time service early in their careers more 
favorably than those whose part-time service comes at the end 
of their careers.
    Section 202 would calculate CSRS benefits for all part-time 
service according to the formula currently used to determine 
benefits for service performed on or after April 7, 1986. To 
ensure that benefits under the new formula would not be smaller 
than benefits calculatedunder the current formula, part-time 
service performed prior to April 7, 1986, would be credited as full 
time. CBO estimates this provision would affect benefits for several 
thousand new CSRS retirees each year. Depending on an individual 
employee's work history, benefits for those retirees could be more than 
30 percent higher than they would be if calculated under the current 
formula.
    Federal Long-Term Care Insurance Program. Section 207 would 
expand eligibility for the federal long-term care insurance 
program to former employees of the District of Columbia, former 
employees who have not attained the minimum age to qualify as 
annuitants, and retired reservists who have not reached the age 
of 60. CBO estimates that this provision would have no 
significant net cost.
    The federal government does not contribute to enrollees' 
premiums for this program, and the private insurers are 
required to reimburse OPM for its expenses in administering the 
plan. Therefore, net federal spending for the long-term care 
insurance program is insignificant. Under the bill, the federal 
government would incur some new costs to inform additional 
people of their eligibility (primarily consisting of postage 
and printing more brochures about plan choices) and to register 
new participants. Those additional costs would be charged to 
the insurance carriers and OPM would be reimbursed for its 
expenses.
    Estimated impact on state, local, and tribal governments: 
H.R. 1836 would authorize the Secretary to appoint older 
Americans to positions in the excepted service, and--
notwithstanding any other provision of law--protect any 
retirement benefits they may be receiving from being reduced as 
a result of that appointment. To the extent that under current 
law retirement benefits provided by state, local, or tribal 
governments might be reduced for a beneficiary hired by the 
Secretary, enacting this provisions would prohibit such 
reductions and thereby impose an intergovernmental mandate as 
defined in UMRA. However, according to the National Association 
of State Retirement Administrators, few, if any, jurisdictions 
require such benefit reductions under current law. Therefore, 
CBO estimates that any costs to state, local, or tribal 
governments from the mandate would be insignificant and would 
not exceed the threshold established in UMRA ($59 million in 
2003, adjusted for inflation).
    Estimated impact on the private sector: H.R. 1836 contains 
no new private-sector mandates as defined in UMRA.
    Previous CBO estimate: On May 1, 2003, CBO transmitted a 
cost estimate for S. 593, the Reservists Pay Secretary Act of 
2003, as introduced by Senator Richard J. Durbin on March 11, 
2003, which is similar to section 212 of H.R. 1836. However, S. 
593 would authorize a retroactive pay differential for federal 
employees who, as members of the uniformed services or National 
Guard, were called to active duty military service since 
September 11, 2001: H.R. 1836 would not. Therefore, the 
estimated costs of section 212 are lower than those for S. 593.
    Estimate prepared by: Federal Costs: Matthew Pickford and 
Kathleen Gramp, Ellen Hays, Michelle S. Patterson and Sunita 
D'Monte, Geoffrey Gerhardt, and Alexis K. Ahlstrom. Impact on 
State, Local, and Tribal Governments: Victoria Heid Hall. 
Impact on the Private Sector. Paige Piper/Bach.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *



PART III--EMPLOYEES

           *       *       *       *       *       *       *


                     Subpart D--Pay and Allowances

      Classification................................................5101
     * * * * * * *
      Human Capital Performance Fund................................5401
     * * * * * * *

                        Subpart I--Miscellaneous

     * * * * * * *
      National Aeronautics and Space Administration.................9801
      Department of Defense National Security Personnel System......9901
     * * * * * * *

                  Subpart B--Employment and Retention

                  CHAPTER 31--AUTHORITY FOR EMPLOYMENT

                  SUBCHAPTER I--EMPLOYMENT AUTHORITIES

Sec.
3101.  General authority to employ.
     * * * * * * *
3114.  Appointment of accountants, economists, and examiners by the 
          Securities and Exchange Commission.
     * * * * * * *

SUBCHAPTER I--EMPLOYMENT AUTHORITIES

           *       *       *       *       *       *       *


Sec. 3111. Acceptance of volunteer service

  (a)  * * *

           *       *       *       *       *       *       *

  (d) Notwithstanding section 1342 of title 31, the head of an 
agency may accept voluntary service for the United States under 
chapter 37 or section 9832 of this title and regulations of the 
Office of Personnel Management.

           *       *       *       *       *       *       *


Sec. 3114. Appointment of accountants, economists, and examiners by the 
                    Securities and Exchange Commission

  (a) Applicability.--This section applies with respect to any 
position of accountant, economist, and securities compliance 
examiner at the Commission that is in the competitive service.
  (b) Appointment Authority.--
          (1) In general.--The Commission may appoint 
        candidates to any position described in subsection 
        (a)--
                  (A) in accordance with the statutes, rules, 
                and regulations governing appointments in the 
                excepted service; and
                  (B) notwithstanding any statutes, rules, and 
                regulations governing appointments in the 
                competitive service.
          (2) Rule of construction.--The appointment of a 
        candidate to a position under authority of this 
        subsection shall not be considered to cause such 
        position to be converted from the competitive service 
        to the excepted service.
  (c) Reports.--No later than 90 days after the end of fiscal 
year 2003 (for fiscal year 2003) and 90 days after the end of 
fiscal year 2005 (for fiscal years 2004 and 2005), the 
Commission shall submit a report with respect to its exercise 
of the authority granted by subsection (b) during such fiscal 
years to the Committee on Government Reform and the Committee 
on Financial Services of the House of Representatives and the 
Committee on Governmental Affairs and the Committee on Banking, 
Housing, and Urban Affairs of the Senate. Such reports shall 
describe the changes in the hiring process authorized by such 
subsection, including relevant information related to--
          (1) the quality of candidates;
          (2) the procedures used by the Commission to select 
        candidates through the streamlined hiring process;
          (3) the numbers, types, and grades of employees hired 
        under the authority;
          (4) any benefits or shortcomings associated with the 
        use of the authority;
          (5) the effect of the exercise of the authority on 
        the hiring of veterans and other demographic groups; 
        and
          (6) the way in which managers were trained in the 
        administration of the streamlined hiring system.
  (d) Commission Defined.--For purposes of this section, the 
term ``Commission'' means the Security and Exchange Commission.

           *       *       *       *       *       *       *


Subpart D--Pay and Allowances

           *       *       *       *       *       *       *


CHAPTER 53--PAY RATES AND SYSTEMS

           *       *       *       *       *       *       *


         SUBCHAPTER VIII--PAY FOR THE SENIOR EXECUTIVE SERVICE.

5381.  Definitions.
[5382.  Establishment and adjustment of rates of pay for the Senior 
          Executive Service.]
5382.  Establishment of rates of pay for the Senior Executive Service

           *       *       *       *       *       *       *


SUBCHAPTER I--PAY COMPARABILITY SYSTEM 

           *       *       *       *       *       *       *


Sec. 5304. Locality-based comparability payments

  (a)  * * *

           *       *       *       *       *       *       *

  (g)(1)  * * *
  (2) The applicable maximum under this subsection shall be 
level III of the Executive Schedule for--
          (A) positions under [subparagraphs (A)-(E)] 
        subparagraphs (A)-(D) of subsection (h)(1); and
          (B) any positions under [subsection (h)(1)(F)] 
        subsection (h)(1)(D) which the President may determine.
  (h)(1) For the purpose of this subsection, the term 
``position'' means--
          (A)  * * *
          [(B) a Senior Executive Service position under 
        section 3132;
          [(C) a position in the Federal Bureau of 
        Investigation and Drug Enforcement Administration 
        Senior Executive Service under section 3151;]
          [(D)] (B) a position to which section 5372 applies 
        (relating to administrative law judges appointed under 
        section 3105);
          [(E)] (C) a position to which section 5372a applies 
        (relating to contract appeals board members); and
          [(F)] (D) a position within an Executive agency not 
        covered under the General Schedule or any of the 
        preceding subparagraphs, the rate of basic pay for 
        which is (or, but for this section, would be) no more 
        than the rate payable for level IV of the Executive 
        Schedule;
but does not include--
          (i)  * * *
          (ii) a position as to which a rate of pay is 
        authorized under section 5377 (relating to critical 
        positions); [or]
          (iii) a position to which subchapter II applies 
        (relating to the Executive Schedule)[.];
          (iv) a Senior Executive Service position under 
        section 3132;
          (v) a position in the Federal Bureau of Investigation 
        and Drug Enforcement Administration Senior Executive 
        Service under section 3151; or
          (vi) a position in a system equivalent to the system 
        in clause (iv), as determined by the President's Pay 
        Agent designated under subsection (d).
  (2)(A)  * * *
  (B) A request by an agency head or exercise of authority by 
the President under subparagraph (A) shall cover--
          (i) with respect to the positions under 
        [subparagraphs (A) through (E)] subparagraphs (A) 
        through (C) of paragraph (1), all positions described 
        in the subparagraph or subparagraphs involved 
        (excluding any under [clause (i) or (ii)] clause (i), 
        (ii), (iii), (iv), (v), or (vii) of such paragraph); 
        and
          (ii) with respect to the positions under [paragraph 
        (1)(F)] paragraph (1)(D), such positions as may be 
        considered appropriate (excluding any under [clause (i) 
        or (ii)] clause (i), (ii), (iii), (iv), (v), or (vi) of 
        paragraph (1)).

           *       *       *       *       *       *       *


SUBCHAPTER IV--PREVAILING RATE SYSTEMS

           *       *       *       *       *       *       *


Sec. 5343. Prevailing rate determinations; wage schedules; night 
                    differentials

  (a)  * * *

           *       *       *       *       *       *       *

  (c) The Office of Personnel Management, by regulation, shall 
prescribe practices and procedures for conducting wage surveys, 
analyzing wage survey data, developing and establishing wage 
schedules and rates, and administering the prevailing rate 
system. The regulations shall provide--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) for proper differentials, as determined by the 
        Office, for duty involving unusually severe working 
        conditions or unusually severe hazards, and for any 
        hardship or hazard related to asbestos, such 
        differentials shall be determined by applying 
        occupational safety and health standards consistent 
        with the permissible exposure limit promulgated by the 
        Secretary of Labor under the Occupational Safety and 
        Health Act of 1970;

           *       *       *       *       *       *       *


SUBCHAPTER VII--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


Sec. 5379. Student loan repayments

  (a)  * * *
  (b)(1)  * * *
  (2) Payments under this section shall be made subject to such 
terms, limitations, or conditions as may be mutually agreed to 
by the agency and employee concerned, except that the amount 
paid by an agency under this section may not exceed--
          (A) [$6,000] $10,000 for any employee in any calendar 
        year; or

           *       *       *       *       *       *       *


SUBCHAPTER VIII--PAY FOR THE SENIOR EXECUTIVE SERVICE

           *       *       *       *       *       *       *


[Sec. 5382. Establishment and adjustment of rates of pay for the Senior 
                    Executive Service

  [(a) There shall be 5 or more rates of basic pay for the 
Senior Executive Service, and each senior executive shall be 
paid at one of the rates. The rates of basic pay shall be 
initially established and thereafter adjusted by the President 
subject to subsection (b) of this section.
  [(b) In setting rates of basic pay, the lowest rate for the 
Senior Executive Service shall not be less than the minimum 
rate of basic pay payable under section 5376 and the highest 
rate shall not exceed the rate for level IV of the Executive 
Schedule. The payment of the rates shall not be subject to the 
pay limitation of section 5306(e) or 5373 of this title.
  [(c) Subject to subsection (b) of this section, effective at 
the beginning of the first applicable pay period commencing on 
or after the first day of the month in which an adjustment 
takes effect under section 5303 of this title in the rates of 
pay under the General Schedule, each rate of basic pay for the 
Senior Executive Service shall be adjusted by an amount 
determined by the President to be appropriate.
  [(d) The rates of basic pay that are established and adjusted 
under this section shall be printed in the Federal Register and 
shall supersede any prior rates of basic pay for the Senior 
Executive Service.]

Sec. 5382. Establishment of rates of pay for the Senior Executive 
                    Service

  (a) Subject to regulations prescribed by the Office of 
Personnel Management, there shall be established a range of 
rates of basic pay for the Senior Executive Service, and each 
senior executive shall be paid at one of the rates within the 
range, based on individual performance, contribution to the 
agency's performance, or both, as determined under a rigorous 
performance management system. The lowest rate of the range 
shall not be less than the minimum rate of basic pay payable 
under section 5376, and the highest rate, for any position 
under this system or an equivalent system as determined by the 
President's Pay Agent designated under section 5304(d), shall 
not exceed the rate for level III of the Executive Schedule. 
The payment of the rates shall not be subject to the pay 
limitation of section 5306(e) or 5373.
  (b) Notwithstanding the provisions of subsection (a), the 
applicable maximum shall be level II of the Executive Schedule 
for any agency that is certified under section 5307 as having a 
performance appraisal system which, as designed and applied, 
makes meaningful distinctions based on relative performance.
  (c) No employee may suffer a reduction in pay by reason of 
transfer from an agency with an applicable maximum rate of pay 
prescribed under subsection (b) to an agency with an applicable 
maximum rate of pay prescribed under subsection (a).

Sec. 5383. Setting individual senior executive pay

  (a) Each appointing authority shall determine, in accordance 
with criteria established by the Office of Personnel 
Management, [which of the rates established under section 5382 
of this title] which of the rates within a range established 
under section 5382 shall be paid to each senior executive under 
such appointing authority.

           *       *       *       *       *       *       *

  (c) Except [for any pay adjustment under section 5382 of this 
title] as provided in regulations prescribed by the Office 
under section 5385, the rate of basic pay for any senior 
executive may not be adjusted more than once during any 12-
month period.

           *       *       *       *       *       *       *


               CHAPTER 54--HUMAN CAPITAL PERFORMANCE FUND

  Sec.
  5401. Purpose.
  5402. Definitions.
  5403. Human Capital Performance Fund.
  5404. Human capital performance payments.
  5405. Regulations.
  5406. Agency plan.
  5407. Nature of payment.
  5408. Appropriations.

Sec. 5401. Purpose

  The purpose of this chapter is to promote, through the 
creation of a Human Capital Performance Fund, greater 
performance in the Federal Government. Monies from the Fund 
will be used to reward agencies' highest performing and most 
valuable employees. This Fund will offer Federal managers a new 
tool to recognize employee performance that is critical to the 
achievement of agency missions.

Sec. 5402. Definitions

  For the purpose of this chapter--
          (1) ``agency'' means an Executive agency under 
        section 105, but does not include the General 
        Accounting Office;
          (2) ``employee'' includes--
                  (A) an individual paid under a statutory pay 
                system defined in section 5302(1);
                  (B) a prevailing rate employee, as defined in 
                section 5342(a)(2); and
                  (C) a category of employees included by the 
                Office of Personnel Management following the 
                review of an agency plan under section 
                5403(b)(1);
        but does not include--
                  (i) an individual paid at an annual rate of 
                basic pay for a level of the Executive 
                Schedule, under subchapter II of chapter 53, or 
                at a rate provided for one of those levels 
                under another provision of law;
                  (ii) a member of the Senior Executive Service 
                paid under subchapter VIII of chapter 53, or an 
                equivalent system;
                  (iii) an administrative law judge paid under 
                section 5372;
                  (iv) a contract appeals board member paid 
                under section 5372a;
                  (v) an administrative appeals judge paid 
                under section 5372b; and
                  (vi) an individual in a position which is 
                excepted from the competitive service because 
                of its confidential, policy-determining, 
                policy-making, or policy-advocating character; 
                and
          (3) ``Office'' means the Office of Personnel 
        Management.

Sec. 5403. Human Capital Performance Fund

  (a) There is hereby established the Human Capital Performance 
Fund, to be administered by the Office for the purpose of this 
chapter.
  (b)(1)(A) An agency shall submit a plan as described in 
section 5406 to be eligible for consideration by the Office for 
an allocation under this section. An allocation shall be made 
only upon approval by the Office of an agency's plan.
  (B)(i) After the reduction for training required under 
section 5408, ninety percent of the remaining amount 
appropriated to the Fund may be allocated by the Office to the 
agencies. Of the amount to be allocated, an agency's pro rata 
distribution may not exceed its pro rata share of Executive 
branch payroll.
  (ii) If the Office does not allocate an agency's full pro 
rata share, the undistributed amount remaining from that share 
will become available for distribution to other agencies, as 
provided in subparagraph (C).
  (C)(i) After the reduction for training under section 5408, 
ten percent of the remaining amount appropriated to the Fund, 
as well as the amount of the pro rata share not distributed 
because of an agency's failure to submit a satisfactory plan, 
shall be allocated among agencies with exceptionally high-
quality plans.
  (ii) An agency with an exceptionally high-quality plan is 
eligible to receive an additional distribution in addition to 
its full pro rata distribution.
  (2) Each agency is required to provide to the Office such 
payroll information as the Office specifies necessary to 
determine the Executive branch payroll.

Sec. 5404. Human capital performance payments

  (a)(1) Notwithstanding any other provision of law, the Office 
may authorize an agency to provide human capital performance 
payments to individual employees based on exceptional 
performance contributing to the achievement of the agency 
mission.
  (2) The number of employees in an agency receiving payments 
from the Fund, in any year, shall not be more than the number 
equal to 15 percent of the agency's average total civilian 
full- and part-time permanent employment for the previous 
fiscal year.
  (b)(1) A human capital performance payment provided to an 
individual employee from the Fund, in any year, shall not 
exceed 10 percent of the employee's rate of basic pay.
  (2) The aggregate of an employee's rate of basic pay, 
adjusted by any locality-based comparability payments, and 
human capital performance pay, as defined by regulation, may 
not exceed the rate of basic pay for Executive Level IV in any 
year.
  (3) Any human capital performance payment provided to an 
employee from the Fund is in addition to any annual pay 
adjustment (under section 5303 or any similar provision of law) 
and any locality-based comparability payment that may apply.
  (c) No monies from the Human Capital Performance Fund may be 
used to pay for a new position, for other performance-related 
payments, or for recruitment or retention incentives paid under 
sections 5753 and 5754.
  (d)(1) An agency may finance initial human capital 
performance payments using monies from the Human Capital 
Performance Fund, as available.
  (2) In subsequent years, continuation of previously awarded 
human capital performance payments shall be financed from other 
agency funds available for salaries and expenses.

Sec. 5405. Regulations

  The Office shall issue such regulations as it determines to 
be necessary for the administration of this chapter, including 
the administration of the Fund. The Office's regulations shall 
include criteria governing--
          (1) an agency plan under section 5406;
          (2) the allocation of monies from the Fund to 
        agencies;
          (3) the nature, extent, duration, and adjustment of, 
        and approval processes for, payments to individual 
        employees under this chapter;
          (4) the relationship to this chapter of agency 
        performance management systems;
          (5) training of supervisors, managers, and other 
        individuals involved in the process of making 
        performance distinctions; and
          (6) the circumstances under which funds may be 
        allocated by the Office to an agency in amounts below 
        or in excess of the agency's pro rata share.

Sec. 5406. Agency plan

  (a) To be eligible for consideration by the Office for an 
allocation under this section, an agency shall--
          (1) develop a plan that incorporates the following 
        elements:
                  (A) adherence to merit principles set forth 
                in section 2301;
                  (B) a fair, credible, and transparent 
                employee performance appraisal system;
                  (C) a link between the pay-for-performance 
                system, the employee performance appraisal 
                system, and the agency's strategic plan;
                  (D) a means for ensuring employee involvement 
                in the design and implementation of the system;
                  (E) adequate training and retraining for 
                supervisors, managers, and employees in the 
                implementation and operation of the pay-for-
                performance system;
                  (F) a process for ensuring ongoing 
                performance feedback and dialogue between 
                supervisors, managers, and employees throughout 
                the appraisal period, and setting timetables 
                for review;
                  (G) effective safeguards to ensure that the 
                management of the system is fair and equitable 
                and based on employee performance; and
                  (H) a means for ensuring that adequate agency 
                resources are allocated for the design, 
                implementation, and administration of the pay-
                for-performance system;
          (2) upon approval, receive an allocation of funding 
        from the Office;
          (3) make payments to individual employees in 
        accordance with the agency's approved plan; and
          (4) provide such information to the Office regarding 
        payments made and use of funds received under this 
        section as the Office may specify.
  (b) The Office, in consultation with the Chief Human Capital 
Officers Council, shall review and approve an agency's plan 
before the agency is eligible to receive an allocation of 
funding from the Office.
  (c) The Chief Human Capital Officers Council shall include in 
its annual report to Congress under section 1303(d) of the 
Homeland Security Act of 2002 an evaluation of the formulation 
and implementation of agency performance management systems.

Sec. 5407. Nature of payment

  Any payment to an employee under this section shall be part 
of the employee's basic pay for the purposes of subchapter III 
of chapter 83, and chapters 84 and 87, and for such other 
purposes (other than chapter 75) as the Office shall determine 
by regulation.

Sec. 5408. Appropriations

  There is authorized to be appropriated $500,000,000 for 
fiscal year 2004, and, for each subsequent fiscal year, such 
sums as may be necessary to carry out the provisions of this 
chapter. In the first year of implementation, up to 10 percent 
of the amount appropriated to the Fund shall be available to 
participating agencies to train supervisors, managers, and 
other individuals involved in the appraisal process on using 
performance management systems to make meaningful distinctions 
in employee performance and on the use of the Fund.

CHAPTER 55--PAY ADMINISTRATION

           *       *       *       *       *       *       *


               SUBCHAPTER IV--DUAL PAY AND DUAL EMPLOYMENT

5531.  Definitions.
     * * * * * * *
5538.  Nonreduction in pay while serving on active duty in a reserve 
          component.
     * * * * * * *

SUBCHAPTER I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


Sec. 5504. Biweekly pay periods; computation of pay

  (a) The pay period for an employee covers two administrative 
workweeks. [For the purpose of this subsection, ``employee'' 
means--
          [(1) an employee in or under an Executive agency;
          [(2) an employee in or under the Office of the 
        Architect of the Capitol, the Botanic Garden, and the 
        Library of Congress, for whom a basic administrative 
        workweek is established under section 6101(a)(5) of 
        this title; and
          [(3) an individual employed by the government of the 
        District of Columbia;
but does not include--
          [(A) an employee on the Isthmus of Panama in the 
        service of the Panama Canal Commission; or
          [(B) an employee or individual excluded from the 
        definition of employee in section 5541(2) of this title 
        other than an employee or individual excluded by 
        section 5541(2)(xvi) of this title.]
  (b) When, in the case of an employee, it is necessary for 
computation of pay under this subsection to convert an annual 
rate of basic pay to a basic hourly, daily, weekly, or biweekly 
rate, the following rules govern:
          (1) To derive an hourly rate, divide the annual rate 
        by 2,087.
          (2) To derive a daily rate, multiply the hourly rate 
        by the number of daily hours of service required.
          (3) To derive a weekly or biweekly rate, multiply the 
        hourly rate by 40 or 80, as the case may be.
Rates are computed to the nearest cent, counting one-half and 
over as a whole cent. [For the purpose of this subsection, 
``employee'' means--
          [(A) an employee in or under an Executive agency;
          [(B) an employee in or under the judicial branch;
          [(C) an employee in or under the Office of the 
        Architect of the Capitol, the Botanic Garden, and the 
        Library of Congress, for whom a basic administrative 
        workweek is established under section 6101(a)(5) of 
        this title; and
          [(D) an individual employed by the government of the 
        District of Columbia;
but does not include an employee or individual excluded from 
the definition of employee in section 5541(2) of this title 
other than an employee or individual excluded by section 
5541(2)(xvi) of this title.]
  (c) For the purposes of this section:
          (1) The term ``employee'' means--
                  (A) an employee in or under an Executive 
                agency;
                  (B) an employee in or under the Office of the 
                Architect of the Capitol, the Botanic Garden, 
                and the Library of Congress, for whom a basic 
                administrative workweek is established under 
                section 6101(a)(5) of this title; and
                  (C) an individual employed by the government 
                of the District of Columbia.
          (2) The term ``employee'' does not include--
                  (A) an employee on the Isthmus of Panama in 
                the service of the Panama Canal Commission; or
                  (B) an employee or individual excluded from 
                the definition of employee in section 5541(2) 
                of this title other than an employee or 
                individual excluded by clauses (ii), (iii), and 
                (xiv) through (xvii) of such section.
          (3) Notwithstanding paragraph (2), an individual who 
        otherwise would be excluded from the definition of 
        employee shall be deemed to be an employee for purposes 
        of this section if the individual's employing agency so 
        elects, under guidelines in regulations promulgated by 
        the Office of Personnel Management under subsection 
        (d)(2).
  [(c)] (d)(1) The Office of Personnel Management may prescribe 
regulations, subject to the approval of the President, 
necessary for the administration of this section insofar as 
this section affects employees in or under an Executive agency.
  (2) The Office of Personnel Management shall provide 
guidelines by regulation for exemptions to be made by the heads 
of agencies under subsection (c)(3). Such guidelines shall 
provide for such exemptions only under exceptional 
circumstances.

           *       *       *       *       *       *       *


SUBCHAPTER IV--DUAL PAY AND DUAL EMPLOYMENT

           *       *       *       *       *       *       *


Sec. 5538. Nonreduction in pay while serving on active duty in a 
                    reserve component

  (a) An employee who is also a member of a reserve component 
and is absent from a position of employment with the Federal 
Government under a call or order to serve on active duty for a 
period of more than 30 days shall be entitled to receive, for 
each pay period described in subsection (b), an amount equal to 
the difference (if any) between--
          (1) the amount of civilian basic pay that would 
        otherwise have been payable to the employee for such 
        pay period if the employee's civilian employment with 
        the Government had not been interrupted by the service 
        on active duty; and
          (2) the amount of military compensation that is 
        payable to the employee for the service on active duty 
        and is allocable to such pay period.
  (b)(1) Amounts under this section shall be payable with 
respect to each pay period (which would otherwise apply if the 
employee's civilian employment had not been interrupted) that 
occurs--
          (A) while the employee serves on active duty for a 
        period of more than 30 days;
          (B) while the employee is hospitalized for, or 
        convalescing from, an illness or injury incurred in, or 
        aggravated during, the performance of such active duty; 
        or
          (C) during the 14-day period beginning at the end of 
        such active duty or the end of the period referred to 
        in subparagraph (B).
  (2) Paragraph (1) shall not apply with respect to a pay 
period for which the employee receives civilian basic pay 
(including by taking any annual, military, or other paid leave) 
to which the employee is entitled by virtue of the employee's 
civilian employment with the Government.
  (c) Any amount payable under this section to an employee 
shall be paid--
          (1) by employing agency of the employee;
          (2) from the appropriations or fund that would be 
        used to pay the employee if the employee were in a pay 
        status; and
          (3) to the extent practicable, at the same time and 
        in the same manner as would civilian basic pay if the 
        employee's civilian employment had not been 
        interrupted.
  (d) In consultation with the Secretary of Defense, the Office 
of Personnel Management shall prescribe such regulations as may 
be necessary to carry out this section.
  (e) In consultation with the Office of Personnel Management, 
the head of each employing agency shall prescribe procedures to 
ensure that the rights under this section apply to the 
employees of such agency.
  (f) In this section:
          (1) The terms ``active duty for a period of more than 
        30 days'', ``member'', and ``reserve component'' have 
        the meanings given such terms in section 101 of title 
        37.
          (2) The term ``civilian basic pay'' includes any 
        amount payable under section 5304 of this title.
          (3) The term ``employing agency'', as used with 
        respect to an employee entitled to any payments under 
        this section, means the agency with respect to which 
        the employee has reemployment rights under chapter 43 
        of title 38. The term ``agency'' has the meaning given 
        such term in subparagraph (C) of section 2302(a)(2) of 
        this title, except that the term includes Government 
        corporations and agencies excluded by clause (i) or 
        (ii) of such subparagraph.
          (4) The term ``military compensation'' has the 
        meaning given the term ``pay'' in section 101(21) of 
        title 37, except that the term includes allowances 
        provided under chapter 7 of such title.

SUBCHAPTER V--PREMIUM PAY

           *       *       *       *       *       *       *


Sec. 5542. Overtime rates; computation

  (a) For full-time, part-time and intermittent tours of duty, 
hours of work officially ordered or approved in excess of 40 
hours in an administrative workweek, or (with the exception of 
an employee engaged in professional or technical engineering or 
scientific activities for whom the first 40 hours of duty in an 
administrative workweek is the basic workweek and an employee 
whose basic pay exceeds the minimum rate for GS-10 (including 
any applicable locality-based comparability payment under 
section 5304 or similar provision of law and any applicable 
special rate of pay under section 5305 or similar provision of 
law) for whom the first 40 hours of duty in an administrative 
workweek is the basic workweek) in excess of 8 hours in a day, 
performed by an employee are overtime work and shall be paid 
for, except as otherwise provided by this subchapter, at the 
following rates:
          (1)  * * *
          (2) For an employee whose basic pay is at a rate 
        which exceeds the minimum rate of basic pay for GS-10 
        (including any applicable locality-based comparability 
        payment under section 5304 or similar provision of law 
        and any applicable special rate of pay under section 
        5305 or similar provision of law), the overtime hourly 
        rate of pay is an amount equal to the greater of one 
        and one-half times the hourly rate of the minimum rate 
        of basic pay for GS-10 (including any applicable 
        locality-based comparability payment under section 5304 
        or similar provision of law and any applicable special 
        rate of pay under section 5305 or similar provision of 
        law) or the hourly rate of basic pay of the employee, 
        and all that amount is premium pay.

           *       *       *       *       *       *       *


Sec. 5545. Night, standby, irregular, and hazardous duty differential

  (a)  * * *

           *       *       *       *       *       *       *

  (d) The Office shall establish a schedule or schedules of pay 
differentials for duty involving unusual physical hardship or 
hazard, and for any hardship or hazard related to asbestos, 
such differentials shall be determined by applying occupational 
safety and health standards consistent with the permissible 
exposure limit promulgated by the Secretary of Labor under the 
Occupational Safety and Health Act of 1970. Under such 
regulations as the Office may prescribe, and for such minimum 
periods as it determines appropriate, an employee to whom 
chapter 51 and subchapter III of chapter 53 of this title 
applies is entitled to be paid the appropriate differential for 
any period in which he is subjected to physical hardship or 
hazard not usually involved in carrying out the duties of his 
position. However, the pay differential--
          (1)  * * *

           *       *       *       *       *       *       *


Subpart E--Attendance and Leave

           *       *       *       *       *       *       *


CHAPTER 63--LEAVE

           *       *       *       *       *       *       *


SUBCHAPTER II--OTHER PAID LEAVE

           *       *       *       *       *       *       *


Sec. 6323. Military leave; Reserves and National Guardsmen

  (a)  * * *
  (b) Except as provided by section 5519 of this title, an 
employee as defined by section 2105 of this title or an 
individual employed by the government of the District of 
Columbia, permanent or temporary indefinite, who--
          (1)  * * *
          (2)(A) performs, for the purpose of providing 
        military aid to enforce the law or for the purpose of 
        providing assistance to civil authorities in the 
        protection or saving of life or property or the 
        prevention of injury--
                  [(A)] (i) Federal service under section 331, 
                332, 333, or 12406 of title 10, or other 
                provision of law, as applicable, or
                  [(B)] (ii) full-time military service for his 
                State, the District of Columbia, the 
                Commonwealth of Puerto Rico, or a territory of 
                the United States; or
          (B) performs full-time military service as a result 
        of a call or order to active duty in support of a 
        contingency operation as defined in section 101(a)(13) 
        of title 10;

           *       *       *       *       *       *       *


Subpart F--Labor-Management and Employee Relations

           *       *       *       *       *       *       *


             CHAPTER 73--SUITABILITY, SECURITY, AND CONDUCT

                   SUBCHAPTER I--REGULATION OF CONDUCT

Sec.
7301.  Presidential regulations.
7302.  Post-employment notification.
     * * * * * * *

SUBCHAPTER I--REGULATION OF CONDUCT

           *       *       *       *       *       *       *


Sec. 7302. Post-employment notification

  (a) Not later than the effective date of the amendments made 
by sections 3 and 4 of the Federal Employees Pay for 
Performance Act of 2003, or 180 days after the date of 
enactment of that Act, whichever is later, the Office of 
Personnel Management shall, in consultation with the Attorney 
General and the Office of Government Ethics, promulgate 
regulations requiring that each Executive branch agency notify 
any employee of that agency who is subject to the provisions of 
section 207(c)(1) of title 18, as a result of the amendment to 
section 207(c)(2)(A)(ii) of that title by that Act.
  (b) The regulations shall require that notice be given 
before, or as part of, the action that affects the employee's 
coverage under section 207(c)(1) of title 18, by virtue of the 
provisions of section 207(c)(2)(A)(ii) of that title, and again 
when employment or service in the covered position is 
terminated.

           *       *       *       *       *       *       *


SUBCHAPTER V--MISCONDUCT

           *       *       *       *       *       *       *


Sec. 7353. Gifts to Federal employees

  (a)  * * *
  (b)(1)  * * *

           *       *       *       *       *       *       *

  (4) Nothing in this section precludes an employee of a 
private sector organization, while assigned to an agency under 
chapter 37 or section 9832, from continuing to receive pay and 
benefits from such organization in accordance with such 
chapter.

           *       *       *       *       *       *       *


Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *


CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *


SUBCHAPTER III--CIVIL SERVICE RETIREMENT

           *       *       *       *       *       *       *


Sec. 8339. Computation of annuity

  (a)  * * *

           *       *       *       *       *       *       *

  (p)(1)  * * *

           *       *       *       *       *       *       *

  (3) In the administration of paragraph (1)--
          (A) subparagraph (A) of such paragraph shall apply 
        with respect to pay for service performed before, on, 
        or after April 7, 1986; and
          (B) subparagraph (B) of such paragraph--
                  (i) shall apply with respect to that portion 
                of any annuity which is attributable to service 
                performed on or after April 7, 1986; and
                  (ii) shall not apply with respect to that 
                portion of any annuity which is attributable to 
                service performed before April 7, 1986.
  (4) Paragraph (3) shall be effective with respect to any 
annuity entitlement to which is based on a separation from 
service occurring on or after the date of the enactment of this 
paragraph.

           *       *       *       *       *       *       *


CHAPTER 90--LONG-TERM CARE INSURANCE

           *       *       *       *       *       *       *


Sec. 9001. Definitions

  For purposes of this chapter:
          (1) Employee.--The term ``employee'' means--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (D) an employee of a nonappropriated fund 
                instrumentality of the Department of Defense 
                described in section [2105(c),
        but does not include an individual employed by the 
        government of the District of Columbia (other than an 
        employee of the District of Columbia Courts).] 2105(c).
          (2) Annuitant.--The term ``annuitant'' means--
                  (A) any individual who would satisfy the 
                requirements of paragraph (3) of section 8901 
                if, for purposes of such paragraph, the term 
                ``employee'' were considered to have the 
                meaning given to it under paragraph (1) of this 
                subsection; [and]
                  (B) any individual who--
                          (i)  * * *

           *       *       *       *       *       *       *

                          (iii) would not (but for this 
                        subparagraph) otherwise satisfy the 
                        requirements of this paragraph[.]; and
                  (C) any former employee who, on the basis of 
                his or her service, would meet all requirements 
                for being considered an ``annuitant'' within 
                the meaning of subchapter III of chapter 83, 
                chapter 84, or any other retirement system for 
                employees of the Government, but for the fact 
                that such former employee has not attained the 
                minimum age for title to annuity.

           *       *       *       *       *       *       *

          (4) Retired member of the uniformed services.--The 
        term ``retired member of the uniformed services'' means 
        a member or former member of the uniformed services 
        entitled to retired or retainer pay, [including a 
        member or former member retired under chapter 1223 of 
        title 10 who has] and a member who has been transferred 
        to the Retired Reserve and who would be entitled to 
        retired pay under chapter 1223 of title 10 but for not 
        having attained the age of 60 and who satisfies such 
        eligibility requirements as the Office of Personnel 
        Management prescribes under section 9008.

           *       *       *       *       *       *       *


Subpart I--Miscellaneous

           *       *       *       *       *       *       *


       CHAPTER 98--NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

                   SUBCHAPTER I--WORKFORCE AUTHORITIES

Sec.
9801. Definitions.
9802. Planning, notification, and reporting requirements.
9803. Workforce authorities.
9804. Recruitment, redesignation, and relocation bonuses.
9805. Retention bonuses.
9806. Term appointments.
9807. Pay authority for critical positions.
9808. Assignments of intergovernmental personnel.
9809. Enhanced demonstration project authority.
9810. Voluntary separation incentive payments.
9811. Limitations relating to bonuses.

                   SUBCHAPTER II--PERSONNEL PROVISIONS

9831. Definitions.
9832. NASA-Industry exchange program.
9833. Science and technology scholarship program.
9834. Distinguished scholar appointment authority.
9835. Travel and transportation expenses of certain new appointees.
9836. Annual leave enhancements.
9837. Limited appointments to Senior Executive Service positions.
9838. Superior qualifications pay.

                  SUBCHAPTER I--WORKFORCE AUTHORITIES

Sec. 9801. Definitions

  For purposes of this subchapter--
          (1) the term ``Administration'' means the National 
        Aeronautics and Space Administration;
          (2) the term ``Administrator'' means the 
        Administrator of the National Aeronautics and Space 
        Administration;
          (3) the term ``critical need'' means a specific and 
        important requirement of the Administration's mission 
        that the Administration is unable to fulfill because 
        the Administration lacks the appropriate employees 
        because--
                  (A) of the inability to fill positions; or
                  (B) employees do not possess the requisite 
                skills;
          (4) the term ``employee'' means an individual 
        employed in or under the Administration;
          (5) the term ``workforce plan'' means the plan 
        required under section 9802(a);
          (6) the term ``appropriate committees of Congress'' 
        means--
                  (A) the Committees on Government Reform, 
                Science, and Appropriations of the House of 
                Representatives; and
                  (B) the Committees on Governmental Affairs, 
                Commerce, Science, and Transportation, and 
                Appropriations of the Senate; and
          (7) the term ``redesignation bonus'' means a bonus 
        under section 9804 paid to an individual described in 
        subsection (a)(2) thereof.

Sec. 9802. Planning, notification, and reporting requirements

  (a) Not later than 90 days before exercising any of the 
workforce authorities under this subchapter, the Administrator 
shall submit a written plan to the appropriate committees of 
Congress. A plan under this subchapter may not be implemented 
without the approval of the Office of Personnel Management.
  (b) A workforce plan shall include a description of--
          (1) each critical need of the Administration and the 
        criteria used in the identification of that need;
          (2)(A) the functions, approximate number, and classes 
        or other categories of positions or employees that--
                  (i) address critical needs; and
                  (ii) would be eligible for each authority 
                proposed to be exercised under section 9803; 
                and
          (B) how the exercise of those authorities with 
        respect to the eligible positions or employees involved 
        would address each critical need identified under 
        paragraph (1);
          (3)(A) any critical need identified under paragraph 
        (1) which would not be addressed by the authorities 
        made available under this subchapter; and
          (B) the reasons why those needs would not be so 
        addressed;
          (4) the specific criteria to be used in determining 
        which individuals may receive the benefits described 
        under sections 9804, 9805 (including the criteria for 
        granting bonuses in the absence of a critical need), 
        and 9810, and how the level of those benefits will be 
        determined;
          (5) the safeguards or other measures that will be 
        applied to ensure that this subchapter is carried out 
        in a manner consistent with merit system principles;
          (6) the means by which employees will be afforded the 
        notification required under subsections (c) and 
        (d)(1)(B);
          (7) the methods that will be used to determine if the 
        authorities exercised under this subchapter have 
        successfully addressed each critical need identified 
        under paragraph (1); and
          (8)(A) the recruitment methods used by the 
        Administration before the enactment of this chapter to 
        recruit highly qualified individuals; and
          (B) the changes the Administration will implement 
        after the enactment of this chapter in order to improve 
        its recruitment of highly qualified individuals, 
        including how it intends to use--
                  (i) nongovernmental recruitment or placement 
                agencies; and
                  (ii) Internet technologies.
  (c) Not later than 60 days before first exercising any of the 
workforce authorities made available under this subchapter, the 
Administrator shall provide to all employees the workforce plan 
and any additional information which the Administrator 
considers appropriate.
  (d)(1)(A) The Administrator may submit any modifications to 
the workforce plan to the Office of Personnel Management. 
Modifications to the workforce plan may not be implemented 
without the approval of the Office of Personnel Management.
  (B) Not later than 60 days before implementing any such 
modifications, the Administrator shall provide an appropriately 
modified plan to all employees of the Administration and to the 
appropriate committees of Congress.
  (2) Any reference in this subchapter or any other provision 
of law to the workforce plan shall be considered to include any 
modification made in accordance with this subsection.
  (e) Before submitting any written plan under subsection (a) 
(or modification under subsection (d)) to the Office of 
Personnel Management, the Administrator shall--
          (1) provide to each employee representative 
        representing any employees who might be affected by 
        such plan (or modification) a copy of the proposed plan 
        (or modification);
          (2) give each representative 30 calendar days (unless 
        extraordinary circumstances require earlier action) to 
        review and make recommendations with respect to the 
        proposed plan (or modification); and
          (3) give any recommendations received from any such 
        representatives under paragraph (2) full and fair 
        consideration in deciding whether or how to proceed 
        with respect to the proposed plan (or modification).
  (f) None of the workforce authorities made available under 
this subchapter may be exercised in a manner inconsistent with 
the workforce plan.
  (g) Whenever the Administration submits its performance plan 
under section 1115 of title 31 to the Office of Management and 
Budget for any year, the Administration shall at the same time 
submit a copy of such plan to the appropriate committees of 
Congress.
  (h) Not later than 6 years after date of enactment of this 
subchapter, the Administrator shall submit to the appropriate 
committees of Congress an evaluation and analysis of the 
actions taken by the Administration under this subchapter, 
including--
          (1) an evaluation, using the methods described in 
        subsection (b)(7), of whether the authorities exercised 
        under this subchapter successfully addressed each 
        critical need identified under subsection (b)(1);
          (2) to the extent that they did not, an explanation 
        of the reasons why any critical need (apart from the 
        ones under subsection (b)(3)) was not successfully 
        addressed; and
          (3) recommendations for how the Administration could 
        address any remaining critical need and could prevent 
        those that have been addressed from recurring.

Sec. 9803. Workforce authorities

  (a) The workforce authorities under this subchapter are the 
following:
          (1) The authority to pay recruitment, redesignation, 
        and relocation bonuses under section 9804.
          (2) The authority to pay retention bonuses under 
        section 9805.
          (3) The authority to make term appointments and to 
        take related personnel actions under section 9806.
          (4) The authority to fix rates of basic pay for 
        critical positions under section 9807.
          (5) The authority to extend intergovernmental 
        personnel act assignments under section 9808.
          (6) The authority to apply subchapter II of chapter 
        35 in accordance with section 9810.
  (b) No authority under this subchapter may be exercised with 
respect to any officer who is appointed by the President, by 
and with the advice and consent of the Senate.
  (c) Unless specifically stated otherwise, all authorities 
provided under this subchapter are subject to section 5307.

Sec. 9804. Recruitment, redesignation, and relocation bonuses

  (a) Notwithstanding section 5753, the Administrator may pay a 
bonus to an individual, in accordance with the workforce plan 
and subject to the limitations in this section, if--
          (1) the Administrator determines that the 
        Administration would be likely, in the absence of a 
        bonus, to encounter difficulty in filling a position; 
        and
          (2) the individual--
                  (A) is newly appointed as an employee of the 
                Federal Government;
                  (B) is currently employed by the Federal 
                Government and is newly appointed to another 
                position in the same geographic area; or
                  (C) is currently employed by the Federal 
                Government and is required to relocate to a 
                different geographic area to accept a position 
                with the Administration.
  (b) If the position is described as addressing a critical 
need in the workforce plan under section 9802(b)(2)(A), the 
amount of a bonus may not exceed--
          (1) 50 percent of the employee's annual rate of basic 
        pay (including comparability payments under sections 
        5304 and 5304a) as of the beginning of the service 
        period multiplied by the service period specified under 
        subsection (d)(1)(B)(i); or
          (2) 100 percent of the employee's annual rate of 
        basic pay (including comparability payments under 
        sections 5304 and 5304a) as of the beginning of the 
        service period.
  (c) If the position is not described as addressing a critical 
need in the workforce plan under section 9802(b)(2)(A), the 
amount of a bonus may not exceed--
          (1) 25 percent of the employee's annual rate of basic 
        pay (including comparability payments under sections 
        5304 and 5304a) as of the beginning of the service 
        period multiplied by the service period specified under 
        subsection (d)(1)(B)(i); or
          (2) 100 percent of the employee's annual rate of 
        basic pay (including comparability payments under 
        sections 5304 and 5304a) as of the beginning of the 
        service period.
  (d)(1)(A) Payment of a bonus under this section shall be 
contingent upon the individual entering into a service 
agreement with the Administration.
  (B) At a minimum, the service agreement shall include--
          (i) the required service period;
          (ii) the method of payment, including a payment 
        schedule, which may include a lump-sum payment, 
        installment payments, or a combination thereof;
          (iii) the amount of the bonus and the basis for 
        calculating that amount; and
          (iv) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has 
        been completed, and the effect of the termination.
  (2) For purposes of determinations under subsections (b)(1) 
and (c)(1), the employee's service period shall be expressed as 
the number equal to the full years and twelfth parts thereof, 
rounding the fractional part of a month to the nearest twelfth 
part of a year. The service period may not be less than 6 
months and may not exceed 4 years.
  (3) A bonus under this section may not be considered to be 
part of the basic pay of an employee.
  (e) Before paying a bonus under this section, the 
Administration shall establish a plan for paying recruitment, 
redesignation, and relocation bonuses, subject to approval by 
the Office of Personnel Management.
  (f) The Administrator shall submit to the appropriate 
committees of Congress, not later than February 28 of each of 
the next 10 years beginning after the date of enactment of this 
subchapter, a summary of all bonuses paid under subsections (b) 
and (c) during the preceding year. Such summary shall include 
the number of bonuses paid, the total amount of bonuses paid, 
and the average percentage used in calculating the total 
average bonus amount, under each such subsection.

Sec. 9805. Retention bonuses

  (a) Notwithstanding section 5754, the Administrator may pay a 
bonus to an employee, in accordance with the workforce plan and 
subject to the limitations in this section, if the 
Administrator determines that--
          (1) the unusually high or unique qualifications of 
        the employee or a special need of the Administration 
        for the employee's services makes it essential to 
        retain the employee; and
          (2) the employee would be likely to leave in the 
        absence of a retention bonus.
  (b) If the position is described as addressing a critical 
need in the workforce plan under section 9802(b)(2)(A), the 
amount of a bonus may not exceed 50 percent of the employee's 
annual rate of basic pay (including comparability payments 
under sections 5304 and 5304a).
  (c) If the position is not described as addressing a critical 
need in the workforce plan under section 9802(b)(2)(A), the 
amount of a bonus may not exceed 25 percent of the employee's 
annual rate of basic pay (including comparability payments 
under sections 5304 and 5304a).
  (d)(1)(A) Payment of a bonus under this section shall be 
contingent upon the employee entering into a service agreement 
with the Administration.
  (B) At a minimum, the service agreement shall include--
          (i) the required service period;
          (ii) the method of payment, including a payment 
        schedule, which may include a lump-sum payment, 
        installment payments, or a combination thereof;
          (iii) the amount of the bonus and the basis for 
        calculating the amount; and
          (iv) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has 
        been completed, and the effect of the termination.
  (2) The employee's service period shall be expressed as the 
number equal to the full years and twelfth parts thereof, 
rounding the fractional part of a month to the nearest twelfth 
part of a year. The service period may not be less than 6 
months and may not exceed 4 years.
  (3) Notwithstanding paragraph (1), a service agreement is not 
required if the Administration pays a bonus in biweekly 
installments and sets the installment payment at the full bonus 
percentage rate established for the employee, with no portion 
of the bonus deferred. In this case, the Administration shall 
inform the employee in writing of any decision to change the 
retention bonus payments. The employee shall continue to accrue 
entitlement to the retention bonus through the end of the pay 
period in which such written notice is provided.
  (e) A bonus under this section may not be considered to be 
part of the basic pay of an employee.
  (f) An employee is not entitled to a retention bonus under 
this section during a service period previously established for 
that employee under section 5753 or under section 9804.
  (g) The Administrator shall submit to the appropriate 
committees of Congress, not later than February 28 of each of 
the next 10 years beginning after the date of enactment of this 
subchapter, a summary of all bonuses paid under subsections (b) 
and (c) during the preceding year. Such summary shall include 
the number of bonuses paid, the total amount of bonuses paid, 
and the average percentage used in calculating the total 
average bonus amount, under each such subsection.

Sec. 9806. Term appointments

  (a) The Administrator may authorize term appointments within 
the Administration under subchapter I of chapter 33, for a 
period of not less than 1 year and not more than 6 years.
  (b) Notwithstanding chapter 33 or any other provision of law 
relating to the examination, certification, and appointment of 
individuals in the competitive service, the Administrator may 
convert an employee serving under a term appointment to a 
permanent appointment in the competitive service within the 
Administration without further competition if--
          (1) such individual was appointed under open, 
        competitive examination under subchapter I of chapter 
        33 to the term position;
          (2) the announcement for the term appointment from 
        which the conversion is made stated that there was 
        potential for subsequent conversion to a career-
        conditional or career appointment;
          (3) the employee has completed at least 2 years of 
        current continuous service under a term appointment in 
        the competitive service;
          (4) the employee's performance under such term 
        appointment was at least fully successful or 
        equivalent; and
          (5) the position to which such employee is being 
        converted under this section is in the same 
        occupational series, is in the same geographic 
        location, and provides no greater promotion potential 
        than the term position for which the competitive 
        examination was conducted.
  (c) Notwithstanding chapter 33 or any other provision of law 
relating to the examination, certification, and appointment of 
individuals in the competitive service, the Administrator may 
convert an employee serving under a term appointment to a 
permanent appointment in the competitive service within the 
Administration through internal competitive promotion 
procedures if the conditions under paragraphs (1) through (4) 
of subsection (b) are met.
  (d) An employee converted under this section becomes a 
career-conditional employee, unless the employee has otherwise 
completed the service requirements for career tenure.
  (e) An employee converted to career or career-conditional 
employment under this section acquires competitive status upon 
conversion.
  (f) The Administrator shall submit to the appropriate 
committees of Congress, not later than February 28 of each of 
the next 10 years beginning after the date of enactment of this 
subchapter--
          (1) the total number of term appointments converted 
        during the previous calendar year; and
          (2) of that total number, the number of conversions 
        that were made to address a critical need described in 
        the Workforce Plan pursuant to section 9802(b)(2).

Sec. 9807. Pay authority for critical positions

  (a) In this section, the term ``position'' means--
          (1) a position to which chapter 51 applies, including 
        a position in the Senior Executive Service;
          (2) a position under the Executive Schedule under 
        sections 5312 through 5317;
          (3) a position established under section 3104; or
          (4) a senior-level position to which section 
        5376(a)(1) applies.
  (b) Authority under this section--
          (1) may be exercised only with respect to a position 
        that--
                  (A) is described as addressing a critical 
                need in the workforce plan under section 
                9802(b)(2)(A); and
                  (B) requires expertise of an extremely high 
                level in a scientific, technical, professional, 
                or administrative field;
          (2) may be exercised only to the extent necessary to 
        recruit or retain an individual exceptionally well 
        qualified for the position; and
          (3) may be exercised only in retaining employees of 
        the Administration or in appointing individuals who 
        were not employees of another Federal agency as defined 
        under section 5102(a)(1).
  (c)(1) Notwithstanding section 5377, the Administrator may 
fix the rate of basic pay for a position in the Administration 
in accordance with this section. The Administrator may not 
delegate this authority.
  (2) The number of positions with pay fixed under this section 
may not exceed 10 at any time.
  (d)(1) The rate of basic pay fixed under this section may not 
be less than the rate of basic pay (including any comparability 
payments) which would otherwise be payable for the position 
involved if this section had never been enacted.
  (2) The annual rate of basic pay fixed under this section may 
not exceed the per annum rate of salary payable under section 
104 of title 3.
  (3) Notwithstanding any provision of section 5307, in the 
case of an employee who, during any calendar year, is receiving 
pay at a rate fixed under this section, no allowance, 
differential, bonus, award, or similar cash payment may be paid 
to such employee if, or to the extent that, when added to basic 
pay paid or payable to such employee (for service performed in 
such calendar year as an employee in the executive branch or as 
an employee outside the executive branch to whom chapter 51 
applies), such payment would cause the total to exceed the per 
annum rate of salary which, as of the end of such calendar 
year, is payable under section 104 of title 3.
  (e) The Administrator shall submit to the appropriate 
committees of Congress, not later than February 28 of each of 
the next 10 years beginning after the date of enactment of this 
subchapter--
          (1) the number of positions for which the rate of 
        basic pay was fixed under this section during the 
        preceding year; and
          (2) the number of positions for which a rate of basic 
        pay under this section was terminated during the 
        preceding year.

Sec. 9808. Assignments of intergovernmental personnel

  For purposes of applying the third sentence of section 
3372(a) (relating to the authority of the head of a Federal 
agency to extend the period of an employee's assignment to or 
from a State or local government, institution of higher 
education, or other organization), the Administrator may, with 
the concurrence of the employee and the government or 
organization concerned, take any action which would be 
allowable if such sentence had been amended by striking ``two'' 
and inserting ``four''.

Sec. 9809. Enhanced demonstration project authority

  When conducting a demonstration project at the 
Administration, section 4703(d)(1)(A) may be applied by 
substituting ``such numbers of individuals as determined by the 
Administrator'' for ``not more than 5,000 individuals''.

Sec. 9810. Voluntary separation incentive payments

  (a) In applying subchapter II of chapter 35, the 
Administrator may provide for voluntary separation incentive 
payments in excess of the dollar-amount limitation that would 
otherwise apply under section 3523(b)(3)(B), subject to 
subsection (b).
  (b) Voluntary separation incentive payments described in 
subsection (a)--
          (1) may not exceed 50 percent of the annual rate of 
        basic pay of the employee receiving such payments 
        (computed disregarding any comparability payments under 
        sections 5304-5304a);
          (2) may not, in any calendar year, be made to more 
        than--
                  (A) 10 employees; or
                  (B) such greater number of employees as the 
                Administrator may, with the approval of the 
                Office of Management and Budget, establish in 
                lieu of the number specified in subparagraph 
                (A) following notification to the appropriate 
                committees of Congress;
          (3) may not be made to an employee if the employee 
        has within the last 12 months received, or if the 
        employee is then receiving, a bonus or allowance under 
        section 5753 or 5754 or under section 9804 or 9805; and
          (4) may be made only if the position in which the 
        employee is serving addresses a critical need 
        identified in the workforce plan pursuant to section 
        9802(b)(2).
  (c)(1) The proposed use of workforce authorities in this 
section shall be included in the plan required by section 3522.
  (2) Whenever the Office of Personnel Management approves the 
Administration's plan required in such section 3522, the 
Administration shall submit a copy of the approved plan to the 
appropriate committees of Congress within 15 days after the 
date on which it is so approved.

Sec. 9811. Limitations relating to bonuses

  (a) Of the total amount in bonuses awarded under sections 
9804 and 9805, respectively, in any year, not to exceed 15 
percent of any such total amount may be awarded to supervisors 
(within the meaning of section 7103(a)(10)).
  (b) A separate appropriations account shall be maintained for 
such bonuses.

                  SUBCHAPTER II--PERSONNEL PROVISIONS

Sec. 9831. Definitions

  For purposes of this subchapter, the terms ``Administration'' 
and ``Administrator'' have the meanings set forth in section 
9801.

Sec. 9832. NASA-Industry exchange program

  (a) For purposes of this section, the term ``detail'' means--
          (1) the assignment or loan of an employee of the 
        Administration to a private sector organization without 
        a change of position from the Administration, or
          (2) the assignment or loan of an employee of a 
        private sector organization to the Administration 
        without a change of position from the private sector 
        organization that employs the individual,
whichever is appropriate in the context in which such term is 
used.
  (b)(1) On request from or with the agreement of a private 
sector organization, and with the consent of the employee 
concerned, the Administrator may arrange for the assignment of 
an employee of the Administration to a private sector 
organization or an employee of a private sector organization to 
the Administration. An employee of the Administration shall be 
eligible to participate in this program only if the employee is 
employed at the GS-11 level or above (or equivalent) and is 
serving under a career or career-conditional appointment or an 
appointment of equivalent tenure in the excepted service.
  (2) The Administrator shall provide for a written agreement 
between the Administration and the employee concerned regarding 
the terms and conditions of the employee's assignment. The 
agreement shall--
          (A) require the employee to serve in the 
        Administration, upon completion of the assignment, for 
        a period equal to the length of the assignment; and
          (B) provide that, in the event the employee fails to 
        carry out the agreement (except for good and sufficient 
        reason, as determined by the Administrator), the 
        employee shall be liable to the United States for 
        payment of all expenses of the assignment.
An amount under subparagraph (B) shall be treated as a debt due 
the United States.
  (3) Assignments may be terminated by the Administration or 
the private sector organization concerned for any reason at any 
time.
  (4) Assignments under this section shall be for a period of 
between 6 months and 1 year, and may be extended in 3-month 
increments for a total of not more than 1 additional year, 
except that no assignment under this section may commence after 
the end of the 5-year period beginning on the date of the 
enactment of this section.
  (c)(1) An employee of the Administration who is assigned to a 
private sector organization under this section is deemed, 
during the period of the assignment, to be on detail to a 
regular work assignment in the Administration.
  (2) Notwithstanding any other provision of law, an employee 
of the Administration who is assigned to a private sector 
organization under this section is entitled to retain coverage, 
rights, and benefits under subchapter I of chapter 81, and 
employment during the assignment is deemed employment by the 
United States, except that, if the employee or the employee's 
dependents receive from the private sector organization any 
payment under an insurance policy for which the premium is 
wholly paid by the private sector organization, or other 
benefit of any kind on account of the same injury or death, 
then, the amount of such payment or benefit shall be credited 
against any compensation otherwise payable under subchapter I 
of chapter 81.
  (3) The assignment of an employee to a private sector 
organization under this section may be made with or without 
reimbursement by the private sector organization for the travel 
and transportation expenses to or from the place of assignment, 
subject to the same terms and conditions as apply with respect 
to an employee of a Federal agency or a State or local 
government under section 3375, and for the pay, or a part 
thereof, of the employee during assignment. Any reimbursements 
shall be credited to the appropriation of the Administration 
used for paying the travel and transportation expenses or pay.
  (4) The Federal Tort Claims Act and any other Federal tort 
liability statute apply to an employee of the Administration 
assigned to a private sector organization under this section. 
The supervision of the duties of an employee of the 
Administration who is so assigned to a private sector 
organization may be governed by an agreement between the 
Administration and the organization.
  (d)(1) An employee of a private sector organization assigned 
to the Administration under this section is deemed, during the 
period of the assignment, to be on detail to the 
Administration.
  (2) An employee of a private sector organization assigned to 
the Administration under this section--
          (A) may continue to receive pay and benefits from the 
        private sector organization from which he is assigned;
          (B) is deemed, notwithstanding paragraph (1), to be 
        an employee of the Administration for the purposes of--
                  (i) chapter 73;
                  (ii) sections 201, 203, 205, 207, 208, 209, 
                603, 606, 607, 643, 654, 1905, and 1913 of 
                title 18;
                  (iii) sections 1343, 1344, and 1349(b) of 
                title 31;
                  (iv) the Federal Tort Claims Act and any 
                other Federal tort liability statute;
                  (v) the Ethics in Government Act of 1978; and
                  (vi) section 1043 of the Internal Revenue 
                Code of 1986;
          (C) may not have access to any trade secrets or to 
        any other nonpublic information which is of commercial 
        value to the private sector organization from which he 
        is assigned; and
          (D) is subject to such regulations as the President 
        may prescribe.
The supervision of an employee of a private sector organization 
assigned to the Administration under this section may be 
governed by agreement between the Administration and the 
private sector organization concerned. Such an assignment may 
be made with or without reimbursement by the Administration for 
the pay, or a part thereof, of the employee during the period 
of assignment, or for any contribution of the private sector 
organization to employee benefit systems.
  (3) An employee of a private sector organization assigned to 
the Administration under this section who suffers disability or 
dies as a result of personal injury sustained while performing 
duties during the assignment shall be treated, for the purpose 
of subchapter I of chapter 81, as an employee as defined by 
section 8101 who had sustained the injury in the performance of 
duty, except that, if the employee or the employee's dependents 
receive from the private sector organization any payment under 
an insurance policy for which the premium is wholly paid by the 
private sector organization, or other benefit of any kind on 
account of the same injury or death, then, the amount of such 
payment or benefit shall be credited against any compensation 
otherwise payable under subchapter I of chapter 81.
  (4) A private sector organization may not charge the Federal 
Government, as direct or indirect costs under a Federal 
contract, the costs of pay or benefits paid by the organization 
to an employee assigned to the Administration under this 
section for the period of the assignment.
  (e)(1) The Administration shall, not later than February 28 
of each year, prepare and submit to the appropriate committees 
of Congress a report summarizing the operation of this section 
during the preceding year.
  (2) Each report shall include, with respect to the period to 
which such report relates--
          (A) the total number of individuals assigned to, and 
        the total number of individuals assigned from, the 
        Administration during such period;
          (B) a brief description of each assignment included 
        under subparagraph (A), including--
                  (i) the name of the assigned individual, as 
                well as the private sector organization, to or 
                from which such individual was assigned;
                  (ii) the respective positions to and from 
                which the individual was assigned, including 
                the duties and responsibilities and the pay 
                grade or level associated with each; and
                  (iii) the duration and objectives of the 
                individual's assignment; and
          (C) such other information as the Administration 
        considers appropriate.
  (3) A copy of each report submitted under paragraph (1)--
          (A) shall be published in the Federal Register; and
          (B) shall be made publicly available on the Internet.
  (f) The Administrator, in consultation with the Director of 
the Office of Personnel Management, shall prescribe regulations 
for the administration of this section.
  (g) Not later than 4 years after the date of the enactment of 
this section, the General Accounting Office shall prepare and 
submit to the appropriate committees of Congress a report on 
the operation of this section. Such report shall include--
          (1) an evaluation of the effectiveness of the program 
        established by this section; and
          (2) a recommendation as to whether such program 
        should be continued (with or without modification) or 
        allowed to lapse.

Sec. 9833. Science and technology scholarship program

  (a)(1) The Administrator shall establish a National 
Aeronautics and Space Administration Science and Technology 
Scholarship Program to award scholarships to individuals that 
is designed to recruit and prepare students for careers in the 
Administration.
  (2) Individuals shall be selected to receive scholarships 
under this section through a competitive process primarily on 
the basis of academic merit, with consideration given to 
financial need and the goal of promoting the participation of 
individuals identified in section 33 or 34 of the Science and 
Engineering Equal Opportunities Act.
  (3) To carry out the Program the Administrator shall enter 
into contractual agreements with individuals selected under 
paragraph (2) under which the individuals agree to serve as 
full-time employees of the Administration, for the period 
described in subsection (f)(1), in positions needed by the 
Administration and for which the individuals are qualified, in 
exchange for receiving a scholarship.
  (b) In order to be eligible to participate in the Program, an 
individual must--
          (1) be enrolled or accepted for enrollment as a full-
        time student at an institution of higher education in 
        an academic field or discipline described in the list 
        made available under subsection (d);
          (2) be a United States citizen; and
          (3) at the time of the initial scholarship award, not 
        be an employee (as defined in section 2105).
  (c) An individual seeking a scholarship under this section 
shall submit an application to the Administrator at such time, 
in such manner, and containing such information, agreements, or 
assurances as the Administrator may require.
  (d) The Administrator shall make publicly available a list of 
academic programs and fields of study for which scholarships 
under the Program may be utilized and shall update the list as 
necessary.
  (e)(1) The Administrator may provide a scholarship under the 
Program for an academic year if the individual applying for the 
scholarship has submitted to the Administrator, as part of the 
application required under subsection (c), a proposed academic 
program leading to a degree in a program or field of study on 
the list made available under subsection (d).
  (2) An individual may not receive a scholarship under this 
section for more than 4 academic years, unless the 
Administrator grants a waiver.
  (3) The dollar amount of a scholarship under this section for 
an academic year shall be determined under regulations issued 
by the Administrator, but shall in no case exceed the cost of 
attendance.
  (4) A scholarship provided under this section may be expended 
for tuition, fees, and other authorized expenses as established 
by the Administrator by regulation.
  (5) The Administrator may enter into a contractual agreement 
with an institution of higher education under which the amounts 
provided for a scholarship under this section for tuition, 
fees, and other authorized expenses are paid directly to the 
institution with respect to which the scholarship is provided.
  (f)(1) The period of service for which an individual shall be 
obligated to serve as an employee of the Administration is, 
except as provided in subsection (h)(2), 24 months for each 
academic year for which a scholarship under this section is 
provided.
  (2)(A) Except as provided in subparagraph (B), obligated 
service under paragraph (1) shall begin not later than 60 days 
after the individual obtains the educational degree for which 
the scholarship was provided.
  (B) The Administrator may defer the obligation of an 
individual to provide a period of service under paragraph (1) 
if the Administrator determines that such a deferral is 
appropriate. The Administrator shall prescribe the terms and 
conditions under which a service obligation may be deferred 
through regulation.
  (g)(1) Scholarship recipients who fail to maintain a high 
level of academic standing, as defined by the Administrator by 
regulation, who are dismissed from their educational 
institutions for disciplinary reasons, or who voluntarily 
terminate academic training before graduation from the 
educational program for which the scholarship was awarded, 
shall be in breach of their contractual agreement and, in lieu 
of any service obligation arising under such agreement, shall 
be liable to the United States for repayment within 1 year 
after the date of default of all scholarship funds paid to them 
and to the institution of higher education on their behalf 
under the agreement, except as provided in subsection (h)(2). 
The repayment period may be extended by the Administrator when 
determined to be necessary, as established by regulation.
  (2) Scholarship recipients who, for any reason, fail to begin 
or complete their service obligation after completion of 
academic training, or fail to comply with the terms and 
conditions of deferment established by the Administrator 
pursuant to subsection (f)(2)(B), shall be in breach of their 
contractual agreement. When recipients breach their agreements 
for the reasons stated in the preceding sentence, the recipient 
shall be liable to the United States for an amount equal to--
          (A) the total amount of scholarships received by such 
        individual under this section; plus
          (B) the interest on the amounts of such awards which 
        would be payable if at the time the awards were 
        received they were loans bearing interest at the 
        maximum legal prevailing rate, as determined by the 
        Treasurer of the United States,
multiplied by 3.
  (h)(1) Any obligation of an individual incurred under the 
Program (or a contractual agreement thereunder) for service or 
payment shall be canceled upon the death of the individual.
  (2) The Administrator shall by regulation provide for the 
partial or total waiver or suspension of any obligation of 
service or payment incurred by an individual under the Program 
(or a contractual agreement thereunder) whenever compliance by 
the individual is impossible or would involve extreme hardship 
to the individual, or if enforcement of such obligation with 
respect to the individual would be contrary to the best 
interests of the Government.
  (i) For purposes of this section--
          (1) the term ``cost of attendance'' has the meaning 
        given that term in section 472 of the Higher Education 
        Act of 1965;
          (2) the term ``institution of higher education'' has 
        the meaning given that term in section 101(a) of the 
        Higher Education Act of 1965; and
          (3) the term ``Program'' means the National 
        Aeronautics and Space Administration Science and 
        Technology Scholarship Program established under this 
        section.
  (j)(1) There is authorized to be appropriated to the 
Administration for the Program $10,000,000 for each fiscal 
year.
  (2) Amounts appropriated under this section shall remain 
available for 2 fiscal years.

Sec. 9834. Distinguished scholar appointment authority

  (a) In this section--
          (1) the term ``professional position'' means a 
        position that is classified to an occupational series 
        identified by the Office of Personnel Management as a 
        position that--
                  (A) requires education and training in the 
                principles, concepts, and theories of the 
                occupation that typically can be gained only 
                through completion of a specified curriculum at 
                a recognized college or university; and
                  (B) is covered by the Group Coverage 
                Qualification Standard for Professional and 
                Scientific Positions; and
          (2) the term ``research position'' means a position 
        in a professional series that primarily involves 
        scientific inquiry or investigation, or research-type 
        exploratory development of a creative or scientific 
        nature, where the knowledge required to perform the 
        work successfully is acquired typically and primarily 
        through graduate study.
  (b) The Administration may appoint, without regard to the 
provisions of sections 3304(b) and 3309 through 3318, 
candidates directly to General Schedule professional positions 
in the Administration for which public notice has been given, 
if--
          (1) with respect to a position at the GS-7 level, the 
        individual--
                  (A) received, from an accredited institution 
                authorized to grant baccalaureate degrees, a 
                baccalaureate degree in a field of study for 
                which possession of that degree in conjunction 
                with academic achievements meets the 
                qualification standards as prescribed by the 
                Office of Personnel Management for the position 
                to which the individual is being appointed; and
                  (B) achieved a cumulative grade point average 
                of 3.0 or higher on a 4.0 scale and a grade 
                point average of 3.5 or higher for courses in 
                the field of study required to qualify for the 
                position;
          (2) with respect to a position at the GS-9 level, the 
        individual--
                  (A) received, from an accredited institution 
                authorized to grant graduate degrees, a 
                graduate degree in a field of study for which 
                possession of that degree meets the 
                qualification standards at this grade level as 
                prescribed by the Office of Personnel 
                Management for the position to which the 
                individual is being appointed; and
                  (B) achieved a cumulative grade point average 
                of 3.5 or higher on a 4.0 scale in graduate 
                coursework in the field of study required for 
                the position;
          (3) with respect to a position at the GS-11 level, 
        the individual--
                  (A) received, from an accredited institution 
                authorized to grant graduate degrees, a 
                graduate degree in a field of study for which 
                possession of that degree meets the 
                qualification standards at this grade level as 
                prescribed by the Office of Personnel 
                Management for the position to which the 
                individual is being appointed; and
                  (B) achieved a cumulative grade point average 
                of 3.5 or higher on a 4.0 scale in graduate 
                coursework in the field of study required for 
                the position; or
          (4) with respect to a research position at the GS-12 
        level, the individual--
                  (A) received, from an accredited institution 
                authorized to grant graduate degrees, a 
                graduate degree in a field of study for which 
                possession of that degree meets the 
                qualification standards at this grade level as 
                prescribed by the Office of Personnel 
                Management for the position to which the 
                individual is being appointed; and
                  (B) achieved a cumulative grade point average 
                of 3.5 or higher on a 4.0 scale in graduate 
                coursework in the field of study required for 
                the position.
  (c) Veterans' preference procedures shall apply when 
selecting candidates under this section. Preference eligibles 
who meet the criteria for distinguished scholar appointments 
shall be considered ahead of nonpreference eligibles.
  (d) An appointment made under this authority shall be a 
career-conditional appointment in the competitive civil 
service.

Sec. 9835. Travel and transportation expenses of certain new appointees

  (a) In this section, the term ``new appointee'' means--
          (1) a person newly appointed or reinstated to Federal 
        service to the Administration to--
                  (A) a career or career-conditional 
                appointment;
                  (B) a term appointment;
                  (C) an excepted service appointment that 
                provides for noncompetitive conversion to a 
                career or career-conditional appointment;
                  (D) a career or limited term Senior Executive 
                Service appointment;
                  (E) an appointment made under section 
                203(c)(2)(A) of the National Aeronautics and 
                Space Act of 1958 (42 U.S.C. 2473(c)(2)(A));
                  (F) an appointment to a position established 
                under section 3104; or
                  (G) an appointment to a position established 
                under section 5108; or
          (2) a student trainee who, upon completion of 
        academic work, is converted to an appointment in the 
        Administration that is identified in paragraph (1) in 
        accordance with an appropriate authority.
  (b) The Administrator may pay the travel, transportation, and 
relocation expenses of a new appointee to the same extent, in 
the same manner, and subject to the same conditions as the 
payment of such expenses under sections 5724, 5724a, 5724b, and 
5724c to an employee transferred in the interests of the United 
States Government.
  (c) The Administrator shall submit to the appropriate 
committees of Congress, not later than February 28 of each of 
the next 10 years beginning after the date of enactment of this 
subchapter--
          (1) the average payment for travel and transportation 
        expenses of certain new appointees provided under this 
        section during the preceding year; and
          (2) the highest payment for travel and transportation 
        expenses to an individual appointee provided under this 
        section during the preceding year.

Sec. 9836. Annual leave enhancements

  (a)(1) In this subsection--
          (A) the term ``newly appointed employee'' means an 
        individual who is first appointed--
                  (i) regardless of tenure, as an employee of 
                the Federal Government; or
                  (ii) as an employee of the Federal Government 
                following a break in service of at least 90 
                days after that individual's last period of 
                Federal employment, other than--
                          (I) employment under the Student 
                        Educational Employment Program 
                        administered by the Office of Personnel 
                        Management;
                          (II) employment as a law clerk 
                        trainee;
                          (III) employment under a short-term 
                        temporary appointing authority while a 
                        student during periods of vacation from 
                        the educational institution at which 
                        the student is enrolled;
                          (IV) employment under a provisional 
                        appointment if the new appointment is 
                        permanent and immediately follows the 
                        provisional appointment; or
                          (V) employment under a temporary 
                        appointment that is neither full-time 
                        nor the principal employment of the 
                        individual;
          (B) the term ``period of qualified non-Federal 
        service'' means any period of service performed by an 
        individual that--
                  (i) was performed in a position the duties of 
                which were directly related to the duties of 
                the position in the Administration to which 
                that individual will fill as a newly appointed 
                employee; and
                  (ii) except for this section, would not 
                otherwise be service performed by an employee 
                for purposes of section 6303; and
          (C) the term ``directly related to the duties of the 
        position'' means duties and responsibilities in the 
        same line of work which require similar qualifications.
  (2)(A) For purposes of section 6303, the Administrator may 
deem a period of qualified non-Federal service performed by a 
newly appointed employee to be a period of service of equal 
length performed as an employee.
  (B) A period deemed by the Administrator under subparagraph 
(A) shall continue to apply to the employee during--
          (i) the period of Federal service in which the 
        deeming is made; and
          (ii) any subsequent period of Federal service.
  (3)(A) Notwithstanding section 6303(a), the annual leave 
accrual rate for an employee of the Administration in a 
position paid under section 5376 or 5383, or for an employee in 
an equivalent category whose rate of basic pay is greater than 
the rate payable at GS-15, step 10, shall be 1 day for each 
full biweekly pay period.
  (B) The accrual rate established under this paragraph shall 
continue to apply to the employee during--
          (i) the period of Federal service in which such 
        accrual rate first applies; and
          (ii) any subsequent period of Federal service.

Sec. 9837. Limited appointments to Senior Executive Service positions

  (a) In this section--
          (1) the term ``career reserved position'' means a 
        position in the Administration designated under section 
        3132(b) which may be filled only by--
                  (A) a career appointee; or
                  (B) a limited emergency appointee or a 
                limited term appointee--
                          (i) who, immediately before entering 
                        the career reserved position, was 
                        serving under a career or career-
                        conditional appointment outside the 
                        Senior Executive Service; or
                          (ii) whose limited emergency or 
                        limited term appointment is approved in 
                        advance by the Office of Personnel 
                        Management;
          (2) the term ``limited emergency appointee'' has the 
        meaning given under section 3132; and
          (3) the term ``limited term appointee'' means an 
        individual appointed to a Senior Executive Service 
        position in the Administration to meet a bona fide 
        temporary need, as determined by the Administrator.
  (b) The number of career reserved positions which are filled 
by an appointee as described under subsection (a)(1)(B) may not 
exceed 10 percent of the total number of Senior Executive 
Service positions allocated to the Administration.
  (c) Notwithstanding sections 3132 and 3394(b)--
          (1) the Administrator may appoint an individual to 
        any Senior Executive Service position in the 
        Administration as a limited term appointee under this 
        section for a period of--
                  (A) 4 years or less to a position the duties 
                of which will expire at the end of such term; 
                or
                  (B) 1 year or less to a position the duties 
                of which are continuing; and
          (2) in rare circumstances, the Administrator may 
        authorize an extension of a limited appointment under--
                  (A) paragraph (1)(A) for a period not to 
                exceed 2 years; and
                  (B) paragraph (1)(B) for a period not to 
                exceed 1 year.
  (d) A limited term appointee who has been appointed in the 
Administration from a career or career-conditional appointment 
outside the Senior Executive Service shall have reemployment 
rights in the agency from which appointed, or in another 
agency, under requirements and conditions established by the 
Office of Personnel Management. The Office shall have the 
authority to direct such placement in any agency.
  (e) Notwithstanding section 3394(b) and section 3395--
          (1) a limited term appointee serving under a term 
        prescribed under this section may be reassigned to 
        another Senior Executive Service position in the 
        Administration, the duties of which will expire at the 
        end of a term of 4 years or less; and
          (2) a limited term appointee serving under a term 
        prescribed under this section may be reassigned to 
        another continuing Senior Executive Service position in 
        the Administration, except that the appointee may not 
        serve in 1 or more positions in the Administration 
        under such appointment in excess of 1 year, except that 
        in rare circumstances, the Administrator may approve an 
        extension up to an additional 1 year.
  (f) A limited term appointee may not serve more than 7 
consecutive years under any combination of limited 
appointments.
  (g) Notwithstanding section 5384, the Administrator may 
authorize performance awards to limited term appointees in the 
Administration in the same amounts and in the same manner as 
career appointees.

Sec. 9838. Superior qualifications pay

  (a) In this section the term ``employee'' means an employee 
as defined under section 2105 who is employed by the 
Administration.
  (b) Notwithstanding section 5334, the Administrator may set 
the pay of an employee paid under the General Schedule at any 
step within the pay range for the grade of the position, based 
on the superior qualifications of the employee, or the special 
need of the Administration.
  (c) If an exercise of the authority under this section 
relates to a current employee selected for another position 
within the Administration, a determination shall be made that 
the employee's contribution in the new position will exceed 
that in the former position, before setting pay under this 
section.
  (d) Pay as set under this section is basic pay for such 
purposes as pay set under section 5334.
  (e) If the employee serves for at least 1 year in the 
position for which the pay determination under this section was 
made, or a successor position, the pay earned under such 
position may be used in succeeding actions to set pay under 
chapter 53.
  (f) The Administrator may waive the restrictions in 
subsection (e), based on criteria established in the plan 
required under subsection (g).
  (g) Before setting any employee's pay under this section, the 
Administrator shall submit a plan to the Office of Personnel 
Management, that includes--
          (1) criteria for approval of actions to set pay under 
        this section;
          (2) the level of approval required to set pay under 
        this section;
          (3) all types of actions and positions to be covered;
          (4) the relationship between the exercise of 
        authority under this section and the use of other pay 
        incentives; and
          (5) a process to evaluate the effectiveness of this 
        section.

  CHAPTER 99--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

Sec.
9901. Definitions.
9902. Establishment of human resources management system.
9903. Attracting highly qualified experts.
9904. Employment of older Americans.
9905. Special pay and benefits for certain employees outside the United 
          States.

Sec. 9901. Definitions

  For purposes of this chapter--
          (1) the term ``Director'' means the Director of the 
        Office of Personnel Management; and
          (2) the term ``Secretary'' means the Secretary of 
        Defense.

Sec. 9902. Establishment of human resources management system

  (a) In General.--Notwithstanding any other provision of this 
part, the Secretary may, in regulations prescribed jointly with 
the Director, establish, and from time to time adjust, a human 
resources management system for some or all of the 
organizational or functional units of the Department of 
Defense. If the Secretary certifies that issuance or adjustment 
of a regulation, or the inclusion, exclusion, or modification 
of a particular provision therein, is essential to the national 
security, the Secretary may, subject to the decision of the 
President, waive the requirement in the preceding sentence that 
the regulation or adjustment be issued jointly with the 
Director.
  (b) System Requirements.--Any system established under 
subsection (a) shall--
          (1) be flexible;
          (2) be contemporary;
          (3) not waive, modify, or otherwise affect--
                  (A) the public employment principles of merit 
                and fitness set forth in section 2301, 
                including the principles of hiring based on 
                merit, fair treatment without regard to 
                political affiliation or other nonmerit 
                considerations, equal pay for equal work, and 
                protection of employees against reprisal for 
                whistleblowing;
                  (B) any provision of section 2302, relating 
                to prohibited personnel practices;
                  (C)(i) any provision of law referred to in 
                section 2302(b)(1), (8), and (9); or
                  (ii) any provision of law implementing any 
                provision of law referred to in section 
                2302(b)(1), (8), and (9) by--
                          (I) providing for equal employment 
                        opportunity through affirmative action; 
                        or
                          (II) providing any right or remedy 
                        available to any employee or applicant 
                        for employment in the public service;
                  (D) any other provision of this part (as 
                described in subsection (c)); or
                  (E) any rule or regulation prescribed under 
                any provision of law referred to in this 
                paragraph;
          (4) ensure that employees may organize, bargain 
        collectively as provided for in this chapter, and 
        participate through labor organizations of their own 
        choosing in decisions which affect them, subject to the 
        provisions of this chapter and any exclusion from 
        coverage or limitation on negotiability established 
        pursuant to law;
          (5) not be limited by any specific law or authority 
        under this title that is waivable under this chapter or 
        by any provision of this chapter or any rule or 
        regulation prescribed under this title that is waivable 
        under this chapter, except as specifically provided for 
        in this section; and
          (6) include a performance management system that 
        incorporates the following elements:
                  (A) adherence to merit principles set forth 
                in section 2301;
                  (B) a fair, credible, and transparent 
                employee performance appraisal system;
                  (C) a link between the performance management 
                system and the agency's strategic plan;
                  (D) a means for ensuring employee involvement 
                in the design and implementation of the system;
                  (E) adequate training and retraining for 
                supervisors, managers, and employees in the 
                implementation and operation of the performance 
                management system;
                  (F) a process for ensuring ongoing 
                performance feedback and dialogue between 
                supervisors, managers, and employees throughout 
                the appraisal period, and setting timetables 
                for review;
                  (G) effective safeguards to ensure that the 
                management of the system is fair and equitable 
                and based on employee performance; and
                  (H) a means for ensuring that adequate agency 
                resources are allocated for the design, 
                implementation, and administration of the 
                performance management system.
  (c) Other Nonwaivable Provisions.--The other provisions of 
this part referred to in subsection (b)(3)(D) are (to the 
extent not otherwise specified in this title)--
          (1) subparts A, B, E, G, and H of this part; and
          (2) chapters 41, 45, 47, 55 (except subchapter V 
        thereof), 57, 59, 72, 73, and 79, and this chapter.
  (d) Limitations Relating to Pay.--(1) Nothing in this section 
shall constitute authority to modify the pay of any employee 
who serves in an Executive Schedule position under subchapter 
II of chapter 53 of this title.
  (2) Except as provided for in paragraph (1), the total amount 
in a calendar year of allowances, differentials, bonuses, 
awards, or other similar cash payments paid under this title to 
any employee who is paid under section 5376 or 5383 of this 
title or under title 10 or under other comparable pay authority 
established for payment of Department of Defense senior 
executive or equivalent employees may not exceed the total 
annual compensation payable to the Vice President under section 
104 of title 3.
  (3) To the maximum extent practicable, the rates of 
compensation for civilian employees at the Department of 
Defense shall be adjusted at the same rate, and in the same 
proportion, as are rates of compensation for members of the 
uniformed services.
  (e) Provisions To Ensure Collaboration With Employee 
Representatives.--(1) In order to ensure that the authority of 
this section is exercised in collaboration with, and in a 
manner that ensures the participation of, employee 
representatives in the planning, development, and 
implementation of any human resources management system or 
adjustments to such system under this section, the Secretary 
and the Director shall provide for the following:
          (A) The Secretary and the Director shall, with 
        respect to any proposed system or adjustment--
                  (i) provide to the employee representatives 
                representing any employees who might be 
                affected a written description of the proposed 
                system or adjustment (including the reasons why 
                it is considered necessary);
                  (ii) give such representatives at least 30 
                calendar days (unless extraordinary 
                circumstances require earlier action) to review 
                and make recommendations with respect to the 
                proposal; and
                  (iii) give any recommendations received from 
                such representatives under clause (ii) full and 
                fair consideration in deciding whether or how 
                to proceed with the proposal.
          (B) Following receipt of recommendations, if any, 
        from such employee representatives with respect to a 
        proposal described in subparagraph (A), the Secretary 
        and the Director shall accept such modifications to the 
        proposal in response to the recommendations as they 
        determine advisable and shall, with respect to any 
        parts of the proposal as to which they have not 
        accepted the recommendations--
                  (i) notify Congress of those parts of the 
                proposal, together with the recommendations of 
                the employee representatives;
                  (ii) meet and confer for not less than 30 
                calendar days with the employee 
                representatives, in order to attempt to reach 
                agreement on whether or how to proceed with 
                those parts of the proposal; and
                  (iii) at the Secretary's option, or if 
                requested by a majority of the employee 
                representatives participating, use the services 
                of the Federal Mediation and Conciliation 
                Service during such meet and confer period to 
                facilitate the process of attempting to reach 
                agreement.
          (C)(i) Any part of the proposal as to which the 
        representatives do not make a recommendation, or as to 
        which the recommendations are accepted by the Secretary 
        and the Director, may be implemented immediately.
          (ii) With respect to any parts of the proposal as to 
        which recommendations have been made but not accepted 
        by the Secretary and the Director, at any time after 30 
        calendar days have elapsed since the initiation of the 
        congressional notification, consultation, and mediation 
        procedures set forth in subparagraph (B), if the 
        Secretary, in his discretion, determines that further 
        consultation and mediation is unlikely to produce 
        agreement, the Secretary may implement any or all of 
        such parts (including any modifications made in 
        response to the recommendations as the Secretary 
        determines advisable), but only after 30 days have 
        elapsed after notifying Congress of the decision to 
        implement the part or parts involved (as so modified, 
        if applicable).
          (iii) The Secretary shall notify Congress promptly of 
        the implementation of any part of the proposal and 
        shall furnish with such notice an explanation of the 
        proposal, any changes made to the proposal as a result 
        of recommendations from the employee representatives, 
        and of the reasons why implementation is appropriate 
        under this subparagraph.
          (D) If a proposal described in subparagraph (A) is 
        implemented, the Secretary and the Director shall--
                  (i) develop a method for the employee 
                representatives to participate in any further 
                planning or development which might become 
                necessary; and
                  (ii) give the employee representatives 
                adequate access to information to make that 
                participation productive.
  (2) The Secretary may, at the Secretary's discretion, engage 
in any and all collaboration activities described in this 
subsection at an organizational level above the level of 
exclusive recognition.
  (3) In the case of any employees who are not within a unit 
with respect to which a labor organization is accorded 
exclusive recognition, the Secretary and the Director may 
develop procedures for representation by any appropriate 
organization which represents a substantial percentage of those 
employees or, if none, in such other manner as may be 
appropriate, consistent with the purposes of this subsection.
  (f) Provisions Regarding National Level Bargaining.--(1) Any 
human resources management system implemented or modified under 
this chapter may include employees of the Department of Defense 
from any bargaining unit with respect to which a labor 
organization has been accorded exclusive recognition under 
chapter 71 of this title.
  (2) For any bargaining unit so included under paragraph (1), 
the Secretary may bargain at an organizational level above the 
level of exclusive recognition. Any such bargaining shall--
          (A) be binding on all subordinate bargaining units at 
        the level of recognition and their exclusive 
        representatives, and the Department of Defense and its 
        subcomponents, without regard to levels of recognition;
          (B) supersede all other collective bargaining 
        agreements, including collective bargaining agreements 
        negotiated with an exclusive representative at the 
        level of recognition, except as otherwise determined by 
        the Secretary;
          (C) not be subject to further negotiations for any 
        purpose, including bargaining at the level of 
        recognition, except as provided for by the Secretary; 
        and
          (D) except as otherwise specified in this chapter, 
        not be subject to review or to statutory third-party 
        dispute resolution procedures outside the Department of 
        Defense.
  (3) The National Guard Bureau and the Army and Air Force 
National Guard are excluded from coverage under this 
subsection.
  (4) Any bargaining completed pursuant to this subsection with 
a labor organization not otherwise having national consultation 
rights with the Department of Defense or its subcomponents 
shall not create any obligation on the Department of Defense or 
its subcomponents to confer national consultation rights on 
such a labor organization.
  (g) Provisions Relating to Appellate Procedures.--(1) The 
Secretary shall--
          (A) establish an appeals process that provides that 
        employees of the Department of Defense are entitled to 
        fair treatment in any appeals that they bring in 
        decisions relating to their employment; and
          (B) in prescribing regulations for any such appeals 
        process--
                  (i) ensure that employees of the Department 
                of Defense are afforded the protections of due 
                process; and
                  (ii) toward that end, be required to consult 
                with the Merit Systems Protection Board before 
                issuing any such regulations.
  (2) Any regulations establishing the appeals process required 
by paragraph (1) that relate to any matters within the purview 
of chapter 77 shall--
          (A) provide for an independent review panel, 
        appointed by the President, which shall not include the 
        Secretary or the Deputy Secretary of Defense or any of 
        their subordinates;
          (B) be issued only after--
                  (i) notification to the appropriate 
                committees of Congress; and
                  (ii) consultation with the Merit Systems 
                Protection Board and the Equal Employment 
                Opportunity Commission;
          (C) ensure the availability of procedures that--
                  (i) are consistent with requirements of due 
                process; and
                  (ii) provide, to the maximum extent 
                practicable, for the expeditious handling of 
                any matters involving the Department of 
                Defense; and
          (D) modify procedures under chapter 77 only insofar 
        as such modifications are designed to further the fair, 
        efficient, and expeditious resolution of matters 
        involving the employees of the Department of Defense.
  (h) Provisions Related to Separation and Retirement 
Incentives.--(1) The Secretary may establish a program within 
the Department of Defense under which employees may be eligible 
for early retirement, offered separation incentive pay to 
separate from service voluntarily, or both. This authority may 
be used to reduce the number of personnel employed by the 
Department of Defense or to restructure the workforce to meet 
mission objectives without reducing the overall number of 
personnel. This authority is in addition to, and 
notwithstanding, any other authorities established by law or 
regulation for such programs.
  (2) For purposes of this section, the term ``employee'' means 
an employee of the Department of Defense, serving under an 
appointment without time limitation, except that such term does 
not include--
          (A) a reemployed annuitant under subchapter III of 
        chapter 83 or chapter 84 of this title, or another 
        retirement system for employees of the Federal 
        Government;
          (B) an employee having a disability on the basis of 
        which such employee is or would be eligible for 
        disability retirement under any of the retirement 
        systems referred to in paragraph (1); or
          (C) for purposes of eligibility for separation 
        incentives under this section, an employee who is in 
        receipt of a decision notice of involuntary separation 
        for misconduct or unacceptable performance.
  (3) An employee who is at least 50 years of age and has 
completed 20 years of service, or has at least 25 years of 
service, may, pursuant to regulations promulgated under this 
section, apply and be retired from the Department of Defense 
and receive benefits in accordance with chapter 83 or 84 if the 
employee has been employed continuously within the Department 
of Defense for more than 30 days before the date on which the 
determination to conduct a reduction or restructuring within 1 
or more Department of Defense components is approved pursuant 
to the program established under subsection (a).
  (4)(A) Separation pay shall be paid in a lump sum or in 
installments and shall be equal to the lesser of--
          (i) an amount equal to the amount the employee would 
        be entitled to receive under section 5595(c) of this 
        title, if the employee were entitled to payment under 
        such section; or
          (ii) $25,000.
  (B) Separation pay shall not be a basis for payment, and 
shall not be included in the computation, of any other type of 
Government benefit. Separation pay shall not be taken into 
account for the purpose of determining the amount of any 
severance pay to which an individual may be entitled under 
section 5595 of this title, based on any other separation.
  (C) Separation pay, if paid in installments, shall cease to 
be paid upon the recipient's acceptance of employment by the 
Federal Government, or commencement of work under a personal 
services contract as described in paragraph (5).
  (5)(A) An employee who receives separation pay under such 
program may not be reemployed by the Department of Defense for 
a 12-month period beginning on the effective date of the 
employee's separation, unless this prohibition is waived by the 
Secretary on a case-by-case basis.
  (B) An employee who receives separation pay under this 
section on the basis of a separation occurring on or after the 
date of the enactment of the Federal Workforce Restructuring 
Act of 1994 (Public Law 103-236; 108 Stat. 111) and accepts 
employment with the Government of the United States, or who 
commences work through a personal services contract with the 
United States within 5 years after the date of the separation 
on which payment of the separation pay is based, shall be 
required to repay the entire amount of the separation pay to 
the Department of Defense. If the employment is with an 
Executive agency (as defined by section 105 of this title) 
other than the Department of Defense, the Director may, at the 
request of the head of that agency, waive the repayment if the 
individual involved possesses unique abilities and is the only 
qualified applicant available for the position. If the 
employment is within the Department of Defense, the Secretary 
may waive the repayment if the individual involved is the only 
qualified applicant available for the position. If the 
employment is with an entity in the legislative branch, the 
head of the entity or the appointing official may waive the 
repayment if the individual involved possesses unique abilities 
and is the only qualified applicant available for the position. 
If the employment is with the judicial branch, the Director of 
the Administrative Office of the United States Courts may waive 
the repayment if the individual involved possesses unique 
abilities and is the only qualified applicant available for the 
position.
  (6) Under this program, early retirement and separation pay 
may be offered only pursuant to regulations established by the 
Secretary, subject to such limitations or conditions as the 
Secretary may require.
  (i) Provisions Relating to Reemployment.--If annuitant 
receiving an annuity from the Civil Service Retirement and 
Disability Fund becomes employed in a position within the 
Department of Defense, his annuity shall continue. An annuitant 
so reemployed shall not be considered an employee for purposes 
of chapter 83 or 84.
  (j) Provisions Relating to Hiring.--Notwithstanding 
subsection (c), the Secretary may exercise any hiring 
flexibilities that would otherwise be available to the 
Secretary under section 4703.

Sec. 9903. Attracting highly qualified experts

  (a) In General.--The Secretary may carry out a program using 
the authority provided in subsection (b) in order to attract 
highly qualified experts in needed occupations, as determined 
by the Secretary.
  (b) Authority.--Under the program, the Secretary may--
          (1) appoint personnel from outside the civil service 
        and uniformed services (as such terms are defined in 
        section 2101 of this title) to positions in the 
        Department of Defense without regard to any provision 
        of this title governing the appointment of employees to 
        positions in the Department of Defense;
          (2) prescribe the rates of basic pay for positions to 
        which employees are appointed under paragraph (1) at 
        rates not in excess of the maximum rate of basic pay 
        authorized for senior-level positions under section 
        5376 of this title, as increased by locality-based 
        comparability payments under section 5304 of this 
        title, notwithstanding any provision of this title 
        governing the rates of pay or classification of 
        employees in the executive branch; and
          (3) pay any employee appointed under paragraph (1) 
        payments in addition to basic pay within the limits 
        applicable to the employee under subsection (d).
  (c) Limitation on Term of Appointment.--(1) Except as 
provided in paragraph (2), the service of an employee under an 
appointment made pursuant to this section may not exceed 5 
years.
  (2) The Secretary may, in the case of a particular employee, 
extend the period to which service is limited under paragraph 
(1) by up to 1 additional year if the Secretary determines that 
such action is necessary to promote the Department of Defense's 
national security missions.
  (d) Limitations on Additional Payments.--(1) The total amount 
of the additional payments paid to an employee under this 
section for any 12-month period may not exceed the lesser of 
the following amounts:
          (A) $50,000 in fiscal year 2004, which may be 
        adjusted annually thereafter by the Secretary, with a 
        percentage increase equal to one-half of 1 percentage 
        point less than the percentage by which the Employment 
        Cost Index, published quarterly by the Bureau of Labor 
        Statistics, for the base quarter of the year before the 
        preceding calendar year exceeds the Employment Cost 
        Index for the base quarter of the second year before 
        the preceding calendar year.
          (B) The amount equal to 50 percent of the employee's 
        annual rate of basic pay.
For purposes of this paragraph, the term ``base quarter'' has 
the meaning given such term by section 5302(3).
  (2) An employee appointed under this section is not eligible 
for any bonus, monetary award, or other monetary incentive for 
service except for payments authorized under this section.
  (3) Notwithstanding any other provision of this subsection or 
of section 5307, no additional payments may be paid to an 
employee under this section in any calendar year if, or to the 
extent that, the employee's total annual compensation will 
exceed the maximum amount of total annual compensation payable 
at the salary set in accordance with section 104 of title 3.
  (e) Savings Provisions.--In the event that the Secretary 
terminates this program, in the case of an employee who, on the 
day before the termination of the program, is serving in a 
position pursuant to an appointment under this section--
          (1) the termination of the program does not terminate 
        the employee's employment in that position before the 
        expiration of the lesser of--
                  (A) the period for which the employee was 
                appointed; or
                  (B) the period to which the employee's 
                service is limited under subsection (c), 
                including any extension made under this section 
                before the termination of the program; and
          (2) the rate of basic pay prescribed for the position 
        under this section may not be reduced as long as the 
        employee continues to serve in the position without a 
        break in service.

Sec. 9904. Employment of older Americans

  (a) In General.--Notwithstanding any other provision of law, 
the Secretary may appoint older Americans into positions in the 
excepted service for a period not to exceed 2 years, provided 
that--
          (1) any such appointment shall not result in--
                  (A) the displacement of individuals currently 
                employed by the Department of Defense 
                (including partial displacement through 
                reduction of nonovertime hours, wages, or 
                employment benefits); or
                  (B) the employment of any individual when any 
                other person is in a reduction-in-force status 
                from the same or substantially equivalent job 
                within the Department of Defense; and
          (2) the individual to be appointed is otherwise 
        qualified for the position, as determined by the 
        Secretary.
  (b) Effect on Existing Retirement Benefits.--Notwithstanding 
any other provision of law, an individual appointed pursuant to 
subsection (a) who otherwise is receiving an annuity, pension, 
social security payment, retired pay, or other similar payment 
shall not have the amount of said annuity, pension, social 
security, or other similar payment reduced as a result of such 
employment.
  (c) Extension of Appointment.--Notwithstanding subsection 
(a), the Secretary may extend an appointment made pursuant to 
this section for up to an additional 2 years if the individual 
employee possesses unique knowledge or abilities that are not 
otherwise available to the Department of Defense.
  (d) Definition.--For purposes of this section, the term 
``older American'' means any citizen of the United States who 
is at least 55 years of age.

Sec. 9905. Special pay and benefits for certain employees outside the 
                    United States

  The Secretary may provide to certain civilian employees of 
the Department of Defense assigned to activities outside the 
United States as determined by the Secretary to be in support 
of Department of Defense activities abroad hazardous to life or 
health or so specialized because of security requirements as to 
be clearly distinguishable from normal Government employment--
          (1) allowances and benefits--
                  (A) comparable to those provided by the 
                Secretary of State to members of the Foreign 
                Service under chapter 9 of title I of the 
                Foreign Service Act of 1980 (Public Law 96-465, 
                22 U.S.C. 4081 et seq.) or any other provision 
                of law; or
                  (B) comparable to those provided by the 
                Director of Central Intelligence to personnel 
                of the Central Intelligence Agency; and
          (2) special retirement accrual benefits and 
        disability in the same manner provided for by the 
        Central Intelligence Agency Retirement Act (50 U.S.C. 
        2001 et seq.) and in section 18 of the Central 
        Intelligence Agency Act of 1949 (50 U.S.C. 403r).
                              ----------                              


TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *


PART I--CRIMES

           *       *       *       *       *       *       *


CHAPTER 11--BRIBERY, GRAFT, AND CONFLICTS OF INTEREST

           *       *       *       *       *       *       *


Sec. 207. Restrictions on former officers, employees, and elected 
                    officials of the executive and legislative branches

  (a)  * * *

           *       *       *       *       *       *       *

  (c) One-Year Restrictions on Certain Senior Personnel of the 
Executive Branch and Independent Agencies.--
          (1)  * * *
          (2) Persons to whom restrictions apply.--(A) 
        Paragraph (1) shall apply to a person (other than a 
        person subject to the restrictions of subsection (d))--
                  (i)  * * *
                  [(ii) employed in a position which is not 
                referred to in clause (i) and for which the 
                basic rate of pay, exclusive of any locality-
                based pay adjustment under section 5302 of 
                title 5 (or any comparable adjustment pursuant 
                to interim authority of the President), is 
                equal to or greater than the rate of basic pay 
                payable for level 5 of the Senior Executive 
                Service,]
                  (ii) employed in a position which is not 
                referred to in clause (i) and for which that 
                person is paid at a rate of basic pay which is 
                equal to or greater than 96 percent of the rate 
                of basic pay for level II of the Executive 
                Schedule, or, for a period of 2 years following 
                the enactment of the Federal Employees Pay for 
                Performance Act of 2003, a person who, on the 
                day prior to the enactment of that Act, was 
                employed in a position which is not referred to 
                in clause (i) and for which the rate of basic 
                pay, exclusive of any locality-based pay 
                adjustment under section 5304 or section 5304a 
                of title 5, was equal to or greater than the 
                rate of basic pay payable for level 5 of the 
                Senior Executive Service on the day prior to 
                the enactment of that Act,

           *       *       *       *       *       *       *

                  (v) assigned from a private sector 
                organization to an agency under chapter 37 or 
                section 9832 of title 5.

           *       *       *       *       *       *       *

  (l) Contract Advice by Former Details.--Whoever, being an 
employee of a private sector organization assigned to an agency 
under chapter 37 or section 9832 of title 5, within one year 
after the end of that assignment, knowingly represents or aids, 
counsels, or assists in representing any other person (except 
the United States) in connection with any contract with that 
agency shall be punished as provided in section 216 of this 
title.

           *       *       *       *       *       *       *


Sec. 209. Salary of Government officials and employees payable only by 
                    United States

  (a)  * * *

           *       *       *       *       *       *       *

  (h) This section does not prohibit an employee of a private 
sector organization, while assigned to the National Aeronautics 
and Space Administration under section 9832 of title 5, from 
continuing to receive pay and benefits from that organization 
in accordance with section 9832 of that title.

           *       *       *       *       *       *       *


CHAPTER 93--PUBLIC OFFICERS AND EMPLOYEES

           *       *       *       *       *       *       *


Sec. 1905. Disclosure of confidential information generally

  Whoever, being an officer or employee of the United States or 
of any department or agency thereof, any person acting on 
behalf of the Office of Federal Housing Enterprise Oversight, 
or agent of the Department of Justice as defined in the 
Antitrust Civil Process Act (15 U.S.C. 1311-1314), or being an 
employee of a private sector organization who is or was 
assigned to an agency under chapter 37 or section 9832 of title 
5, publishes, divulges, discloses, or makes known in any manner 
or to any extent not authorized by law any information coming 
to him in the course of his employment or official duties or by 
reason of any examination or investigation made by, or return, 
report or record made to or filed with, such department or 
agency or officer or employee thereof, which information 
concerns or relates to the trade secrets, processes, 
operations, style of work, or apparatus, or to the identity, 
confidential statistical data, amount or source of any income, 
profits, losses, or expenditures of any person, firm, 
partnership, corporation, or association; or permits any income 
return or copy thereof or any book containing any abstract or 
particulars thereof to be seen or examined by any person except 
as provided by law; shall be fined under this title, or 
imprisoned not more than one year, or both; and shall be 
removed from office or employment.

           *       *       *       *       *       *       *

                              ----------                              


     SECTION 203 OF THE NATIONAL AERONAUTICS AND SPACE ACT OF 1958

                    FUNCTIONS OF THE ADMINISTRATION

  Sec. 203. (a)  * * *

           *       *       *       *       *       *       *

  (c) In the performance of its functions the Administration is 
authorized--
          (1)  * * *
          (2) to appoint and fix the compensation of such 
        officers and employees as may be necessary to carry out 
        such functions. Such officers and employees shall be 
        appointed in accordance with the civil-service laws and 
        their compensation fixed in accordance with the 
        Classification Act of 1949, except that (A) to the 
        extent the Administrator deems such action necessary to 
        the discharge of his responsibilities, he may appoint 
        not more than four hundred and twenty-five of the 
        scientific, engineering, and administrative personnel 
        of the Administration without regard to such laws, and 
        may fix the compensation of such personnel not in 
        excess of [the highest rate of grade 18 of the General 
        Schedule of the Classification Act of 1949, as 
        amended,] the rate of basic pay payable for level III 
        of the Executive Schedule, and (B) to the extent the 
        Administrator deems such action necessary to recruit 
        specially qualified scientific and engineering talent, 
        he may establish the entrance grade for scientific and 
        engineering personnel without previous service in the 
        Federal Government at a level up to two grades higher 
        than the grade provided for such personnel under the 
        General Schedule established by the Classification Act 
        of 1949, and fix their compensation accordingly;

           *       *       *       *       *       *       *

                              ----------                              


               SECTION 125 OF THE ACT OF JANUARY 8, 1988

AN ACT Making technical corrections relating to the Federal Employees' 
               Retirement System, and for other purposes.

SEC. 125. ELIGIBILITY OF CERTAIN INDIVIDUALS TO PARTICIPATE IN THE 
                    THRIFT SAVINGS PLAN.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Applicability.--This section applies with respect to--
          (1) any individual participating in the Civil Service 
        Retirement System or the Federal Employees' Retirement 
        System as--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) an individual appointed or otherwise 
                assigned to one of the cooperative extension 
                services, as defined by section 1404(5) of the 
                National Agricultural Research, Extension, and 
                Teaching Policy Act of 1977 (7 U.S.C. 3103(5)); 
                [or]
                  (D) an individual assigned from a Federal 
                agency to a private sector organization under 
                chapter 37 of title 5, United States Code; 
                [and] or
                  (E) an individual assigned from the National 
                Aeronautics and Space Administration to a 
                private sector organization under section 9832 
                of title 5, United States Code; and

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    Over the past century, Congress has developed a 
comprehensive set of laws to prevent the patronage system that 
ruled the federal government during the first 100 years of the 
country's existence. Until the Civil Service Act of 1883, 
federal jobs were often awarded through the spoils system. 
Civil service jobs went to supporters of elected officials and 
loyal party members, which often led to incompetence and 
corruption.
    With the passage of H.R. 1836, this Committee has embarked 
on the path of reversing many of the legislative reforms of the 
past century. The bill strips away fundamental rights from 
almost 700,000 civilian employees at the Department of Defense 
(DoD)--approximately one-third of all federal civilian 
employees. The bill also opens the door for the rest of the 
federal workforce to have their rights taken away as well.
    We agree that DoD needs certain flexibilities to allow it 
to operate more effectively and more efficiently. We want the 
strongest possible national defense and are willing to give DoD 
the tools it needs to modernize its workforce. However, H.R. 
1836 goes well beyond those flexibilities by giving DoD a 
blanket waiver from large parts of the civil service laws.
    In two hearings before the Committee, DoD witnesses 
provided virtually no details about how it would exercise these 
flexibilities and no rationale for why statutory protections of 
employee rights should be waived. Often, the only rationale DoD 
provided for such waivers was that the Department of Homeland 
Security received the same waivers last year. However, the 
creation of the Homeland Security Department was a unique 
situation involving the combination of more than 20 different 
agencies from different parts of the federal government. 
Congress reasoned that the new Secretary of Homeland Security 
needed flexibilities to quickly organize the different 
components and functions. The Homeland Security Department was 
an experiment, not a precedent.
    The bill approved by the Committee on a party-line vote is 
an improvement over the proposal initially submitted by DoD. On 
balance, however, H.R. 1836 still gives far too little 
direction to DoD without providing any meaningful safeguards to 
employees.
    Our views on specific provisions in H.R. 1836 and the 
Committee's process for considering the bill are set forth 
below.

                   I. EXPEDITED CONSIDERATION OF BILL

    Members of the Committee on both sides of the aisle argued 
that a bill of this magnitude deserves careful and thoughtful 
consideration by Congress. However, DoD did not send its 
personnel proposal to Congress until April 10, 2003, and the 
bill was not introduced until April 29, 2003.
    Prior to marking up the bill, the Committee held only one 
subcommittee hearing and one full committee hearing--both in 
the eight days prior to the markup. Eight days was not enough 
time to consider a bill that will affect one-third of federal 
civilianemployees and will likely become the de factor 
personnel system for the entire federal government. At the subcommittee 
hearing, Chairwoman Jo Ann Davis stated: ``We're doing this so quickly 
and so fast that I can't say I'm very comfortable. I'm not anxious to 
run forward and vote for something when I just don't know what it's 
going to do to 700,000 people. * * * I think we're all concerned with 
the sweeping power that would be given.''
    DoD also failed to consult with interested parties about 
its legislative proposal. DoD never formally consulted with 
unions representing DoD employees during the development of the 
proposal. We also were not briefed on the proposal until after 
it was submitted to Congress.
    Finally, we believe this bill is premature because the 
personnel provisions of the Homeland Security Act--the 
precedent for many of the changes sought by DoD--have not been 
implemented. Congress should wait until the Department of 
Homeland Security has implemented its new personnel system, 
before deciding that this novel approach should be extended to 
other agencies.

                        II. PERSONNEL PROVISIONS

    We believe that H.R. 1836 provides a blank check to DoD to 
create a new personnel system for its almost 700,000 civilian 
employees without providing any details about what it would do. 
DoD has stated only that the new personnel system would be 
based on: (1) existing demonstration projects within the 
Department; and (2) DoD's civilian human resources strategic 
plan.
    Existing DoD demonstration projects cover approximately 
30,000 employees, many of whom are scientists and engineers, at 
research labs. It is an open question as to whether these 
limited demonstration projects can be extrapolated to a more 
diverse workforce that is over 20 times larger the 
demonstration projects. At a minimum, more research is needed 
before DoD is granted such broad pay and hiring flexibilities.
    DoD's reliance on its human resources strategic plan is 
also problematic. In a report issued in March 2003 GAO found 
DoD's strategic plan to be wholly inadequate:

          The human capital strategic plans GAO reviewed for 
        the most part lacked key elements found in fully 
        developed plans. Most of the civilian human capital 
        goals, objectives, and initiatives were not explicitly 
        aligned with the overreaching missions of the 
        organizations. Consequently, DoD and the components 
        cannot be sure that strategic goals are properly 
        focused on mission achievement. Also, none of the plans 
        contained results--oriented performance measure to 
        assess the impact of their civilian human capital 
        initiatives (i.e., programs, policies, and processes). 
        Thus, DoD and the components cannot gauge the extent to 
        which their human capital initiatives contribute to 
        achieving their organizations' mission. Finally, the 
        plans did not contain data on the skills and 
        competencies needed to successfully accomplish future 
        mission; therefore, DoD and thecomponents risk not 
being able to put the right people, in the right place, and at the 
right time, which can result in diminished accomplishments of the 
overall defense mission. * * * Moreover, the civilian strategic plans 
did not address how the civilian workforce will be integrated with 
their military counterparts or sourcing initiatives.\1\
---------------------------------------------------------------------------
    \1\ General Accounting Office, DOD Actions Needed to Strengthen 
Civilian Human Capital Strategic Planning and Integration with Military 
Personnel and Sourcing Decisions (Mar. 2003) (GAO-03-475).

    At the Civil Service Subcommittee hearing, Comptroller 
General David Walker underscored these points, testifying that 
he had ``serious concerns'' about the proposal and that the 
Pentagon needs to improve its management systems to demonstrate 
that adequate safeguards would be in place to minimize the 
chance of abuse. Mr. Walker testified: ``Unfortunately, based 
on GAO's past work most existing federal performance appraisal 
systems, including a vast majority of DoD's system, are not 
currently designed to support systems, including a vast 
majority of DoD's system, are not currently designed to support 
a meaningful performance-based pay system.''
    Despite GAO's criticisms of DoD's human resources strategic 
plan--and DoD's failure to adequately address these 
criticisms--H.R. 1836 essentially allows the Department to 
implement a new personnel system modeled after the strategic 
plan.
    Of equal concern is DoD's inability to justify the need for 
these sweeping flexibilities. At the subcommittee hearing, 
Undersecretary of Defense David Chu testified that the new 
personnel system would make DoD into a more ``agile'' force but 
was unable to explain how the current personnel system had in 
any way hindered DoD's efforts to wage war in Iraq.
    Based on pre-markup negotiations and amendments passed 
during the markup, several changes were made to the initial 
proposal submitted by DoD in April. Some of these changes 
improved the bill. Most significantly, the number of waivable 
chapters under Title 5 of the U.S. Code was scaled back from 12 
provisions in the original DoD proposal to the six chapters 
that were waived in the homeland security bill. A provision 
exempting the DoD personnel regulations from notice and comment 
requirements was dropped. A provision allowing the Defense 
Secretary to invoke national security and trump the Office of 
Personnel Management was modified to require that the national 
security exception be the President's decision. And standards 
were added to the bill to require that a performance-based pay 
system incorporate elements of accountability and transparency.
    Nevertheless, efforts by minority members to improve the 
bill during the markup were rejected on party-line votes. 
Minority amendments were defeated that would have: required DoD 
to submit a legislative proposal detailing its new personnel 
system prior to any authorities being granted; limited any new 
flexibilities only to DoD managers; and required DoD to receive 
an unqualified audit opinion before it could exercise any 
authorities.

              III. LACK OF PROTECTION FOR EMPLOYEE RIGHTS

    In its proposal, DoD sought a complete waiver from four 
chapters of the Title 5 of U.S. Code that protect fundamental 
rights of federal employees.
    DoD sought waivers from Chapters 43, 75, and 77, which 
relate to due process and appeal rights. These chapters set 
forth basic employee protections, such as the right to have 
advance notice of suspension or removal, the right to respond 
in writing, the right to be represented by an attorney, and the 
right to a written decision explaining the action. In addition, 
these chapters set forth a procedure for employees to challenge 
personnel actions to the Merit Systems Protection Board (MSPB) 
and the Equal Employment Opportunity Commission (EEOC) and 
receive backpay for wrongful termination actions.
    DoD also sought a waiver from Chapter 71, which relates to 
employees collective bargaining rights. Chapter 71 protects the 
rights of employees to join unions, requires that agencies and 
unions bargain in good faith, and prohibits discrimination 
based on union membership.
    Even as DoD argued for a complete waiver from these 
chapters of Title 5, DoD witnesses continued to maintain that 
they were not revoking the rights contained in these chapters. 
Deputy Defense Secretary Paul Wolfowitz explained:

        [W] are not talking about stripping all of those basic 
        protections of civil service. In fact, we are very much 
        keeping the basic prohibitions on prohibitive personnel 
        practices. We are keeping appeals process in place. We 
        are simply making it easier to hire people that ought 
        to be hired, easier to reward people that ought to be 
        rewarded.

    When Mr. Wolfowitz was asked about employee protections 
against race and sex discrimination, he explained: ``We are 
certainly not trying to change anything in the way that people 
are protected against that kind of discrimination.''
    Notwithstanding DoD's reassurance, the Department's new 
ability to waive Chapters 43, 75, and 77 effectively precludes 
employees from having a statutory remedy to redress employment 
discrimination or wrongful termination actions. DoD has not 
stated what due process and appeals provisions will be adopted 
in place of the current system. The amendment offered by 
Representative McHugh that was adopted by the Committee is an 
improvement upon DoD's initial proposal but still gives the 
Department too much discretion to determine what kind of due 
process and appeal rights will be given to their employees.
    Two amendments by Representative Norton to strengthen the 
due process and appeals provisions were defeated on party-line 
votes. However, the Committee did adopt an amendment by 
Representative Norton to prohibit any DoD employee from serving 
on the new employee appeals panel, thus ensuring the panel's 
independence. Representative Norton's amendment also required 
that the Department consult with EEOC in designing its 
personnel regulations.
    With regard to collective bargaining rights, DoD was unable 
to justify its request for a complete waiver from Chapter 71. 
In only one area--the ability of DoD to bargain with unions at 
the national level, instead of the local level--was the 
Department able to identify a potential problem that needed to 
be addressed. Under Secretary of Defense David Chu explained: 
``[T]here's no proposal here for anyone to lose his or her 
collective bargaining rights. * * * The proposal is designed to 
facilitate bargaining at the national level. That is the 
proposal.'' Mr. Wolfowitz stated: ``I read [the bill] as 
consolidating collective bargaining at the national level. 
Collective bargaining will still be very much a part of the 
process.''
     On the issue of national-level bargaining, we are 
sympathetic to DoD's arguments and are willing to give DoD the 
requested flexibility. However, there was great skepticism 
about DoD waiving all collective bargaining obligations. No 
explanation was given for the need to waive the obligations in 
5 U.S.C. Sec. 7116 that DoD not ``encourage or discourage 
membership in any labor organization by discrimination in 
connection with hiring'' and that DoD ``negotiate in good faith 
with a labor organization.''
    Notwithstanding DoD's statement that it welcomes national-
level bargaining, H.R. 1836 provides no guarantees that DoD 
will engage in collective bargaining at all. The bill requires 
only that the Department engage in ``collaboration'' with 
unions in the development of the new personnel system. If the 
Defense Secretary decides to implement any part of the proposal 
over the objections of labor organizations, the bill gives the 
Secretary the discretion to do so after notifying Congress.
    In those instances in which DoD chooses to engage in 
collective bargaining, the bill specifically removes the 
current requirement that any agency-union impasses be mediated 
by the Federal Services Impasse Panel, whose members are all 
appointed by the President. Without any impasse resolution 
procedure--and without any legal duty to bargain in good 
faith--the Defense Department could always bargain to impasse 
and then unilaterally impose its will on employees.
    Rep. Lynch offered two amendments that would have restored 
Chapter 71 and several key collective bargaining rights. Both 
amendments were defeated on party-line votes.

                       IV. OTHER BILL PROVISIONS

A. SEC provisions

    The Securities and Exchange Commission (SEC) has sought 
flexibilities to hire accountants, economists, and compliance 
examiners to improve oversight of U.S. corporations. We support 
this flexibility but contend that these flexibilities should be 
temporary to meet current hiring needs caused by the passage of 
the Sarbanes-Oxley Act. An amendment by Representative 
Kanjorski to sunset these flexibilities at the end of FY 2008 
was defeated.

B. NASA provisions

    The National Aeronautics and Space Administration (NASA) 
also sought a variety of workforce flexibilities relating to 
greater pay and hiring authority. We believe, however, that it 
is premature to expand NASA's authorities at this time. An 
outside board headed by Admiral Harold Gehman is currently 
investigating the Columbia space shuttle accident and has 
indicated that it is examining whether workforce issues played 
a role in the accident. Until the board issues its report, 
Congress should not grant far-reaching waivers to NASA.
    On the merits of NASA's request, we are most concerned 
about NASA's request to remove the current restriction that 
demonstration projects be limited to no more than 5,000 
employees. This provision would allow NASA to exempt the entire 
agency from most federal civil service laws. We also are 
concerned about a provision in the bill that would allow 
employee exchanges between NASA and outside contractors. This 
provision could give contractors undue influence over NASA's 
operations and might create potential conflict of interest 
problems by allowing private sector detailees to NASA to review 
contract proposals from their competitors.
    The NASA provisions of H.R. 1836 were improved during the 
markup. The Committee accepted an amendment by Representative 
Jo Ann Davis to require NASA to consider employee input into 
any workforce flexibilities employed by the agency. The 
Committee also accepted an amendment by Representative Kucinich 
to prohibit NASA supervisors from receiving more than 15% of 
the relocation, retention, and recruitment bonuses authorized 
under the bill.

C. Hatch Act provision

    The manager's substitute amendment contained a provision 
relating to the Hatch Act that was never discussed with us 
prior to the Committee markup. This provision is intended to 
help one person, Alan White, who is currently being prosecuted 
by the Office of Special Counsel (OSC) for an alleged Hatch Act 
violation. The provision would prevent OSC from prosecuting Mr. 
White, while also prohibiting OSC from publicly discussing the 
case.
    We believe this is a private relief measure that has no 
place in this legislation. The provision also has implications 
beyond Mr. White by creating a loophole for federal employees 
to avoid Hatch Act prosecution. Moreover, the provision imposes 
a ``gag order'' on OSC that will prevent the OSC from 
disclosing information about its cases to the media and public. 
According to OSC, disclosure of enforcement actions and 
accomplishments is important to deter violations and ensure 
accountability.
    On May 13, 2003, Elaine Kaplan, the head of OSC, sent a 
letter to the chairman and ranking minority member of the House 
Armed Services Committee about this provision of H.R. 1836. In 
this letter, Ms. Kaplan states the provision ``would 
significantly undermine OSC's ability to effectively enforce 
compliance with the Hatch Act.'' A copy of this letter is 
attached to these views.

D. Other provisions

    During the markup, the Committee accepted other amendments 
offered by minority members:
     An amendment by Representatives Bell and Lantos 
was passed giving federal employees called up for duty in the 
military reserves the difference between their reserves salary 
and their civilian salary.
     An amendment by Representative Van Hollen was 
passed prohibiting agencies from charging fees to employees for 
setting up flexible spending accounts.
     An amendment by Representative Ruppersberger was 
passed requiring agencies to conduct annual employee surveys.
    In addition, an amendment by Representative Van Hollen was 
defeated which would have provided all federal civilian 
employees with the same pay increases as the military.

                             V. CONCLUSION

    Although we support giving DoD the tools it needs to 
modernize its workforce, we cannot support H.R. 1836 in its 
current form. As reported by the Committee, the bill is a blank 
check to DoD to develop a new personnel system for its almost 
700,000 civilian employees, without providing meaningful 
safeguards for those employees.
                                   Henry A. Waxman.
                                   Tom Lantos.
                                   Major R. Owens.
                                   Edolphus Towns.
                                   Paul E. Kanjorski.
                                   Bernard Sanders.
                                   Carolyn B. Maloney.
                                   Elijah E. Cummings.
                                   Dennis J. Kucinich.
                                   Danny K. Davis.
                                   John F. Tierney.
                                   Wm. Lacy Clay.
                                   Diane E. Watson.
                                   Stephen F. Lynch.
                                   Chris Van Hollen.
                                   Linda T. Sanchez.
                                   C.A. Dutch Ruppersberger.
                                   Eleanor Holmes Norton.
                                   Jim Cooper.
                                   Chris Bell.