[Federal Register Volume 62, Number 85 (Friday, May 2, 1997)]
[Notices]
[Pages 24256-24278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11317]



[[Page 24255]]

_______________________________________________________________________

Part IV





Office of Personnel Management





_______________________________________________________________________



Proposed Demonstration Project; Alternative Personnel Management System 
for the U.S. Department of Commerce; Notice

  Federal Register / Vol. 62, No. 85 / Friday, May 2, 1997 / Notices  

[[Page 24256]]



OFFICE OF PERSONNEL MANAGEMENT


Proposed Demonstration Project; Alternative Personnel Management 
System for the U.S. Department of Commerce

AGENCY: Office of Personnel Management.

ACTION: Notice of a proposed demonstration project plan.

-----------------------------------------------------------------------

SUMMARY: Title VI of the Civil Service Reform Act, now codified in 5 
U.S.C. Chapter 47, authorizes the Office of Personnel Management (OPM) 
to conduct demonstration projects that experiment with new and 
different human resources management concepts to determine whether 
changes in human resources policy or procedures result in improved 
Federal human resources management. This demonstration project is 
designed to replicate many of the features of the National Institute of 
Standards and Technology (NIST) demonstration project created by 
Congress pursuant to the National Bureau of Standards Authorization Act 
for Fiscal Year 1987 (Pub. L. 99-574). This project will cover portions 
of five Department of Commerce organizations:

(1) Office of the Secretary
    --Office of the Chief Financial Officer and Assistant Secretary for 
Administration
    --Office of the General Counsel
(2) Technology Administration
    --Office of the Under Secretary
    --Office of Technology Policy
(3) Economics and Statistics Administration
    --Bureau of Economic Analysis
(4) National Telecommunications and Information Administration
    --Institute for Telecommunications Sciences
(5) National Oceanic and Atmospheric Administration
    --Portions of the Office of Oceanic and Atmospheric Research
    --Portions of the National Environmental Satellite, Data, and 
Information Service
    --Portions of the National Marine Fisheries Service.

DATES: To be considered, written comments must be submitted on or 
before July 10, 1997. Public hearings have been scheduled as follows:

1. Monday, June 9, 1997, 2:00 p.m., in Washington, DC.
2. Monday, June 16, 1997, 10:00 a.m., in Boulder, Colorado.
3. Tuesday, June 17, 1997, 10:00 a.m., in Portland, Oregon.
4. Wednesday, June 18, 1997, 10:00 a.m., in Juneau, Alaska.
5. Thursday, June 26, 1997, 10:00 a.m., in Asheville, North Carolina.

    At the time of the hearings, interested persons or organizations 
may present their written or oral comments on the proposed 
demonstration project. The hearings will be informal. However, anyone 
wishing to testify should contact the person listed under FOR FURTHER 
INFORMATION CONTACT, and state the hearing location, so that OPM can 
plan the hearings and provide sufficient time for all interested 
persons and organizations to be heard. Priority will be given to those 
on the schedule, with others speaking in any remaining available time. 
Each speaker's presentation will be limited to ten minutes. Written 
comments may be submitted to supplement oral testimony during the 
public comment period.

ADDRESSES: Comments may be mailed to Judith B. White, U.S. Office of 
Personnel Management, 1900 E Street, NW., Room 7460, Washington, DC 
20415; public hearings will be held at the following locations:

1. Washington--Herbert C. Hoover Building Auditorium, 14th & C Streets, 
NW., Washington, DC 20230;
2. Boulder--Research Laboratory Building #3, 3100 Marine Street, Room 
620, Boulder, Colorado;
3. Portland--Portland Convention Center, 300 Northeast Multnomah 
Street, Portland, Oregon 97233;
4. Juneau--709 West 9th Street, Room 45C, Juneau, Alaska 99802; and
    5. Asheville--Veech-Bailey Federal Complex, 151 Patton Avenue, Room 
5000, Asheville, North Carolina 28801.

FOR FURTHER INFORMATION CONTACT: (1) On the proposed demonstration 
project: Darlene F. Haywood at the U.S. Department of Commerce, 1400 
Constitution Avenue, NW., Room 5004. Washington, DC 20230, 202-482-
3620; (2) On the proposed demonstration project and public hearings: 
Judith B. White, U.S. Office of Personnel Management, 1900 E Street, 
NW., Room 7460, Washington, DC 20415, 202-606-1526.

SUPPLEMENTARY INFORMATION: The goals of this demonstration project are 
to improve workforce performance and promote mission accomplishment by 
improving the quality of new hires, motivating supervisors and 
employees, retaining good performers, making line managers more 
responsible and accountable for human resources management, and 
improving the effectiveness and efficiency of human resources systems.
James B. King,
Director.

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems with the Present System
    C. Changes Required/Expected Benefits
    D. Participating Organizations
    E. Participating Employees
    F. Labor Participation
    G. Project Design/Methodology
III. Personnel System Changes
    A. Position Classification
    B. Staffing
    C. Reduction-in-Force
    D. Pay Administration
    E. Performance Evaluation and Rewards
IV. Conversion or Movement from a Project Position to a General 
Schedule Position
    A. Grade-Setting Provisions
    B. Pay-Setting Provisions
V. Budget Discipline
    A. Reprogramming Costs
    B. Base Cost Assessment
    C. Funding Pools for Performance Pay Increases and Bonuses
    D. Budget Monitoring
VI. Project Evaluation
VII. Project Management
VIII. Training
    A. Manager and Supervisor Training
    B. Employee Training
    C. Support Staff Training
IX. Experimentation and Revision
X. Authorities and Waiver of Laws and Regulations Required

I. Executive Summary

    This project was designed by the Department of Commerce (DoC) with 
participation and review by the Office of Personnel Management (OPM). 
The demonstration project will pursue several key objectives of the 
National Performance Review: to simplify the current classification 
system for greater flexibility in classifying work and paying 
employees; to establish a performance management and rewards system for 
improving individual and organizational performance; and to improve 
recruiting and examining to attract highly qualified candidates and get 
new hires aboard faster. The duration of the project will be 5 years, 
except that the project may be extended by OPM if further testing and 
evaluation are warranted.
    The proposed project will test whether the interventions of the 
NIST project can be successful in other environments. Other reasons for 
testing the NIST interventions in the Department are: (1) all of the 
diverse operating units in the proposed coverage are within the same 
Department, the U.S. Department of Commerce, which is also the parent

[[Page 24257]]

agency of NIST; (2) several of the operating units in the proposed 
coverage have served for eight years as comparison sites for the NIST 
project; and (3) during the implementation and operation of the NIST 
project, DoC and NIST staff worked closely with the U.S. Department of 
Agriculture's National Finance Center (NFC), which provides personnel 
and payroll computing and database services to all of DoC including 
NIST and the units proposed for the new project.

II. Introduction

A. Purpose

    The purpose of the proposed project is to strengthen the 
contribution of human resources management in helping to achieve the 
missions of specific operating units of the Department of Commerce. The 
project conducted by NIST successfully demonstrated that certain 
innovative changes could improve human resources management in the NIST 
environment. The proposed project will test whether these same 
innovations will produce similarly successful results in other 
environments.

B. Problems With the Present System

    The Department of Commerce encourages, serves, and promotes the 
Nation's international trade, economic growth, and technological 
advancement. Within this framework, and in the interest of promoting 
the national interest through the encouragement of the competitive free 
enterprise system, the Department provides a wide variety of programs, 
some of which are included in the proposed coverage of the project.
    The current system has three major impediments to a manager's 
ability to effectively manage human resources and shape the workforce: 
hiring restrictions and an overly complex job classification system, 
coupled with poor tools for rewarding and motivating employees and a 
system that does not assist managers in removing poor performers, build 
stagnation in the workforce and waste valuable time.

C. Changes Required/Expected Benefits

    The innovations of the project and their objectives are:
1. Classification
    Career paths will replace occupational groups, broad bands will 
replace grades, and Departmental broad-band standards will replace OPM 
classification standards. The classification system will be automated 
and classification authority will be delegated to line managers.
    These changes are intended to simplify and speed up the 
classification process, make the process more serviceable and 
understandable, improve the effectiveness of classification decision-
making and accountability, and facilitate pay for performance.
    Broad bands provide larger classification targets that can be 
defined by shorter, simpler, and more understandable classification 
standards. This simpler system will be easier to automate, will require 
fewer resources to operate, and will facilitate delegation to line 
managers.
    By providing broader and more flexible pay ranges for setting entry 
pay, broad banding will provide hiring officials with an important tool 
for attracting high-quality candidates and thus contribute to the 
objective of increasing the quality of new hires.
    By providing more flexible pay setting based on performance, broad 
banding will give managers the ability to increase the pay of good 
performers to higher and more competitive levels, thus improving the 
retention of good performers. At the same time, the potential for 
higher pay increases for good performance, supported by the broader pay 
ranges of broad banding, will contribute to the objective of improving 
organizational and individual performance.
2. Staffing
    Staffing methods will include two that were implemented in the NIST 
Demonstration Project and which are now available to all agencies 
through examining authority delegated by OPM. For the sake of 
simplification and to parallel the NIST Demonstration Project, they are 
retained with the same titles under the Department of Commerce 
Demonstration Project: Direct Examination and Agency Based Staffing. In 
addition, there will be placements under Merit Assignment and various 
noncompetitive appointing authorities. OPM registers will not be used, 
but positions in occupations covered by the Luevano Consent Decree 
(Administrative Careers with America or successor programs) will be 
filled using OPM guidance. Other supplemental staffing tools will 
include such elements as paid advertising, flexible entry salaries, 
probation, local authority for recruiting and retention payments, and 
more flexible pay increases associated with promotion.
    These changes are intended to attract high-quality candidates, 
speed up the recruiting and examining process, increase the 
effectiveness of the probationary review process, and increase the 
retention of good performers.
    Agency-based staffing, supported by paid advertising, will allow 
hiring officials to focus on more relevant recruiting sources. Direct 
examination will allow managers to hire individuals with shortage 
skills as they find them, get them on board faster, and avoid the loss 
of good candidates who may grow impatient with a long hiring process, 
thus contributing to the objectives of increased quality of new hires 
and better fit between position requirements and candidate skills.
    The three-year probationary period will help ensure that scientists 
and engineers who are retained beyond probation are capable of carrying 
out the full cycle of research and development (R&D) work, thus 
contributing to the objectives of high-quality hires and a high-
performing workforce. Local authority for recruiting and retention 
payments will provide extra incentives for hiring and retaining 
individuals with shortage skills, thus contributing to the objectives 
of increasing the quality of new hires, improving the fit between 
position requirements and individual qualifications, and improving the 
retention of good performers.
3. Pay
    The most important change in pay administration is the introduction 
of pay for performance, which will govern individual pay progression 
within bands. Funds currently applied to within-grade increases, 
quality step increases, and promotions from one grade to a higher grade 
when both grades are now in the same band, will be used instead to 
grant performance-based pay increases within bands. The amount of the 
basic pay and locality pay increases approved by Congress and the 
President, however, will continue to be applied to pay schedules and to 
the salaries of employees with acceptable performance. Other pay tools 
are supervisory pay differentials, flexible pay setting for new hires, 
and more flexible pay setting upon promotion.
    Pay for performance promotes fairness through the peer ranking 
process and provides a motivational tool and a retention tool. As a 
motivational tool, the promise of higher pay increases for good 
performance encourages high achievement. As a retention tool, pay for 
performance allows the organization to quickly move the salaries of 
good performers to levels that are more competitive in the labor 
market.
    Supervisory pay differentials provide a performance incentive for 
supervisors, addressing the objective of improved individual and 
organizational

[[Page 24258]]

performance. Supervisory pay differentials also address the objective 
of improving retention by raising the pay of high-performing 
supervisors to more competitive levels.
    Flexible pay setting for new hires is a recruiting tool that gives 
hiring officials greater flexibility to offer more competitive salaries 
to high-quality candidates, addressing the objective of improving the 
quality of new hires. The greater flexibility in setting pay upon 
promotion gives managers another retention tool to help retain top 
performers.
4. Performance Appraisal
    The new system replaces the current five-level rating system with a 
two-level rating system, using Unsatisfactory and Eligible labels. 
(Unsatisfactory is equivalent to Unacceptable, as used in Part 430 of 
Title 5, Code of Federal Regulations.) The most important feature of 
the proposed performance appraisal system is that it is based on the 
application of a weighted 100-point scoring system linked to pay for 
performance. As in the current system, each employee has an individual 
performance plan composed of several performance elements (all of which 
are critical elements) that are measured with the 100-point scoring 
system in conjunction with the application of benchmark performance 
standards. Based on the resulting total scores, supervisors rank 
employees by performance within peer groups and grant performance pay 
increases according to the ranking. Bonuses are granted at the 
discretion of the supervisor and are not tied to the rating. Highly 
ranked employees within a peer group receive relatively high pay 
increases and lower ranked employees receive relatively lower pay 
increases.
    The performance appraisal process is intended to (1) promote good 
performance; (2) encourage a continuing dialogue between supervisors 
and employees on organizational objectives, supervisory expectations, 
employee performance, employee needs for assistance and guidance, and 
employee development; and (3) provide a basis for performance-related 
decisions in employee development, pay, rewards, assignment, promotion, 
and retention. The system will more effectively communicate to 
employees how they are performing in relation to their peers, the 
rewards of good performance, and the consequences of poor performance.
    Performance-based pay increases give an operating unit the ability 
to raise the pay of good performers more rapidly, thus improving 
retention of good performers. The potential for higher pay increases 
for good performance will encourage achievement and promote the 
objective of improved individual and organizational performance.
5. Performance Bonuses
    In accordance with 5 CFR Part 451, at the end of the annual 
performance period, Rating Officials, with the approval of Pay Pool 
Managers, will have the opportunity to reward employee performance with 
bonuses up to $10,000. Bonuses address two objectives. First, rewarding 
achievement will make high achievers more likely to remain, thus 
improving retention of the best performers. Second, the potential for 
bonuses for achievement will encourage improved individual performance.
6. More Efficient Systems
    The Department will improve the efficiency of human resource 
systems by streamlining procedures, reducing paperwork, and automating 
processes wherever possible.
7. Line Management Authority
    The operating units will delegate greater authority and 
accountability to line managers. This delegation is intended to improve 
the effectiveness of human resources management by strengthening the 
role of line managers as the human resources managers of their units. 
The project will be managed by the Departmental Personnel Management 
Board (DPMB), chaired by the Deputy Director of NIST, now the DoC 
Acting Chief Financial Officer/Assistant Secretary for Administration. 
Each major operating unit will have its own Operational Personnel 
Management Board (OPMB) to oversee local operations. (See the section 
on Project Management.)

D. Participating Organizations

    The Department of Commerce encourages, serves, and promotes the 
Nation's international trade, economic growth, and technological 
advancement. Within this framework, and in the interests of promoting 
the national interest through the encouragement of the competitive free 
enterprise system, the Department provides a wide variety of programs, 
some of which are included in the proposed coverage:
OFFICE OF THE CHIEF FINANCIAL OFFICER AND ASSISTANT SECRETARY FOR 
ADMINISTRATION (CFO/ASA), OFFICE OF THE SECRETARY
    The Office of the CFO/ASA is responsible for Departmental policy 
and operations dealing with financial management, budget, 
organizational planning and development, telecommunications, 
information policy and planning, civil rights, human resources 
management, facilities and property management, transportation, 
security, and acquisition. This coverage provides an application of 
project systems to positions dealing with administrative policy setting 
for a large and diverse Federal executive agency, an arena never before 
addressed by broad banding principles. It also covers the DoC Office of 
Human Resources Management (OHRM), which will provide HRM expertise for 
the proposed project. The DoC Director of Human Resources Management 
will be a member of the Departmental Personnel Management Board and 
will provide staff resources for the project. All units of the Office 
of the CFO/ASA are located at the DoC headquarters building in 
Washington, D.C.
    The work of the organization is reflected in the following key 
occupations: Computer Specialist; Management Analyst; General 
Administration; Budget Analyst; Personnel Management Specialist; 
Accountant; Contracts Specialist; General Business Specialist; and 
Security Officer.
OFFICE OF THE GENERAL COUNSEL (OGC), OFFICE OF THE SECRETARY
    The OGC is responsible for providing legal services for the 
Department. It prepares or examines for legal form and effect all 
orders, rules, and regulations issued by the Department and all legal 
instruments entered into by the Department. It appears on behalf of the 
Department before tribunals and courts. It prepares or reviews all 
legislative proposals. This coverage provides an application of project 
systems to positions dealing with legal services for a large and 
diverse Federal executive agency, an arena never before addressed by 
broad banding principles. All units of the OGC are located in DoC 
headquarters in the Washington metropolitan area.
    The key occupations are Attorney, Paralegal Specialist, and 
Intelligence Operations Specialist.
OFFICE OF THE UNDER SECRETARY, TECHNOLOGY ADMINISTRATION (TA)
    The Technology Administration, which oversees NIST and the National 
Technical Information Service (NTIS), was established by Congress in 
1988 as the premier technology agency working with U.S. industry in 
improving competitiveness and increasing the impact of technology on 
economic

[[Page 24259]]

growth. The TA coverage would include only the Office of the Under 
Secretary for Technology Administration and the Office of Technology 
Policy. This coverage would be an opportunity to apply broad banding 
principles to a policy, planning, and development environment dealing 
with issues vital to the future of the U.S. economy as it is affected 
by technology. All TA offices in the proposed coverage are located at 
the DoC headquarters building in Washington, D.C.
    The key occupations are: General Administration; Management 
Analyst; and General Business Specialist.
BUREAU OF ECONOMIC ANALYSIS (BEA), ECONOMICS AND STATISTICS 
ADMINISTRATION
    BEA is responsible for providing a current picture of the U.S. 
economy through the preparation, development, and interpretation of the 
national income and product accounts showing the gross domestic 
product, business and other components of the national wealth accounts, 
industrial market interrelationships traced by the input-output 
accounts, and other accounts showing such economic indicators as 
personal income, foreign investment, and balance of payments. The 
bureau also develops surveys and other tools for analyzing and 
forecasting economic developments. This coverage provides a test of the 
NIST system in an environment that uses economists and accountants as 
analysts, reporters, and forecasters. BEA is located at 1441 L Street, 
NW., Washington, DC.
    The economic analysis work of the organization is reflected in the 
following key occupations: Economist; Accountant; Financial 
Administrator; Computer Specialist; Statistician; and Statistical 
Assistant.
INSTITUTE FOR TELECOMMUNICATION SCIENCES (ITS), NATIONAL 
TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
    ITS is a major component of the National Telecommunications and 
Information Administration (NTIA). ITS is the principal Federal 
telecommunications research and engineering laboratory. The Institute 
conducts telecommunications research in support of NTIA's 
responsibilities in advising the President on telecommunications and 
information policy; developing U.S. plans and policies in international 
forums; and developing policy for Federal use of the radio frequency 
spectrum. This application will test how well the NIST interventions 
work in an R&D environment quite different from the NIST environment. 
ITS is located in Boulder, Colorado.
    The ITS R&D work is carried out primarily by Electronics Engineers, 
with help from Mathematicians.
    The remaining units are subunits of the National Oceanic and 
Atmospheric Administration (NOAA):
OFFICE OF OCEANIC AND ATMOSPHERIC RESEARCH (OAR)
    OAR is the primary research and development unit of NOAA. OAR 
provides the science and technology to support improvements in NOAA 
services and address current and future problems. OAR conducts research 
programs in coastal, marine, atmospheric, and space sciences through 
its own laboratories and offices, as well as through networks of 
university-based programs. The work consists of research, modeling, and 
environmental observations relating to weather, climate, and 
environmental resources. The laboratory component of OAR is the 
Environmental Research Laboratories (ERL). ERL includes research 
laboratories in space environment, aeronomy, environmental technology, 
weather forecast systems, climate monitoring and diagnostics, severe 
storms, air resources, oceanography, and geophysical fluid dynamics. 
This diversity provides a rich new R&D environment for the testing of 
broad banding principles. OAR and ERL headquarters are located in 
Silver Spring, Maryland. All ERL laboratories will be included in the 
project, except the Great Lakes Environmental Research Laboratory (Ann 
Arbor, MI), the Geophysical Fluid Dynamics Laboratory (Princeton, NJ), 
and the Pacific Marine Environmental Laboratory (Seattle, WA). The 
project laboratories are:

Aeronomy Lab--Boulder, CO
Atlantic Oceanographic and Meteorology Lab--Miami, FL
Air Resources Lab--Silver Spring, MD
Climate Diagnostic Center--Boulder, CO
Climate Monitoring and Diagnostics Lab--Boulder, CO
Environmental Technology Lab--Boulder, CO
Forecast Systems Lab--Boulder, CO
Geophysical Fluid Dynamics Lab--Princeton, NJ
National Severe Storms Lab--Norman, OK
Pacific Marine Environmental Lab--Seattle, WA
Space Environmental Lab--Boulder, CO

The dominant occupation within OAR is Meteorologist. Other key 
occupations are Physical Scientist, Physicist, Electronics Engineer, 
Computer Specialist, Electronics Technician, Physical Science 
Technician, and Mathematician.
NATIONAL ENVIRONMENTAL SATELLITE, DATA, AND INFORMATION SERVICE 
(NESDIS)
    NESDIS operates NOAA's satellites and ground facilities; collects, 
processes, and distributes remotely sensed data; conducts studies, 
plans new systems, and carries out the engineering required to develop 
and implement new or modified satellite systems; carries out research 
and development on satellite products and services; provides ocean data 
management and services to researchers and other users; and acquires, 
stores, and disseminates worldwide data related to solid earth 
geophysics, solar-terrestrial physics, and marine geology and 
geophysics. NESDIS provides both a technical operations environment and 
a new R&D environment for testing the NIST interventions. NESDIS 
headquarters and most of its offices are located in Suitland, Maryland. 
Ground stations are located at Wallops Island, Virginia, and Fairbanks, 
Alaska. The National Climatic Data Center is located in Asheville, 
North Carolina. All of NESDIS will be included in the project, except 
for the Wallops Island ground station.
    The key occupations within NESDIS are Physical Scientist, 
Meteorologist, Computer Specialist, Oceanographer, Physical Science 
Technician, Meteorological Technician, Electronics Engineer, 
Engineering Technician, Geophysicist, and Mathematician.
NATIONAL MARINE FISHERIES SERVICE (NMFS)
    The mission of the National Marine Fisheries Service is the 
stewardship of living marine resources for the benefit of the Nation 
through their science-based conservation and management and promotion 
of the health of their environment. NMFS supports domestic and 
international conservation and management of living marine resources. 
The goals of NMFS are to rebuild and maintain sustainable fisheries, to 
promote the recovery of protected species, and to protect and maintain 
the health of coastal marine habitats. NMFS brings in a variety of work 
in the biological sciences never before addressed by broad banding 
principles.
    In addition to the headquarters office in Silver Spring, Maryland, 
there are five regions, each of which consists of a Regional Office and 
a Fisheries Science Center. The regional offices are located in the 
following areas: Northeast (Gloucester, Massachusetts); Southeast

[[Page 24260]]

(St. Petersburg, Florida); Northwest (Seattle, Washington); Southwest 
(Long Beach, California); and Alaska (Juneau). All the above units of 
NMFS would be included in the project except for the following: in 
Headquarters, the Office of Enforcement and the Inspection Services 
Division; and in the regions, the Fisheries Science Centers located in 
Woods Hole, Massachusetts; Miami, Florida; Seattle, Washington; La 
Jolla, California; and the Alaska Center located in Seattle, 
Washington.
    NMFS is supported mainly by occupations in the biological sciences: 
Fish Biologist, Biologist, Microbiologist, and Biology Technician. 
Other important occupations are Chemist, Oceanographer, Wildlife 
Biologist, Computer Specialist, and General Business Specialist.

E. Participating Employees

    The project covers all positions that would otherwise be in the 
General Schedule (GS) system. Wage Grade positions are not included.
    Table 1 shows the total number of employees in each operating unit 
to be covered by the project. Table 2 lists the occupational series in 
which current positions are classified and shows the number of 
employees in each series. The OPM occupational series will be retained. 
The series are listed under the career path in which they will be 
placed. (See Position Classification for definitions of the four career 
paths.) Table 3 shows the number of covered employees in each series, 
by General Schedule grade.

              Table 1.--Number of Covered Employees by Unit             
------------------------------------------------------------------------
                        Operating unit                           Number 
------------------------------------------------------------------------
CFO/ASA, OS...................................................       433
OGC, OS.......................................................       177
TA............................................................        38
BEA, ESA......................................................       411
ITS, NTIA.....................................................        86
NOAA..........................................................      2093
  OAR.........................................................     (689)
  NESDIS......................................................     (705)
  NMFS........................................................     (699)
                                                               ---------
      Total...................................................      3238
------------------------------------------------------------------------


              Table 2.--Occupational Series, by Career Path             
------------------------------------------------------------------------
Series                           Title                           Number 
------------------------------------------------------------------------
              Scientific and Engineering (ZP) Career Path               
------------------------------------------------------------------------
101...  Social Scientist......................................         1
110...  Economist.............................................       244
150...  Geographer*...........................................         1
184...  Sociologist*..........................................         1
190...  Anthropologist*.......................................         1
334...  Computer Specialist...................................       316
401...  Biologist.............................................        58
403...  Microbiologist........................................         3
408...  Ecologist*............................................         9
480...  Fish Administrator*...................................        46
482...  Fish Biologist*.......................................       165
486...  Wildlife Biologist*...................................         2
499...  Biological Science Student............................         1
690...  Industrial Hygienist..................................         1
701...  Veterinary Medical Officer*...........................         1
801...  General Engineer......................................         3
810...  Civil Engineer........................................         5
830...  Mechanical Engineer...................................         4
850...  Electrical Engineer...................................         1
854...  Computer Engineer.....................................         2
855...  Electronics Engineer..................................       101
861...  Aerospace Engineer....................................         1
1301..  General Physical Scientist............................       194
1310..  Physicist.............................................        75
1313..  Geophysicist*.........................................         9
1315..  Hydrologist*..........................................         4
1320..  Chemist...............................................        26
1330..  Astronomer............................................         8
1340..  Meteorologist*........................................       235
1350..  Geologist.............................................         2
1360..  Oceanographer.........................................        77
1382..  Food Technologist*....................................         2
1399..  Physical Science Student..............................         3
1515..  Operations Research Analyst...........................         1
1520..  Mathematician.........................................        27
1529..  Mathematical Statistician.............................         1
1530..  Statistician..........................................        12
1550..  Computer Scientist....................................         6
                                                               ---------
      ZPTotal.................................................      1649
------------------------------------------------------------------------
         Scientific and Engineering Technician (ZT) Career Path         
------------------------------------------------------------------------
332...  Computer Operator.....................................        12
404...  Biology Technician....................................        11
802...  Engineering Technician................................        24
856...  Electronics Technician................................        27
1311..  Physical Science Technician...........................        83
1341..  Meteorological Technician*............................        40
1531..  Statistical Clerk/Assistant*..........................        24
                                                               ---------
      ZTTotal.................................................       221
------------------------------------------------------------------------
                    Administrative (ZA) Career Path                     
------------------------------------------------------------------------
18....  Safety Specialist.....................................         2
80....  Security Officer......................................        14
130...  Foreign Affairs Specialist*...........................        10
131...  International Relations Specialist*...................         7
132...  Intelligence Operations Specialist*...................         8
201...  Personnel Management Specialist.......................        23
212...  Personnel Staffing Specialist*........................         1
223...  Salary and Wage Specialist*...........................         1
230...  Employee Relations Specialist.........................         8
260...  Equal Employment Specialist...........................        22
301...  Miscellaneous Administration..........................       107
340...  Program Manager.......................................         2
341...  Administrative Officer................................        24
342...  Support Services Specialist*..........................         3
343...  Management Analyst....................................       117
391...  Telecommunications Specialist.........................        12
501...  Financial Administrator...............................        16
510...  Accountant............................................        66
560...  Budget Analyst........................................        49
610...  Nurse*................................................         1
696...  Consumer Safety Specialist............................         1
904...  Law Clerk*............................................         2
905...  Attorney*.............................................       124
930...  Appeals Officer*......................................         2
950...  Paralegal Specialist*.................................         7
1001..  General Arts and Information..........................         3
1008..  Interior Designer*....................................         2
1035..  Public Affairs Specialist.............................         2
1082..  Writer/Editor.........................................        16
1083..  Technical Writer/Editor...............................         5
1084..  Visual Information Specialist.........................        12
1101..  General Business Specialist...........................        71
1102..  Contracts Specialist..................................        21
1140..  Trade Specialist......................................        10
1165..  Loan Specialist*......................................        10
1170..  Realty Specialist*....................................         4
1176..  Building Management Specialist*.......................         2
1222..  Patent Attorney*......................................         1
1410..  Librarian.............................................        18
1412..  Technical Information Specialist......................         3
1601..  General Facilities Manager............................         1
1654..  Printing Manager......................................        11
1670..  Equipment Specialist..................................         1
2010..  Inventory Manager.....................................         2
2030..  Distribution Facilities Specialist*...................         1
2101..  Transportation Specialist.............................         2
                                                               ---------
      ZATotal.................................................       827
------------------------------------------------------------------------
                        Support (ZS) Career Path                        
------------------------------------------------------------------------
29....  Environmental Protection Assistant*...................         2
86....  Security Clerk/Assistant*.............................         9
203...  Personnel Clerk/Assistant.............................        10
303...  Miscellaneous Clerk/Assistant.........................        96
305...  Mail and File Clerk...................................         1
309...  Correspondence Clerk/Assistant........................         1
318...  Secretary.............................................       236
322...  Clerk-Typist..........................................         3
326...  Office Automation Clerk/Assistant.....................        47
335...  Computer Clerk/Assistant..............................        46
344...  Management Clerk/Assistant............................         8
361...  Equal Opportunity Clerk/Assistant.....................         1

[[Page 24261]]

                                                                        
399...  Student Trainee.......................................        24
503...  Financial Clerk/Assistant.............................         2
525...  Accounting Technician.................................        10
530...  Cash Clerk/Teller*....................................         1
544...  Payroll Clerk/Technician..............................         1
561...  Budget Clerk/Assistant................................         7
963...  Legal Instruments Examiner*...........................         9
1087..  Editorial Clerk/Assistant.............................         1
1101..  Trade Information/Financial Assistant.................         6
1105..  Purchasing Agent......................................         4
1106..  Procurement Clerk/Assistant...........................         1
1411..  Library Technician....................................         9
2005..  Supply Clerk/Assistant................................         5
2102..  Transportation Clerk/Assistant........................         1
                                                               ---------
      ZSTotal.................................................       541
                                                                        
------------------------------------------------------------------------
 * These occupations were not tested by the NIST project.               


                                Table 3.--Covered Employees, by Series and Grade                                
----------------------------------------------------------------------------------------------------------------
                                                                 Grade                                          
            Series            ---------------------------------------------------------------------------  Total
                                1    2    3    4    5    6    7    8    9    10   11   12   13   14   15        
----------------------------------------------------------------------------------------------------------------
18...........................                                            1                   1                 2
29...........................                        1         1                                               2
80...........................                                                           6    5    2    1      14
86...........................                             7    1    1                                          9
101..........................                                                           1                      1
110..........................                                  1        23        33   81   42   39   25     244
130..........................                                                           2    3    4    1      10
131..........................                                                                3    3    1       7
132..........................                                            1         1    2    2    1    1       8
150..........................                                                           1                      1
184..........................                                                                     1            1
190..........................                                                                          1       1
201..........................                                  1                        6    8    5    3      23
203..........................                        1         7    2                                         10
212..........................                                                                     1            1
223..........................                                                                1                 1
230..........................                                                           2    3    3            8
260..........................                                  1                   2    3   11    3    2      22
301..........................                                  1        15    1   22   19   17   15   17     107
303..........................    2         3    4   21   16   28   11   11                                    96
305..........................                   1                                                              1
309..........................                             1                                                    1
318..........................                   1   26   87   58   35   27    2                              236
322..........................              1    2                                                              3
326..........................    1    4    1   10   21    8    2                                              47
332..........................                        2    1    5         4                                    12
334..........................                        1        10        24        47   93   90   45    6     316
335..........................              1    3    8    8   10    8    4    3    1                          46
340..........................                                                      1         1                 2
341..........................                                  3         3         5    8    4    1           24
342..........................                                            1         1    1                      3
343..........................                                  8         6         9   13   39   31   11     117
344..........................                             2    2    2    2                                     8
361..........................                                  1                                               1
391..........................                                            2         1    2    4    2    1      12
399..........................   22                   2                                                        24
401..........................                                  3         9        11   17   11    4    3      58
403..........................                                  1                        1              1       3
404..........................              1    1    9                                                        11
408..........................                                                      3    1    1    3    1       9
480..........................                                                           1   10   22   13      46
482..........................                                  4        10        29   59   45   15    3     165
486..........................                                                      1    1                      2
499..........................                   1                                                              1
501..........................                                  1         1         1    8    5                16
503..........................                                  2                                               2
510..........................                                  2         2         8   20   16   15    3      66
525..........................                   1    4    4    1                                              10
530..........................                             1                                                    1
544..........................                                            1                                     1
560..........................                                            5         9    6   15    8    6      49
561..........................                             3    3    1                                          7
610..........................                                            1                                     1
690..........................                                                           1                      1
696..........................                                                      1                           1
701..........................                                                                1                 1
801..........................                                                                     1    2       3
802..........................              2    1              1              1    2   17                     24
810..........................                                                           3    2                 5
830..........................                                            1         1         1    1            4
850..........................                                                                          1       1
854..........................                                                      1         1                 2
855..........................                                  2         4        11   17   36   17   14     101
856..........................                                  1    1    4    2    9    9    1                27
904..........................                                                      2                           2
905..........................                                                      4   13   16   38   53     124
930..........................                                                           1    1                 2
950..........................                                            5         1    1                      7
963..........................                             4    4    1                                          9
1001.........................                                            1              1         1            3
1008.........................                                                           2                      2
1035.........................                                                           2                      2
1082.........................                                            2        10    3    1                16
1083.........................                                            2         1    1         1            5

[[Page 24262]]

                                                                                                                
1084.........................                                            2         6    3    1                12
1087.........................                                  1                                               1
1101.........................                        1    3    7        16        22    9   11    5    3      77
1102.........................                                                      2    3    4    9    3      21
1105.........................                                  4                                               4
1106.........................                                       1                                          1
1140.........................                                                           3    6         1      10
1165.........................                                                      7    1    2                10
1170.........................                                                           2    1    1            4
1176.........................                                                                1    1            2
1222.........................                                                                          1       1
1301.........................                                  1         4         9   30   56   56   38     194
1310.........................                                                      2   10   18   22   23      75
1311.........................              3    4    1    1    9    3   21    3   24    6    8                83
1313.........................                                            1         1    2    2    2    1       9
1315.........................                                                           2    1         1       4
1320.........................                                  1         2         1    5    8    5    4      26
1330.........................                                                           1    5    1    1       8
1340.........................                        1         1         3   15   64   79   48   24  235        
1341.........................                   1        12   10    3    9         3    2                     40
1350.........................                                                                1         1       2
1360.........................                                            1         9   15   26   15   11      77
1382.........................                                                      1         1                 2
1399.........................                   3                                                              3
1410.........................                                            1         2   10    2    2    1      18
1411.........................         1    2              2    4                                               9
1412.........................                                                      1         2                 3
1515.........................                                                      1                           1
1520.........................                                            1         3    8   10    5           27
1529.........................                                                                          1       1
1530.........................                                            1         1    1    4    4    1      12
1531.........................                   1         2    5    2   10    3    1                          24
1550.........................                                                           1    4    1            6
1601.........................                                                           1                      1
1654.........................                                            1         2    3    1    3    1      11
1670.........................                                                           1                      1
2005.........................                        2    1    2                                               5
2010.........................                                            1              1                      2
2030.........................                                                           1                      1
2101.........................                                                           2                      2
2102.........................                             1                                                    1
                              ----------------------------------------------------------------------------------
      Total..................   25    5   14   35  101  164  210   70  247   15  343  612  651  464  285    3238
----------------------------------------------------------------------------------------------------------------

Senior Executive Service and ST-3104 Positions
    The personnel systems for SES positions (see 5 U.S.C. 3131-3136 and 
5 U.S.C. 5381-5385) will not change for the project. SES 
classification, staffing, compensation, performance appraisal, awards, 
and reduction in force will be based on standard SES methods. The 
personnel systems for ST-3104 positions (see 5 U.S.C. 3104 and 5376) 
will change only to the extent that ST-3104 positions are in the same 
performance appraisal, awards, and reduction-in-force systems as 
General Schedule positions. Classification, staffing, and compensation, 
however, will not change. Neither SES nor ST-3104 employees will be 
subject to the pro rata share payouts upon conversion to the 
demonstration system. Pay adjustments for their positions under the 
project will be carried out in accordance with existing Federal rules 
pertaining to SES and ST-3104 pay adjustments.
General Schedule Positions
    All General Schedule (GS and GM) positions are incorporated in the 
new career path/pay band system. The step increases of the General 
Schedule will be replaced by the annual performance pay increases. 
Except as otherwise provided in the project plan, laws and regulations 
pertaining to GS employees (e.g., overtime pay and cost-of living 
allowance provisions) continue in force for all project employees in 
the same way as they do for GS employees.

F. Labor Participation

    There is one bargaining unit within the Office of the Chief 
Financial Officer/Assistant Secretary for Administration (CFO/ASA), 
represented by the Graphics Communications International Union (GCIU). 
All other unions affected by the project are local unions of the 
American Federation of Government Employees (AFGE). All of the AFGE 
representation is within the National Oceanic and Atmospheric 
Administration (NOAA). The following table shows the number of project 
employees represented by each union local.

                                        Table 4.--Bargaining Unit Coverage                                      
----------------------------------------------------------------------------------------------------------------
                                                                                                       Employees
              Operating unit                         Location                     Union local           covered 
----------------------------------------------------------------------------------------------------------------
CFO/ASA..................................  Washington, DC..............  GCIU 1-C....................         21
NESDIS...................................  Camp Springs, MD............  AFGE 3680...................        118
                                           Asheville, NC...............  AFGE 146....................        146
NMFS.....................................  Silver Spring, MD...........  AFGE 2703...................        169
MASC.....................................  Boulder, CO.................  AFGE 2186...................         84
OAR......................................  Triangle Park, NC...........  AFGE 3347...................         39
----------------------------------------------------------------------------------------------------------------

    The project operating units provided numerous briefings on the 
project to employees and union representatives. Human resources 
representatives traveled to the various organizational locations to 
conduct three-hour information briefings. In addition, each bargaining 
unit covered was invited to send a representative to Boulder, Colorado 
at management's cost to

[[Page 24263]]

receive further information on the project and to interact with a panel 
of NIST managers and employees currently in the NIST project. The 
project operating units offered Impact and Implementation Bargaining to 
each of these unions on the conditions and provisions of the proposed 
project. All of the unions on the list have agreed to the project.

G. Project Design/Methodology

    The project methodology is to introduce into selected DoC operating 
units certain innovations in human resources management, and to 
evaluate over time the effects of those innovations on the ability of 
the operating units to manage their human resources. The methodology 
includes the following steps:
    1. Selection of Innovations: After review of the innovations tested 
at NIST, the Department has determined that all would have potential 
benefit in other DoC units and therefore should be included in the 
proposed project. These innovations, and the procedures associated with 
them, are described below under Position Classification, Staffing, 
Reduction-in-Force, Pay Administration, and Performance Evaluation and 
Rewards.
    2. Selection Of Operating Units: The Department has selected 
several operating units (See Participating Organizations.) that will 
provide a useful test of whether the innovations successfully tested at 
NIST will produce similarly successful results in other environments.
    3. Establishment of Goals and Objectives: The following section on 
Goals and Objectives describes the overall goals of the project and the 
objectives associated with each of the innovations.
    4. Partnership: The Department has sought input on the proposal 
from each affected local union. (See Labor Participation.) The 
Department will also ensure that partnership in accordance with 
Executive Order 12871 continues to be an integral part of planning and 
implementation.
    5. Baseline Evaluation: To provide a basis of comparison between 
employee opinions of the current system and their future opinions of 
the project system, each employee in the covered operating units will 
be asked to complete an opinion questionnaire on the current system 
prior to implementation of the project. To establish a baseline cost 
analysis, each operating unit will be required to analyze its personnel 
costs during fiscal years 1994, 1995, and 1996.
    6. Training: The Department and the operating units will provide 
training to human resources staff, managers, and employees prior to 
implementation of the project and will provide additional training to 
managers on the pay-for-performance system prior to the end of the 
first performance cycle. (See Training.)
    7. Implementation: To ensure a smooth implementation, the 
Department and the operating units will emphasize top management 
support; the development of detailed operating procedures prior to 
implementation; thorough training of managers and human resources 
office staff; step-by-step implementation planning; adequate backup 
systems, particularly in automated personnel and payroll systems; and 
sufficient operating resources.
    8. Operation: The Department will exercise continual oversight, 
under the direction of the Departmental Personnel Management Board (See 
Project Management.) to ensure that project authorities and procedures 
are administered correctly.
    9. Evaluation: The Department will arrange for an annual evaluation 
of the project under an OPM-approved evaluation plan. (See Project 
Evaluation.) The evaluation will be designed to determine whether the 
innovations are achieving the goals and objectives described in the 
following section and are operating within acceptable cost limits (See 
Budget Discipline.)

III. Personnel System Changes

A. POSITION CLASSIFICATION

1. Introduction
    Career paths will replace occupational groups, broad bands will 
replace grades, and Departmental broad-band standards will replace OPM 
classification standards. The classification system will be automated, 
and classification authority will be delegated to line managers.
    These changes are intended to simplify and speed up the 
classification process, make the process more serviceable and 
understandable, improve the effectiveness of classification decision-
making and accountability, and facilitate pay for performance. Broad 
bands provide larger classification targets that can be defined by 
shorter, simpler, and more understandable classification standards. 
This simpler system will be easier to automate, will require fewer 
resources to operate, and will facilitate delegation to line managers.
    By providing broader and more flexible pay ranges for setting entry 
pay, broad banding will provide hiring officials with an important tool 
for attracting high-quality candidates and thus will contribute to the 
objectives of increasing the quality of new hires and improving 
workforce performance.
    By providing more flexible pay setting based on performance, broad 
banding will give managers the ability to increase the pay of good 
performers to higher and more competitive levels, thus improving the 
retention of good performers. At the same time, the promise of higher 
pay increases for good performance, supported by the broader pay ranges 
of broad banding, will contribute to the objective of improving 
organizational and individual performance.
2. Career Paths
    A career path aggregates comparable occupations that have parallel 
career patterns and are suitable for similar treatment in staffing, 
classification, pay, and other personnel functions. There are four 
career paths:
    (a) Scientific and Engineering (ZP): research, policy, staff, and 
managerial positions in science, engineering, computing, and 
mathematics.
    (b) Scientific and Engineering Technician (ZT): science and 
engineering support positions.
    (c) Administrative (ZA): specialist positions in such fields as 
finance, procurement, human resources management, public information, 
technical information, accounting, and management analysis.
    (d) Support (ZS): clerical, assistant, secretarial, police, and 
other support positions not fitting the definition of any of the other 
career paths.
3. Bands
    Each career path is divided into five bands, which replace GS 
grades. The maximum rate of a band is step 10 of the highest GS grade 
in the band including locality rates in the 48 contiguous States and 
the District of Columbia. When a special rate for one or more of the 
occupations in the band is higher than the applicable locality rate, 
the Departmental Personnel Management Board will have the option of 
using the maximum applicable special rate to set the maximum rate of 
the band. For each regular band, there is a corresponding supervisory 
band for employees who receive supervisory pay differentials. The 
supervisory band has the same minimum rate as the nonsupervisory band, 
but has a maximum rate 6 percent higher than the maximum rate of the 
nonsupervisory band. Positions in the

[[Page 24264]]

supervisory band include positions that involve formal supervisory 
duties that occupy at least 25 percent of the incumbent's time and 
other positions approved by the DPMB on a case-by-case basis. The 
following chart shows the four project career paths, the bands in each 
career path, and the relationship between bands and General Schedule 
grades.

BILLING CODE 6325-01-P
[GRAPHIC] [TIFF OMITTED] TN02MY97.048


BILLING CODE 6325-01-C
4. Occupational Series
    The General Schedule occupational series will be retained. New 
occupational series may be added or deleted in response to programmatic 
needs. New or revised series may also be established.
5. Classification Standards
    Each classification standard will describe each band in two 
factors: (1) general duties and responsibilities and (2) knowledge, 
skills, and abilities. These two factors complement each other at each 
band in a career path and may not be separated in classifying a 
position. OPM classification standards will not be used.
6. Position Descriptions
    Line managers will follow an automated menu-driven process to 
classify positions and produce position descriptions.
7. Delegation of Classification Authority
    The Departmental Personnel Management Board (DPMB) will oversee the 
delegation of classification authority to line managers. Under 
authority delegated by the DPMB, the Department's human resources staff 
will monitor and review classification decisions made by managers to 
ensure consistent and uniform application of classification policies 
and guidelines. Under this authority, the Department's Director for 
Human Resources Management will establish a plan to review the accuracy 
of classification decisions made by line managers and make periodic 
reports to the DPMB. A variety of approaches will be used to conduct 
classification reviews, such as regularly scheduled Departmental 
oversight reviews as well as ad hoc reviews conducted to address 
specific classification issues identified through data analysis, random 
sampling of classification actions, project evaluation reports, etc. 
The Governmentwide system of approval of SES and ST-3104 positions will 
be maintained.
8. Classification Appeals
    An employee covered by the DoC Demonstration Project may appeal the 
career path, occupational series, or pay band of his or her position at 
any time. An employee wishing to formally appeal must first appeal to 
the Operating Unit (OU). If the employee is dissatisfied with the OU 
decision, he or she may appeal further to the Department level. The 
decision of the Department will be final.
    Details pertaining to the classification appeals process are found 
in the Project Operating Procedures.

B. Staffing

1. Introduction
    The project operating units will use a variety of staffing methods 
to fill positions, including Direct Examination, Agency-Based Staffing, 
Merit Assignment, and various noncompetitive placements. Recruiting

[[Page 24265]]

and examining will be carried out directly by the operating units 
except for positions covered by the Luevano Consent Decree. OPM 
registers will not be used. These methods will be supplemented by other 
staffing tools, such as paid advertising, flexible entry salaries, 
probation, recruitment and retention payments, and more flexible pay 
increases associated with promotion. The Department will make necessary 
adjustments in response to future revisions in staffing statutes. These 
changes are intended to attract higher-quality candidates, speed up the 
recruiting and examining process, increase the effectiveness of the 
probationary review process, and improve the retention of good 
performers.
    Agency-based staffing, supported by paid advertising, will allow 
hiring officials to focus on more relevant recruiting sources. Direct 
examination will allow managers to hire individuals with shortage 
skills as they find them, get them on board faster, and avoid the loss 
of good candidates who may grow impatient with a long hiring process, 
thus contributing to the objectives of increasing the quality of new 
hires and improving the fit between position requirements and candidate 
skills. The three-year probationary period will help ensure that 
scientists and engineers who are retained beyond probation are capable 
of carrying out a full cycle of R&D work, thus contributing to the 
objectives of higher-quality hires and a higher-performing workforce. 
Local authority for recruiting and retention payments will provide 
extra incentives for hiring and retaining individuals with shortage 
skills, thus contributing to the objectives of increasing the quality 
of new hires, improving the fit between position requirements and 
individual qualifications, and improving the retention of good 
performers.
2. Direct Examination
    The project will apply two direct examination authorities: Direct 
Examination Critical Shortage Occupations and Direct Examination 
Critical Shortage Highly Qualified Candidates. These vacancies will 
normally be filled through direct recruiting by selecting officials, 
supplemented by a required search of the operating unit Applicant 
Supply File. Direct examination procedures are not exempt from the 
application of veteran preference rules.
    (a) Direct Examination: Critical Shortage Occupations.
    Direct examination procedures will be used for categories of 
occupations which require skills that are in short supply. All 
occupations for which there is a special rate under the General 
Schedule pay system constitute a shortage category, and all occupations 
at Band III and above in the ZP Career Path constitute a shortage 
category. Any position in these shortage categories may be filled 
through direct examination procedures.
    (b) Direct Examination: Critical Shortage Highly Qualified 
Candidates.
    Direct examination procedures will be used for additional positions 
for which there is a shortage of highly qualified candidates. 
Candidates for positions at Band I or II of the ZP Career Path who have 
a bachelor's degree with at least a 2.9 GPA (on a 4.0 scale) in a job-
related major or a master's degree in a job-related field constitute a 
shortage category; candidates for positions at Band I of the ZT Career 
Path who have at least a 2.9 GPA in a job-related field during a 
minimum of at least 2 years in an accredited college, junior college, 
or technical institute constitute a shortage category; and candidates 
for positions at Band II of the ZT Career Path who have at least a 2.9 
GPA in a job-related field in 4 years of college study constitute a 
shortage category.
3. Agency-Based Staffing
    Agency-based staffing procedures will be used to fill vacancies not 
covered by direct examination or the project operating unit Merit 
Assignment Plan (MAP). Vacancies filled by agency-based procedures will 
be advertised at a minimum through the Governmentwide automated 
employment information system operated by (OPM).
4. Merit Assignment Plan (MAP)
    MAP procedures will be used to fill positions restricted to current 
or former Federal employees with competitive status. These plans will 
be amended to include any demonstration project flexibilities.
5. Applicant Supply Files
    The operating units will advertise the availability of job 
opportunities in direct-examination occupations by continuous posting 
of an Applicant Supply Bulletin on the Governmentwide automated 
employment information system operated by OPM. The operating units will 
accept applications for this file on an open-continuous basis for all 
direct-hire authorities. Selecting officials will be able to recruit 
directly for applicants, but any applicants they find must compete with 
applicants who apply through the Applicant Supply Bulletin and other 
applicants whose applications are stored in the operating unit 
Applicant Supply File.
6. Referral Procedures for Direct Examination and Agency-Based Staffing 
Authorities
    Either direct referral or rating and ranking will be used to refer 
applicants for vacancies under direct examination and agency-based 
staffing authorities.
    (a) Direct referral.
    A qualified candidate may be referred directly without rating and 
ranking:
    (1) When there are no more than three qualified candidates and no 
preference eligibles; or
    (2) If the candidate is a preference eligible with a compensable 
Service-connected disability of 10 percent or more. (These preference 
eligibles are given absolute preference except when the position is at 
Band III or above in the Scientific and Engineering Career Path.) 
Selecting officials may choose any of these preference eligibles when 
more than one are referred.
    (b) Rating and ranking.
    Rating and ranking (including veteran preference and ``rule-of-
three'' procedures) will be used when the list of qualified candidates 
contains:
    (1) More than three candidates; or
    (2) Two or more candidates including at least one preference 
eligible (except when direct referral of a 10-point veteran is made 
under 1b above).
7. Priority Placement
    All Department of Commerce and OPM priority placement programs will 
be followed.
8. Paid Advertising
    Paid advertising may be used as one of the first steps in 
recruitment without having to first try unpaid methods.
9. Private Sector Temporaries
    Private sector temporary help services may be used as appropriate.
10. Probationary Period
    Probation under the project will follow current law and 
regulations, except when an employee in the Scientific and Engineering 
(ZP) Career Path is required to serve a probationary period. The ZP 
probationary period will be three years, except that a supervisor may 
end the probationary period of a subordinate ZP employee anytime after 
one year. Near the end of the first year of a ZP employee's 
probationary period, the supervisor will be required to decide whether 
to (1) change the employee from probationary status to non-probationary 
status; (2) remove the employee; or (3) continue the employee on 
probation. If the employee is

[[Page 24266]]

continued on probation, the supervisor must select from the same 
options near the end of the second year of probation. If probation is 
continued into the third year, the supervisor must make a final 
decision on whether to retain or remove the employee near the end of 
the third and final year of probation.
    The purpose of the three-year probationary period for scientists 
and engineers only is to allow a hiring official to view the full cycle 
of a research assignment before making a final decision on retaining 
the employee. The one-year probationary period is insufficient to cover 
the full cycle of research and development from assignment of a 
research project to publication of results. For the other three career 
paths, the one-year probationary period is adequate.
11. Qualification Standards
    The qualifications required for placement within a band and within 
a career path will be based on the OPM Qualification Standards for 
General Schedule Positions, except that testing requirements will not 
be used and the Superior Academic Criterion will be defined as a 2.9 
GPA (on a 4.0 scale). The minimum qualifications for the occupation and 
for the GS grade corresponding to the lowest grade in the band will 
apply. The DPMB may authorize new or modified qualification standards 
based on current practices in the scientific, engineering, and computer 
science fields and to reflect modern curricula in recognized degree 
programs.
12. Recruitment and Retention Payments
    The project operating units may grant recruiting and retention 
payments in appropriate circumstances, not to exceed $10,000 or 25 
percent of basic pay, whichever is greater. Decisions on allowances 
will be based on market factors such as salary comparability and salary 
offer issues, relocation and dislocation issues, programmatic urgency, 
emerging technologies, turnover rates, special qualifications, and 
shortage categories or scarcity of positions unique to the operating 
unit. All scientific, engineering, and other hard-to-fill positions 
will be eligible. Recruitment and retention payments will not be 
considered part of basic pay.
13. Travel Expenses
    Travel and transportation expenses, advancement of funds, per diem 
expenses incident to travel, and/or relocation expenses may be provided 
to new hires in the same manner as is authorized in sections 5723, 
5724, 5724a, 5724b, and 5724c of title 5, U.S. Code. Recipients must 
sign service agreements indicating commitment to at least 12 months of 
continued service.
14. Promotion
    A promotion is a change of an employee to (1) a higher band in the 
same career path, or (2) a band in another career path in combination 
with an increase in pay. To be eligible for promotion, an employee must 
have a current performance rating of Eligible. The time-in-band 
requirement for promotion eligibility is 52 weeks, with two exceptions: 
(1) an employee may be promoted from Band I to Band II in the Support 
Career Path without time restriction; and (2) an employee may be 
promoted from Band II to Band III in the Support Career Path without 
time restriction if the employee was not promoted from a Band I to a 
Band II position during the previous 52 weeks. (For pay provisions 
related to promotion, see Pay Administration.)

C. Reduction-in-Force

1. Introduction
    The project operating units will follow reduction-in-force 
procedures contained in law and regulation, except that career path 
will be added to the definition of competitive areas, retention credit 
for performance will be based on performance ranking, and grades will 
be converted to bands for the purpose of interpreting reduction-in-
force regulations.
    The objective of the link between career paths and competitive 
areas is to improve the fit between the skills of displaced employees 
and the positions they are offered through reduction-in-force 
procedures. The objective of the link between performance and retention 
standing is to continue to make performance a factor in retention 
during reduction-in-force.
2. Competitive Areas
    Each of the four career paths in each project operating unit local 
commuting area will be a separate competitive area--separate from the 
other career paths and separate from the competitive areas of other 
operating unit employees.
3. Link Between Performance and Retention
    An employee with an overall performance score in the top 10 percent 
of scores within a peer group (See Performance Evaluation and Rewards 
below.) will be credited with 10 additional years of service for 
retention purposes. The total credit will be based on the employee's 
three most recent annual performance ratings of record received during 
the 4-year period prior to an established cutoff date, for a potential 
total credit of 30 years. Career status and veteran preference will 
continue to have the same effect on retention standing as they now have 
under current regulations. No performance-related retention credit will 
convert to this system from any other performance appraisal system.
4. Link Between Bands and Grades
    OPM reduction-in-force regulations on assignment rights (5 CFR 
351.701) will be applied to the project by substituting ``one band'' 
for ``three grades'' and ``two bands'' for ``five grades.''

D. Pay Administration

1. Introduction
    The most important change in pay administration is the introduction 
of pay for performance, which will govern individual pay progression 
within bands. The amount of the basic pay and locality pay increases 
approved by Congress and the President will continue to be applied to 
pay schedules and employee salaries, with the variations described 
below. Other pay tools are supervisory pay differentials, flexible pay 
setting for new hires, and more flexible pay setting upon promotion.
    Pay for performance promotes fairness and provides a motivational 
tool and a retention tool. It is fair that higher achievement should 
produce higher rewards. In particular, the quality work that arises 
from a commitment to the goals and objectives of the organization 
should be rewarded by higher pay increases. As a motivational tool, the 
promise of higher pay increases for good performance encourages high 
achievement. As a retention tool, pay for performance allows the 
organization to more quickly move the salaries of good performers to 
levels that are more competitive in the labor market.
    Supervisory pay differentials provide an extra performance 
incentive for supervisors, addressing the objective of improved 
individual and organizational performance. Supervisory pay 
differentials also address the objective of improving retention by 
raising the pay of high-performing supervisors to more competitive 
levels. Flexible pay setting for new hires is a recruiting tool that 
gives hiring officials greater flexibility to offer more competitive 
salaries to high-quality candidates, addressing the objective of 
improving the quality of new hires. The greater flexibility in setting 
pay upon promotion gives managers another

[[Page 24267]]

retention tool to help retain top performers.
2. Pay for Performance
    Pay for performance has three components: (a) the annual adjustment 
to basic pay, which includes the annual general increase and the 
locality pay increase; (b) annual performance pay increases; and (c) 
bonuses. The first component, the annual adjustment to basic pay, is 
set according to the subsections referring to general and locality 
increases. The second component, performance pay increases, is set 
according to the procedures under Performance Evaluation and Rewards. 
The third component, bonuses, is managed in accordance with the 
subsection on Performance Bonuses under Performance Evaluation and 
Rewards.
3. Placement in a Lower Band
    An employee whose performance rating is Unsatisfactory does not 
receive the annual adjustment to basic pay. Because the minimum pay 
rate for each band is increased each year by the amount of the annual 
adjustment to basic pay, it is possible that the new minimum rate of a 
band will exceed the basic pay of an employee in that band who does not 
receive the annual adjustment to basic pay due to unsatisfactory 
performance. When this happens, the employee is placed in the next 
lower band. This placement shall not be considered an adverse action 
under 5 U.S.C. 7512, nor shall grade (i.e., band) retention under 5 
U.S.C. 5362 be applicable.
4. Supervisory Pay Differentials
    Appropriate supervisory and managerial pay differentials will be 
provided. Employees who spend at least 25 percent of their time 
performing supervisory duties will receive supervisory differentials. 
(Other employees may be approved by the DPMB on a case-by-case basis to 
receive the supervisory differential.) Supervisory differentials will 
be considered a part of basic pay.
    Upon conversion to the project, all eligible supervisory positions 
will be placed in the supervisory bands. The incumbents of these 
positions will be converted at their basic pay (including special rates 
or locality pay) at the time of conversion, except for Scientific and 
Engineering (ZP) supervisors, who will begin receiving the added 
differential upon conversion. New hires into supervisory positions 
after the date of conversion will have their pay set at the 
supervisor's discretion within the pay range of the applicable 
supervisory band.
    There will be two types of differentials. The first type will apply 
to supervisors in the ZP Career Path only. The amount of this type of 
differential will be fixed at 3 percent or 6 percent, for first and 
second-level (and higher) supervisors, respectively. The second type of 
supervisory differential will apply to all bands in all career paths 
where there are supervisors. Supervisors receiving this type of 
differential will be eligible for higher pay band ceilings which they 
may reach through pay for performance. The higher pay band ceilings are 
set in accordance with the Project Operating Procedures.
    The granting of a differential is not considered a promotion or a 
competitive action. The differential is canceled when an employee's 
supervisory responsibilities are discontinued. The cancellation of a 
supervisory differential does not constitute an adverse action, and 
there is no right of appeal under 5 U.S.C. Chapter 75. Pay retention 
under 5 U.S.C. 5363 is not applicable. Before entering a supervisory 
position, an employee will be required to sign a statement certifying 
that the employee understands that the differential will be canceled 
when the employee ceases to be a supervisor.
5. Pay and Compensation Ceilings
    The maximum rate for a band (excluding special bands established to 
allow for the supervisory pay differential) will be equal to the 
maximum rate--GS rate, locality rate, or special rate, as applicable--
payable to GS employees for the grades corresponding to the band. An 
employee's basic pay may not exceed the maximum rate of the employee's 
band (including a supervisory band), except for employees receiving 
retained rates of pay.
    An employee's rate of basic pay payable under any pay band may not 
exceed the rate of basic pay payable for Level IV of the Executive 
Schedule. An employee's aggregate monetary compensation for a calendar 
year may not exceed the basic rate of pay for Level I of the Executive 
Schedule, as required by 5 U.S.C. 5307 and (OPM) regulations in Subpart 
B of 5 CFR 530.
6. Locality Pay
    Locality pay is implemented as basic pay for all purposes except as 
otherwise provided in this plan. The locality adjustment will be 
applied to the minimum and maximum rates of each band. For bands 
affected by special rates, the maximum rate will be the higher of the 
special rate and the locality rate. A locality adjustment may be 
applied to an eligible employee's basic pay only to the extent that it 
does not cause the employee's basic pay to exceed the maximum rate of 
the band.
7. Special Salary Rates
    When appropriate, special salary rates will be used to determine 
employees' maximum pay rates in lieu of the normal pay band ceilings. 
The provisions of current regulations (5 CFR 530.303) will be followed 
to determine the appropriateness of special salary rates. As provided 
for under these regulations, special salary rates will be restricted to 
occupations and/or geographic locations for which there is an existing 
or likely difficulty in the recruitment or retention of well-qualified 
personnel.
8. Effect of General and Locality Pay Increases on Bands
    The minimum and maximum rates of each band will be increased at the 
time of a general pay increase under 5 U.S.C. 5303 and/or a locality 
pay increase under 5 U.S.C. 5304 or 5304a so that they equal the new 
locality-adjusted minimum and maximum rates of the grades corresponding 
to the band. The maximum rates of bands set according to special rates, 
however, may exceed this amount to the extent necessary to equal the 
10th step of the appropriate special rate scale if that rate is higher.
9. Effect of General and Locality Pay Increases on Individual Pay
    Only employees with a current annual performance rating of record 
of Eligible may receive an increase in their basic pay at the time of 
band adjustments. This increase in basic pay will reflect any 
applicable general and/or locality pay increase for General Schedule 
employees. The increase in basic pay for eligible employees whose basic 
pay is at the ceiling of their band will equal the increase in the 
ceiling.
    The basic pay increase for eligible employees whose basic pay is 
below the ceiling of their band will be calculated by applying two 
factors to the employee's rate of pay. One factor is the general 
increase factor representing the increase in General Schedule rates 
under 5 U.S.C. 5303 (e.g., 1.02 if the general increase is 2 percent). 
The second factor is the locality pay increase factor, which is derived 
by dividing the newly applicable locality pay percentage factor by the 
formerly applicable locality pay percentage factor. (For example, if 
the locality payment percentage for an area increased from 4.23 percent 
to 5.48 percent, the locality pay increase factor

[[Page 24268]]

would be 1.0548 divided by 1.0423, or approximately 1.012.) Thus, the 
new rate of basic pay would be calculated using the following formula:
[GRAPHIC] [TIFF OMITTED] TN02MY97.022

    However, a basic pay increase will be applied only to the extent 
that it does not cause an employee's basic pay to exceed the ceiling of 
the applicable band.
10. Basic Pay
    Employees covered by the project will not have separate basic pay 
rates and locality pay rates, as do General Schedule employees. Project 
basic pay rates will be basic pay for all purposes, except as 
specifically provided in the demonstration project plan.
11. Pay Setting Upon Promotion
    The new basic pay rate upon promotion may be set at any level in 
the new band (If the move is to a different career path, any band in 
the new path would be considered a ``new band.''), except that the 
minimum pay increase upon promotion is 6 percent. The maximum 
percentages allowed upon promotion are described in the Project 
Operating Procedures.
12. Pay Setting for New Hires
    The setting of initial salaries within bands for new appointees 
will be flexible, particularly for hard-to-fill positions in the 
Scientific and Engineering Career Path. Supervisory guidance on setting 
pay for new hires is included in the Project Operating Procedures.
13. Conversion of Employees From the General Schedule to the 
Demonstration System
    For employees being converted from the GS pay system to the 
demonstration project, GS grades will translate directly to the 
project's career path and band structure. Employees will be converted 
at their current highest rate under the GS pay system (i.e., highest of 
locality rate or special rate or similar rate) at the time of 
conversion, except for supervisors in the Scientific and Engineering 
Career Path who qualify for a supervisory/managerial pay differential 
upon conversion. No one's salary will be reduced as a result of the 
conversion. When conversion of an employee into the project is 
accompanied by a geographic move, the employee's GS pay entitlements 
(including any locality rate or special rate) in the new area will be 
determined before converting the employee's pay to the demonstration 
project pay system.
    At the time of conversion, each converted employee will be given a 
lump-sum cash payment for the time credited to the employee toward what 
would have been the employee's next within-grade increase. The payment 
for a General Schedule employee will be computed by (1) calculating the 
ratio of (a) the number of days the employee will have spent in the 
employee's current rate through the day prior to the day of conversion, 
to (b) the total number of days in the employee's current waiting 
period for a regular within-grade increase (364, 728, or 1092 days), 
and (2) multiplying that ratio by the dollar value of the employee's 
next within-grade increase, as in effect at the time of conversion.
14. Movement of GS Employees From Other Organizations to the 
Demonstration System
    GS employees can move into the project from other organizations 
through transfer, reassignment, promotion, or new appointment. When the 
movement is by lateral transfer or lateral reassignment, the employee's 
GS grade will translate directly to the project's career path/band 
structure and the employee's rate of basic pay under the demonstration 
project will equal his or her current highest rate under the GS pay 
system (i.e., highest of locality rate or special rate or similar 
rate), except for the addition of a supervisory differential if the 
position is a supervisory position in the Scientific and Engineering 
Career Path. When a lateral transfer or lateral reassignment is 
accompanied by a geographic move, the employee's GS pay entitlements 
(including any locality rate or special rate) in the new area will be 
determined before converting the employee's pay to the demonstration 
project pay system. When the movement is by new appointment, promotion, 
reassignment with pay adjustment (through merit assignment plan 
competition), or transfer to ``higher grade'' (i.e., to a band higher 
than the band that corresponds to the employee's current GS grade, the 
new pay rate is set according to project pay setting flexibilities for 
new hires and promotions.
15. Pay Setting Upon Movement of an Employee to a Different Pay Area
    Employees who move (voluntarily or involuntarily) from one 
geographic area to another within their operating unit will have their 
pay adjusted to account for any change in the band maximum rates 
between the two areas. This adjustment ensures that the employee's 
relative position in the band (measured as a percentage of the band 
maximum rate) will be maintained upon movement. The pay rate in the new 
area will be derived using the following formula:
[GRAPHIC] [TIFF OMITTED] TN02MY97.022

    The new pay rate is calculated before any other simultaneous pay 
action (e.g., general pay adjustment or promotion effective on the same 
date). Any reduction in pay solely attributable to a movement from one 
pay area to a lower-paying area shall not be considered a reduction in 
basic pay under the adverse action provisions of 5 U.S.C. 7512(4) or 
under the pay retention provisions of 5 U.S.C. 5363. (The employee 
retains the right to grieve or file a complaint regarding a geographic 
reassignment if there is an allegation of a violation of 
nondiscrimination statutes or a prohibited personnel practice.)
16. Severance Pay
    (OPM) severance pay regulations (5 CFR 550.703) will be applied to 
the project by substituting ``one band'' for ``two grades'' and ``two 
grades or pay levels.''

[[Page 24269]]

17. Grade and Pay Retention
    Grade and pay retention will follow current law and regulations, 
except as allowed by specific waiver (e.g., ``career path and band'' 
for ``grade''). Specific waivers are listed in the section entitled 
Authorities and Waiver of Laws and Regulations Required.

E. Performance Evaluation and Rewards

1. Introduction
    The most important feature of the performance evaluation system is 
that it is based on the application of a weighted 100-point scoring 
system in support of pay for performance. As in the current system, 
each employee has an individual performance plan composed of several 
performance elements. Through application of benchmark performance 
standards and a 100-point scoring system, supervisors rank employees by 
performance within peer groups and grant performance pay increases 
according to the ranking. Highly ranked employees within a peer group 
receive relatively high pay increases and lower ranked employees 
receive relatively lower pay increases.
    The performance appraisal process is intended to (1) promote good 
performance; (2) encourage a continuing dialogue between supervisors 
and employees on organizational objectives, supervisory expectations, 
employee performance, employee needs for assistance and guidance, and 
employee development; and (3) provide a basis for performance-related 
decisions in employee development, pay, rewards, assignment, promotion, 
and retention. The system will more effectively communicate to 
employees how they are performing in relation to their peers, the 
consequences of poor performance, and the rewards for good performance.
    Performance-based pay increases give an operating unit the ability 
to raise the pay of good performers more rapidly, thus improving 
retention of good performers. The promise of higher pay increases for 
good performance will encourage achievement and promote the objective 
of improved individual and organizational performance.
2. Coverage
    All employees covered by the project will be covered by the project 
performance evaluation and rewards system, except that the Departmental 
Personnel Management Board may remove from the system any position not 
filled by career or career conditional appointment. ST-3104 employees 
will have their performance evaluated under the structure of the 
performance evaluation system and may receive bonuses, but do not 
receive performance pay increases. Members of the Senior Executive 
Service will remain under the non-demonstration DoC SES performance 
appraisal, pay, and bonus system.
    Upon conversion to the demonstration project, any administrative 
action already initiated under a previous appraisal program will 
continue to be processed in accordance with the requirements and 
procedures of the program in effect when the action was initiated.
3. Performance Cycle
    The performance year begins October 1 and ends September 30. The 
stages of the performance cycle are performance planning, performance 
review, performance appraisal, and performance-related decisions.
4. Performance Plans
    Performance plans will be developed each year by supervisors with 
input from employees. Critical performance elements will be established 
for each position. (All elements are critical.) The supervisor weights 
each element so that the total weight of all elements is 100 points. 
Benchmark performance standards define the range of performance. A 
supervisor may add supplemental standards to a performance plan to 
further elaborate on the benchmark performance standards.
5. Mid-Year Review
    A required mid-year review addresses mid-year accomplishments, 
performance successes and deficiencies, and any need for performance 
plan modifications. Additional reviews may be held as needed.
6. Performance Appraisal
    Performance appraisals bring supervisors and employees together to 
discuss performance and accomplishments during the performance year. 
The appraisals lead to decisions by supervisors and Pay Pool Managers 
on performance scores, performance ratings, performance pay increases, 
and bonuses. Performance appraisal is scheduled for the final weeks of 
the performance year. However, at any time of the year, a supervisor 
may determine that an employee's performance is not satisfactory on one 
or more critical elements and place the employee on a Performance 
Improvement Plan.
7. Performance Ratings
    The demonstration project performance ratings are Eligible (for 
performance pay increase, bonus, and annual adjustment to basic pay) 
and Unsatisfactory. The rating Eligible covers the same performance 
range as the former ratings of Marginal, Fully Successful, Commendable, 
and Outstanding. Unsatisfactory covers the same performance range as 
the former ratings of Unsatisfactory and Unacceptable. An employee 
whose performance is unsatisfactory is placed on a performance 
improvement plan and given an opportunity to improve before a final 
rating is assigned.
8. Performance Scores
    Each element is evaluated individually against the benchmark 
performance standards and any supplemental standards. If a single 
element in an employee's plan is rated Unsatisfactory, the overall 
rating is Unsatisfactory and there is no performance score. If all 
elements meet at least the minimally acceptable benchmark, the overall 
rating is Eligible. Rating Officials score the performance of employees 
rated Eligible on a 100-point scale, which corresponds to the 100-point 
element weight scale. An individual element score may be as high as the 
weight of that element. The total performance score is the sum of the 
element scores. A perfect score on each element would produce a total 
score of 100 points.
9. Performance Ranking
    Employees are ranked, by performance score, within a peer group. A 
peer group may involve no more than one career path, but may be 
otherwise organized by any combination of organization, occupation, 
band, or appointment type. Rating Officials rank their own employees, 
then Pay Pool Managers interleave the rankings of subordinate Rating 
Officials to produce peer group rankings at the pay pool level. A Pay 
Pool Manager is a line manager who manages his or her organization's 
pay increase and bonus funds and has final decision authority over the 
performance scores, performance pay increases, and bonuses of 
subordinate employees.
10. Performance Pay Decisions
    The Performance Pay Table divides each band into three segments or 
intervals. Each interval is linked to a range of potential percentage 
pay increases beginning at zero and progressing to a maximum percentage 
pay increase. The maximum performance pay increase an employee may 
receive, therefore, depends on the interval into which the employee's 
salary falls. The Pay Pool Manager makes a performance pay decision for

[[Page 24270]]

each employee in a peer group, based on the Pay Pool Manager's ranking 
and the pay increase ranges in the Performance Pay Table. Within a peer 
group, an employee may not receive a higher proportion-of-range than a 
higher-ranking employee or a lower proportion-of-range than a lower-
ranking employee. Proportion-of-range is the percentage of the maximum 
pay increase allowed for a particular interval of a pay band, i.e., a 
percent of a percent. For example, if the pay increase range for the 
pay interval is 0-12 percent, and the employee receives a 9 percent 
increase, that employee receives a proportion-of-range that equals 75 
percent of the maximum 12 percent.
11. Performance Bonuses
    Bonuses are the only cash awards directly linked to the project 
performance appraisal system, and are awarded at the end of the 
performance year in conjunction with decisions on performance pay 
increases. A Pay Pool Manager may award a bonus to any employee with an 
Eligible rating. The OPMBs will determine the bonus authority to be 
delegated to their pay pool managers.
    Bonuses address two objectives. First, the ability to reward the 
accomplishments of good performers will make them more likely to 
remain, thus improving the retention of high achievers. Second, the 
promise of bonuses for achievement will encourage improved individual 
performance.
12. Action Based on Unsatisfactory Performance
    If, after an opportunity to improve, an employee's performance is 
still not satisfactory, the operating unit will give a rating of 
Unsatisfactory and must take action to reassign or remove the employee, 
or place the employee in a lower band, in accordance with performance 
action provisions in law and regulation.

IV. Conversion or Movement From a Project Position to a General 
Schedule Position

    If a DoC Demonstration Project employee moves to a General Schedule 
position, the following procedures will be used to convert the 
employee's project pay band to an equivalent GS grade and the 
employee's project rate of pay to equivalent GS rates of pay. The 
converted GS grade and rates of pay must be determined before movement 
out of the project and any accompanying geographic movement, promotion, 
or other simultaneous action. For lateral reassignments and lateral 
transfers, the converted GS grade and rates of pay will become the 
employee's actual GS grade and rates of pay, unless immediately 
affected by a simultaneous geographic movement or another pay action. 
For non-lateral transfers, promotions, and other actions, the converted 
GS grade and rates of pay will be deemed to be the employee's grade and 
rates of pay at the time of movement out of the project and will be 
used in applying applicable pay setting rules (e.g., promotion rules.)

A. Grade-Setting Provisions

    An employee in a band corresponding to a single GS grade is 
converted to that grade. An employee in a band corresponding to two or 
more grades is converted to one of those grades according to the 
following rules:
    1. The employee's project basic rate of pay is compared with step 4 
rates in the highest applicable GS rate range (including a rate range 
in the GS base schedule, a rate range in the applicable locality rate 
schedule, or a rate range in a special rate schedule for the employee's 
occupation). If the series is a two-grade interval series, only odd-
numbered grades are considered below GS-11.
    2. If the employee's pay rate equals or exceeds the applicable step 
4 rate of the highest GS grade in the band, the employee is converted 
to that grade.
    3. If the employee's pay rate is lower than the applicable step 4 
rate of the highest grade, the pay rate is compared with the step 4 
rate of the second highest grade in the employee's band. If the 
employee's pay rate equals or exceeds step 4 of the second highest 
grade, the employee is converted to that grade.
    4. This process is repeated for each successively lower grade in 
the band until a grade is found in which the employee's rate of basic 
pay equals or exceeds the applicable step 4 rate of the grade. The 
employee is then converted at that grade. If the employee's rate of pay 
is below the step 4 rate of the lowest grade in the band, the employee 
is converted to the lowest grade.
    5. Exceptions: (1) If the employee's pay rate exceeds the maximum 
rate of the grade assigned under the above-described ``step 4'' rule 
but fits in the rate range for the next higher applicable grade in the 
band (i.e., between step 1 and step 4), then the employee shall be 
converted to that next higher applicable grade; (2) An employee will 
not be converted to a lower grade than the grade held by the employee 
immediately preceding a conversion, lateral reassignment, or lateral 
transfer in the project unless since that time the employee has 
undergone a reduction in band; (3) In Band I of the ZP and ZA Career 
Paths, students without a bachelor's degree or comparable experience 
are converted no higher than GS-4.

B. Pay-Setting Provisions

    An employee's pay within the converted GS grade is set by 
converting the project rate to GS pay rates in accordance with the 
following rules:
    1. The pay conversion is done before any geographic movement or 
other pay-related action that coincides with the employee's movement 
out of the demonstration project.
    2. An employee's project rate is converted to a rate on the highest 
applicable rate range for the converted GS grade (including a rate 
range in the GS base schedule, a rate range in the applicable locality 
rate schedule, or a rate range in a special rate schedule for the 
employee's occupation).
    3. If the highest applicable rate range is a locality pay rate 
range, the project rate is converted to a GS locality rate of pay. If 
this rate falls between two steps in the locality-adjusted schedule, 
the rate must be set at the higher step. The converted GS rate of basic 
pay is the GS base rate corresponding to the converted GS locality rate 
(i.e., same step position). (If this employee is also covered by a 
special rate schedule as a GS employee, the converted special rate will 
be determined based on the GS step position. This underlying special 
rate will be basic pay for certain purposes for which the employee's 
higher locality rate is not basic pay.)
    4. If the highest applicable rate range is a special rate range, 
the project rate is converted to a special rate. If this rate falls 
between two steps in the special rate schedule, the rate must be set at 
the higher step. The converted GS rate of basic pay will be the GS rate 
corresponding to the converted special rate (i.e., same step position).
    5. Exception: If an employee's project rate exceeds the maximum 
rate of the highest applicable rate range upon conversion to the 
General Schedule, the affected employee's project rate will be 
converted to a retained rate under 5 U.S.C. 5363. If an employee is 
entitled to a special rate under the General Schedule, the project rate 
is converted directly to a retained rate. If an employee is only 
entitled to locality pay under the General Schedule, the retained rate 
is derived by dividing the project rate by the applicable locality pay 
factor (i.e., 1 plus the locality payment percentage). Thus, the 
locality-adjusted retained rate will equal the project rate the 
employee had been receiving before conversion. Since the

[[Page 24271]]

employee's total rate of pay is not reduced upon conversion, this 
change to converted rates under the General Schedule will not be 
considered a reduction in basic pay under 5 U.S.C. 5363 or 7512.
    6. After conversion or movement out of the demonstration project, 
an employee's converted GS rates will be used in applying GS pay 
administration rules, as necessary, in lieu of using his or her 
demonstration project rate. Thus, for example, the converted GS rate of 
basic pay (or converted special rate, if applicable) will be used in 
applying GS rules for promotions, maximum payable rate determinations, 
and pay retention, as appropriate. For conversions upon termination of 
the project and for lateral reassignments, the converted GS rates will 
become the employee's GS rates immediately after movement out of the 
demonstration project (before processing any accompanying geographic 
move).

V. Budget Discipline

    Each project operating unit will maintain compensation during the 
project at the level it would have reached under the current system. 
Current costs will be reallocated to cover project costs. To ensure 
appropriate carryover of costs from pre-project to project years, a 
base assessment will be made using three base years: Fiscal Years 1994, 
1995, and 1996. Budget discipline will be required and achieved by 
imposing specific funding principles (described in detail in the 
section on Funding Pools for Performance Pay Increases and Bonuses). 
Finally, both longitudinal and site comparisons will be used to ensure 
that spending remains within acceptable limits.

A. Reprogramming Costs

    The following actions and their costs will be eliminated by the new 
system:
    1. Promotions from one grade to a higher grade where both grades 
are now in the same broad band. For example, because Band III of both 
the ZP and ZA career paths will cover the same pay range as current 
grades GS-11 and GS-12, there will be no more promotions from GS-11 to 
GS-12.
    2. Regularly scheduled Within-Grade Step Increases and Quality Step 
Increases. There are no steps in the broad band system. These actions 
will be eliminated.
    3. Cash awards related to the performance appraisal cycle (These 
funds will be applied to bonus pools only--not to pay pools).
    The cost savings from eliminating these actions will be used to 
finance the following new actions:

--Performance-based pay increases within bands, including the ability 
to increase the pay of supervisors, through performance-based pay 
increases, to a higher level than under the current system. There is no 
guaranteed performance pay increase in the proposed system, however, 
for Eligible performance; and
--Performance bonuses.

B. Base Cost Assessment

    In order to determine whether project costs are being maintained at 
acceptable levels, a base assessment of pre-project costs will be 
needed. Costs will be computed as annual averages over three pre-
project years: Fiscal Years 1994, 1995, and 1996. The costs of all 
personnel actions of types that are being replaced by project systems 
will be totaled and averaged.

C. Funding Pools for Performance Pay Increases and Bonuses

    The results of the base cost assessment will provide a basis for: 
(1) setting maximum spending limits; and (2) constructing performance 
pay increase and bonus funding pools by organization, career path, 
band, and salary. Performance pay pools for project employees will be 
subject to the same budgetary constraints and reductions imposed on 
other Department funding allocations. Neither allocations nor 
authorizations convey funding. Therefore, managers will be required to 
make payout decisions tied to their individual budgets, within 
allocations. The following principles will be observed:
    1. In terms of career paths and bands, costs will be kept for the 
most part where they are found in the base assessment. That is, base 
costs for promotions, within-grade increases, and cash awards in a 
particular band and career path will form the basis for project 
spending in the same band and career path.
    2. Formulas will be devised to authorize pay increase and bonus 
pools up to the limits calculated from base-year spending. For each 
pool, the authorized spending ceiling will depend on the number of 
employees in the pool by career path, band, and salary.
    3. No allocation will be placed in performance pay increase pools 
for employees who are not eligible for a performance pay increase, such 
as those who have insufficient time in the position to be rated and 
those whose salaries are at the ceilings of their bands. No money will 
be placed in bonus pools for employees not eligible for a bonus, such 
as those not eligible for a performance rating or who are not on the 
payroll the last day of the performance cycle.
    4. The potential size of performance pay increases will be 
relatively high for employees whose salaries are near the minimum rate 
of the band and relatively low for those whose salaries are near the 
maximum rate of the band. This arrangement imposes a reduced rate of 
salary increases as an individual advances in the band, similar to the 
reduced rate of within-grade increases in a General Schedule grade 
imposed by the one-year, two-year, and three-year waiting periods.
    5. There will be no guaranteed performance pay increase in the 
proposed system. An employee with an Eligible performance rating may, 
if ranked at or near the bottom of a peer group, get no performance pay 
increase.
    6. Although Pay Pool Managers will not be allowed, under normal 
circumstances, to exceed their allocated pay increase and bonus pools, 
they will be allowed to spend less than the full amounts of their 
pools.
    7. Funds previously used to pay cash awards will be applied to 
bonus pools only--not to performance pay pools.

D. Budget Monitoring

    These procedures permit changes in operating unit expenditures 
which result from legislatively mandated program changes and changes in 
Federal pay and benefits. The operating units may offset selected 
salary increases with savings by reducing turnover, eliminating 
unnecessary overhead, and cutting other personnel costs.
    The operating units will measure their adherence to cost control by 
preparing budget estimates based on prescribed Federal budget processes 
and monitoring actual spending under the project against this budget 
estimate. Two cost comparisons will be used:
1. Longitudinal Comparisons
    a. Project costs will be calculated on an established schedule.
    b. Costs will be compared against the spending limits calculated 
from the base years to ensure that budget limitations are not being 
exceeded.
    c. Each year, the funding of the performance pay increase and bonus 
pools will be used as an opportunity to ``balance the books.'' That is, 
the funding of the pools will be limited to the amount that is judged 
to maintain budget discipline.

[[Page 24272]]

2. Site Comparisons
    a. A number of non-project units will be selected from within the 
Department to serve as comparison sites. The comparison sites will be 
selected to reflect, as nearly as possible, the missions and workforces 
of the project units.
    b. Periodically, the rate of increase in salaries in the project 
units will be compared to the rate of increase in salaries in the 
comparison units.
    c. When it is found that salaries in project units are outpacing 
salaries in comparison units, and the differences cannot be explained 
by non-project variables, appropriate adjustments will be made in 
project funding.

VI. Project Evaluation

    The Department will arrange for periodic evaluations of the project 
under an OPM-approved evaluation plan. The evaluation will be designed 
to determine whether the interventions are achieving the goals and 
objectives of the project within acceptable cost limits. (See Costs.)
    The following table lays out the project evaluation model, 
beginning with and flowing from the objectives that the project is 
designed to achieve. The Objective column and the Intervention column 
together serve as the project hypotheses; i.e., the hypotheses to be 
tested are that the objectives will be achieved by the interventions 
linked to them. Most objectives are linked to more than one 
intervention. Each intervention is associated with at least one 
expected result. The Measures column lists the means by which the 
actual results will be measured, and the Data Sources column shows 
where the data required for the measurements can be found.
    A hypothesis will be supported--that is, the intervention will be 
deemed to have achieved the objective--when actual results are found to 
match expected results.

                                       Table 5.--Project Evaluation Model                                       
----------------------------------------------------------------------------------------------------------------
           Objectives                Interventions     Expected  results       Measures          Data  sources  
----------------------------------------------------------------------------------------------------------------
Increased quality of new hires;   Agency-Based        Hiring officials     Hiring      Interview
 improved fit between position     Staffing.           will be able to     officials'          s with hiring    
 requirements and individual                           focus on more       judgments of the    officials.       
 qualifications; greater                               relevant            improvement in      Focus    
 likelihood of getting a highly                        recruiting          the quality of      groups.          
 qualified candidate.                                  sources and avoid   new hires.          HRM      
                                                       losing candidates   Hiring      office records on
                                                       who grow            officials'          offers and       
                                                       impatient with      judgments of        acceptances.     
                                                       long hiring         improvements in     Periodic 
                                                       processes.          the fit of          employee/        
                                                                           qualifications of   supervisor       
                                                                           new hires.          surveys.         
                                                                           Rate of     Exit     
                                                                           acceptance of       interviews.      
                                                                           offers.                              
                                  Direct Examination  For skill areas in   Hiring     Interviews with   
                                                       which well          officials'          hiring officials.
                                                       qualified           judgments of the    Focus    
                                                       individuals are     improvement in      groups.          
                                                       hard to find,       the quality of      HRM      
                                                       managers will be    new hires.          office records on
                                                       able to hire good   Hiring      offers and       
                                                       candidates as       officials'          acceptances.     
                                                       they find them,     judgments of        Periodic 
                                                       thus avoiding the   improvements in     employee/        
                                                       loss of well        the fit of          supervisor       
                                                       qualified           qualifications of   surveys.         
                                                       individuals         new hires.                           
                                                       through delays.     Rate of                      
                                                                           acceptance of                        
                                                                           offers.                              
                                  Broad-band          Broad bands and      Hiring      Interview
                                   Classification      flexible entry      officials'          s with hiring    
                                   System, in          salaries within     judgments of the    officials.       
                                   conjunction with    bands provide a     improvement in      Focus    
                                   Flexible Entry      more competitive    the quality of      groups.          
                                   Salaries.           range of entry      new hires.          HRM      
                                                       salaries for        Hiring      office records on
                                                       managers to use     officials'          offers and       
                                                       in negotiating      judgments of        acceptances.     
                                                       with candidates,    improvements in     Periodic 
                                                       thus increasing     the fit of          employee/        
                                                       the ability to      qualifications of   supervisor       
                                                       hire highly         new hires.          surveys.         
                                                       qualified           Rate of                      
                                                       candidates.         acceptance of                        
                                                                           offers.                              
                                  More Flexible Paid  Managers will be    Number of           HRM office        
                                   Advertising.        able to make        selections          records.         
                                                       greater use of      resulting from                       
                                                       paid advertising,   paid advertising.                    
                                                       thus expanding                                           
                                                       the scope of                                             
                                                       recruiting                                               
                                                       efforts or                                               
                                                       focusing the                                             
                                                       recruitment                                              
                                                       effort on                                                
                                                       specialized                                              
                                                       sources.                                                 
                                  3-Year              Greater likelihood  Number of            Automated
                                   Probationary        that scientists     scientists and      history file     
                                   Period for          and engineers who   engineers           data.            
                                   Scientists and      are retained        released during     HRM      
                                   Engineers.          after probation     probation after     office records.  
                                                       will be capable     the first year.                      
                                                       of the full range                                        
                                                       of R&D functions.                                        
                                  Local Authority     The ability of      Number of            HRM      
                                   for Recruitment     managers to grant   selections made     office records.  
                                   Payments.           recruitment         for which the       Interview
                                                       payments during     recruitment         s with hiring    
                                                       negotiations with   payment was         officials.       
                                                       highly qualified    instrumental in     Focus    
                                                       candidates will     attracting the      groups.          
                                                       increase            candidate.                           
                                                       competitiveness.                                         

[[Page 24273]]

                                                                                                                
Increased retention of good       Broad-Band          Broad-banding       Turnover rates      Automated history 
 performers.                       Classification      gives an            among good          file data.       
                                   System.             operating unit      performers.                          
                                                       the ability to     Turnover rates of                     
                                                       raise the pay of    low performers.                      
                                                       good performers                                          
                                                       to higher and                                            
                                                       more competitive                                         
                                                       levels, thus                                             
                                                       improving                                                
                                                       retention of good                                        
                                                       performers.                                              
                                  Performance-Based   Performance-based   Turnover rates       Automated
                                   Pay Increases.      pay increases       among good          history file     
                                                       give an operating   performers.         data.            
                                                       unit the ability                        Interview
                                                       to raise the pay                        s with hiring    
                                                       of good                                 officials.       
                                                       performers more                         Focus    
                                                       rapidly, thus                           groups.          
                                                       improving                                                
                                                       retention of good                                        
                                                       performers.                                              
                                  Bonuses...........  The ability to      Turnover rates      Automated history 
                                                       reward the          compared to size    file data.       
                                                       accomplishments     of bonus.                            
                                                       of good                                                  
                                                       performers will                                          
                                                       make them more                                           
                                                       likely to remain.                                        
                                  Local Authority     The ability of      A count of the       HRM      
                                   for Retention       managers to grant   instances in        office records.  
                                   Payments.           retention           which a retention   Interview
                                                       payments will       payment is          s with hiring    
                                                       improve their       instrumental in     officials.       
                                                       ability to retain   retaining an        Focus    
                                                       employees in        employee who        groups.          
                                                       critical skill      would otherwise                      
                                                       areas in a job-     have left.                           
                                                       related course of                                        
                                                       study.                                                   
                                  Supervisory Pay     The ability to      Turnover rates      Automated history 
                                   Differentials.      raise the pay of    among supervisors   file data.       
                                                       high-performance    in relation to                       
                                                       supervisors to      pay and                              
                                                       higher levels       performance.                         
                                                       will make their                                          
                                                       salaries more                                            
                                                       competitive,                                             
                                                       improving                                                
                                                       retention.                                               
                                  More Flexible Pay   Flexible pay        Turnover rates in   Automated history 
                                   Increase Upon       increases upon      relation to pay     file data.       
                                   Promotion.          promotion gives     and performance.                     
                                                       an operating unit                                        
                                                       the ability to                                           
                                                       raise the pay of                                         
                                                       high-performing                                          
                                                       employees and                                            
                                                       employees in                                             
                                                       critical skill                                           
                                                       areas to higher                                          
                                                       and more                                                 
                                                       competitive                                              
                                                       levels, thus                                             
                                                       improving their                                          
                                                       retention.                                               
Improved individual and           Two-Level, 100-     This system will    Judgments of Pay     Interview
 organizational performance.       Point, Peer Group   more effectively    Pool Managers,      s with hiring    
                                   Performance         communicate to      Rating Officials,   officials.       
                                   Appraisal System.   employees how       and Employees.      Periodic 
                                                       they are                                employee/        
                                                       performing in                           supervisor       
                                                       relation to their                       surveys.         
                                                       peers, the                              Focus    
                                                       consequences of                         groups.          
                                                       poor performance,                                        
                                                       and the rewards                                          
                                                       for good                                                 
                                                       performance.                                             
                                  Pay Increases       The promise of      Judgments of         Periodic 
                                   Linked to           higher pay          managers,           employee/        
                                   Performance.        increases for       supervisors, and    supervisor       
                                                       high achievement    employees.          surveys.         
                                                       will encourage                          Focus    
                                                       improved                                groups.          
                                                       performance.                                             
                                  Supervisory Pay     The promise of      Judgments of         Managemen
                                   Differentials.      higher pay levels   higher-level        t interviews.    
                                                       for effective       managers.                            
                                                       supervision will                                         
                                                       encourage                                                
                                                       improved                                                 
                                                       supervisory                                              
                                                       performance.                                             
                                  Bonuses Linked to   The promise of      Judgments of         Periodic 
                                   Performance.        bonuses for good    managers,           employee/        
                                                       performance will    supervisors, and    supervisor       
                                                       encourage           employees.          surveys.         
                                                       improved                                Focus    
                                                       performance.                            groups.          
                                  Hiring              By improving the    Judgments of         Interview
                                   Interventions       quality of new      managers and        s with hiring    
                                   (listed above).     hires, the hiring   supervisors.        officials.       
                                                       interventions                           Focus    
                                                       will gradually                          groups.          
                                                       produce a higher-                                        
                                                       performing                                               
                                                       workforce.                                               

[[Page 24274]]

                                                                                                                
                                  Retention           By improving the    Judgments of         Interview
                                   Interventions       retention of good   managers and        s with hiring    
                                   (listed above).     performers, the     supervisors.        officials.       
                                                       quality of the                          Focus    
                                                       workforce will be                       groups.          
                                                       higher than it                                           
                                                       otherwise would                                          
                                                       be.                                                      
More effective human resources    Broad-Band          The broad-band      Judgments of         Interview
 management.                       Classification.     classification      managers,           s with managers. 
                                                       system will be      supervisors, and    Periodic 
                                                       simpler to use,     employees.          employee/        
                                                       more                                    supervisor       
                                                       understandable to                       surveys.         
                                                       managers and                                             
                                                       employees, and                                           
                                                       more accurate.                                           
                                  Delegated           Line managers       Judgments of         Interview
                                   Classification      understand the      managers and        s with hiring    
                                   Authority to        organizational      supervisors.        officials.       
                                   Managers.           mission and the                         Periodic 
                                                       work related to                         employee/        
                                                       the mission and                         supervisor       
                                                       are therefore                           surveys.         
                                                       better prepared                         Focus    
                                                       to classify the                         groups.          
                                                       work.                                                    
                                  Delegated Pay       Line managers are   Judgments of         Interview
                                   Authority to        in a better         managers and        s with hiring    
                                   Managers.           position to         supervisors.        officials.       
                                                       understand the                          Focus    
                                                       labor market                            groups.          
                                                       forces related to                                        
                                                       the work they                                            
                                                       manage and will                                          
                                                       therefore be more                                        
                                                       effective pay                                            
                                                       managers.                                                
More efficient human resources    Automated Broad-    The broad-band       Judgments   Interview
 management.                       Band                classification      of managers and     s with hiring    
                                   Classification      system will be      supervisors.        officials.       
                                   System.             simpler, faster,    Time        Periodic 
                                                       easier to           required to         employee/        
                                                       automate, require   produce position    supervisor       
                                                       fewer resources     descriptions and    surveys.         
                                                       to operate, and     classify            Focus    
                                                       involve fewer       positions.          groups.          
                                                       classification      Number of   HRM      
                                                       decisions.          classification      office records.  
                                                                           decisions.          Automated
                                                                                               history file.    
----------------------------------------------------------------------------------------------------------------

VII. Project Management

    The Office of Personnel Management will oversee the project under 
its demonstration project authority in 5 U.S.C. 4703. The DoC 
Departmental Personnel Management Board will manage the project at the 
Department level.
    Each major operating unit will have its own Operational Personnel 
Management Board to oversee local operations. The following table lists 
the separate responsibilities of these three bodies.

[[Page 24275]]



                                          Table 6.--Project Authorities                                         
----------------------------------------------------------------------------------------------------------------
                                                                 Project authorities                            
               Arena               -----------------------------------------------------------------------------
                                             OPM                      DPMB                        OPMB          
----------------------------------------------------------------------------------------------------------------
General...........................   final          approval            establishing    
                                     approval authority     authority within the        operating unit project  
                                     for the Project        Department for the          guidelines within the   
                                     Plan, Implementing     Project Plan and            Project Plan,           
                                     Regulations, and any   Implementing Regulations.   Implementing            
                                     future changes to      approval            Regulations, and DPMB   
                                     the plan or            authority within the        policies.               
                                     implementing           Department for proposing    management of   
                                     regulations.           changes in the Project      authorities outlined    
                                                            Plan or Implementing        below and any additional
                                                            Regulations to (OPM).       authorities delegated by
                                                            monitoring the      the DPMB.               
                                                            success of project          delegating      
                                                            interventions so as to      authority to managers   
                                                            propose appropriate mid-    within the operating    
                                                            course corrections to       unit, including the     
                                                            (OPM).                      withdrawal of authority 
                                                            setting project     when warranted.         
                                                            policies within the         assuring        
                                                            parameters of the Project   adequate resources for  
                                                            Plan and Implementing       implementing and        
                                                            Regulations.                operating the project   
                                                            delegating          within the operating    
                                                            authority to OPMBs,         unit.                   
                                                            including the withdrawal    overseeing      
                                                            of authority when           training of operating   
                                                            warranted.                  unit managers,          
                                                            exercising the      employees, and support  
                                                            authority to make           staff in project        
                                                            exceptions to normal        policies and procedures.
                                                            project procedures on a                             
                                                            case-by-case basis when                             
                                                            it believes an exception                            
                                                            is warranted (the OPMBs                             
                                                            will not have this                                  
                                                            authority).                                         
                                                            assuring adequate                           
                                                            resources for designing,                            
                                                            implementing, and                                   
                                                            operating the project.                              
                                                            establishing a                              
                                                            training plan to train                              
                                                            managers, employees, and                            
                                                            support staff in project                            
                                                            policies and procedures.                            
Position Classification...........   approval of    setting project     establishing    
                                     the project            classification policy       operating unit          
                                     Classification         within the Project Plan     classification          
                                     Interventions.         and Implementing            guidelines within the   
                                                            Regulations.                Project Plan,           
                                                            approving           Implementing            
                                                            automated classification    Regulations, and DPMB   
                                                            systems and                 policies.               
                                                            classification standards.   delegating      
                                                            approving new       classification authority
                                                            occupational series and     to operating unit       
                                                            titles.                     managers.               
                                                                                        establishing    
                                                                                        career ladders.         
                                                                                        ensuring proper 
                                                                                        classification of       
                                                                                        positions within the    
                                                                                        operating unit.         
                                                                                        resolving issues
                                                                                        in operating unit       
                                                                                        classifications.        
                                                                                        approving or    
                                                                                        delegating the approval 
                                                                                        of new specialty        
                                                                                        descriptors.            
Staffing..........................   approval of    approving project   establishing    
                                     the project Staffing   staffing policies.          operating unit staffing 
                                     Interventions.         establishing        guidelines within the   
                                                            policy and criteria for     Project Plan,           
                                                            recruiting and retention    Implementing            
                                                            payments..                  Regulations, and DPMB   
                                                                                        policies.               
                                                                                        approving or    
                                                                                        delegating the approval 
                                                                                        of individual recruiting
                                                                                        and retention payments. 
                                                                                        establishing    
                                                                                        career ladders.         
                                                                                        approving use of
                                                                                        recruiting services.    
                                                                                        delegating and  
                                                                                        overseeing use of paid  
                                                                                        advertising.            
                                                                                        overseeing the  
                                                                                        application of the three-
                                                                                        year probationary       
                                                                                        period.                 
                                                                                        establishing    
                                                                                        operating unit practices
                                                                                        on vacancy distribution,
                                                                                        opening timeframes, and 
                                                                                        similar local issues.   
Reduction in Force................   approval of    approving project   establishing    
                                     the project            reduction-in-force          operating unit reduction-
                                     reduction in force     policies.                   in-force guidelines     
                                     Interventions.                                     within the Project Plan,
                                                                                        Implementing            
                                                                                        Regulations, and DPMB   
                                                                                        policies.               
                                                                                        establishing    
                                                                                        procedures on operating 
                                                                                        unit competitive levels.
                                                                                        establishing    
                                                                                        guidelines for, and     
                                                                                        overseeing, reductions  
                                                                                        in force within the     
                                                                                        operating unit.         

[[Page 24276]]

                                                                                                                
Pay Administration................   approval of    approving project   establishing    
                                     the project Pay        pay administration and      operating unit pay      
                                     Administration         pay-for-performance         guidelines within the   
                                     Interventions.         policies.                   Project Plan,           
                                                            approving project   Implementing            
                                                            pay tables.                 Regulations, and DPMB   
                                                            approving           policies.               
                                                            performance pay increase    establishing    
                                                            ranges.                     operating unit          
                                                            approving           performance pay increase
                                                            automated performance pay   pools.                  
                                                            increase systems.           establishing    
                                                            approving           operating unit          
                                                            formulas used to develop    guidelines and          
                                                            performance pay increase    delegating approval     
                                                            pools.                      authorities for setting 
                                                                                        pay levels for new hires
                                                                                        and promotions.         
Performance Evaluation............   approval of    approving project   establishing    
                                     the project            performance evaluation      operating unit          
                                     Performance            policies.                   performance evaluation  
                                     Evaluation             approving project-  guidelines within the   
                                     Interventions.         wide forms for              Project Plan,           
                                                            performance plans and       Implementing            
                                                            appraisals and for          Regulations, and DPMB   
                                                            recording outcomes.         policies.               
                                                                                        overseeing the  
                                                                                        operating unit annual   
                                                                                        performance appraisal   
                                                                                        process, from           
                                                                                        development of plans to 
                                                                                        individual pay increases
                                                                                        and bonuses.            
                                                                                        establishing    
                                                                                        operating unit          
                                                                                        guidelines on           
                                                                                        performance elements.   
                                                                                        delegating      
                                                                                        rating, review, and pay 
                                                                                        pool management         
                                                                                        authorities.            
Bonuses...........................   approval of    approving project   establishing    
                                     the project Bonus      bonus policies.             operating unit bonus    
                                     Interventions.         delegating bonus    guidelines within the   
                                                            limits to OPMBs.            Project Plan,           
                                                                                        Implementing            
                                                                                        Regulations, and DPMB   
                                                                                        policies.               
                                                                                        delegating bonus
                                                                                        limits to pay pool      
                                                                                        managers.               
                                                                                        establishing    
                                                                                        operating unit bonus    
                                                                                        pools.                  
Costs and Budget Discipline.......   approval of    approving project   establishing and
                                     the project cost       budget policies.            overseeing operating    
                                     plan.                                              unit budget procedures. 
                                                                                        assuring        
                                                                                        operating unit budget   
                                                                                        discipline.             
                                                                                        designating pay 
                                                                                        pool managers.          
                                                                                        establishing and
                                                                                        overseeing the use of   
                                                                                        operating unit          
                                                                                        performance pay increase
                                                                                        and bonus pools.        
Project Evaluation................   approval of    approving the       overseeing and  
                                     the project            approach for selecting an   assuring operating unit 
                                     Evaluation Model.      evaluator to carry out      participation in project
                                     clearing       the annual project          evaluations, including  
                                     annual evaluation      evaluation.                 data collection, focus  
                                     reports.               assuring adequate   group participation by  
                                     transmitting   resources for project       operating unit          
                                     annual evaluation      evaluation.                 employees, and          
                                     reports to Congress.   approving project   availability of managers
                                                            policies for internal       for interviews.         
                                                            Departmental assessments.   approving       
                                                                                        objectives and          
                                                                                        procedures for internal 
                                                                                        operating unit          
                                                                                        assessments.            
----------------------------------------------------------------------------------------------------------------

    The DoC Chief Financial Officer/Assistant Secretary for 
Administration will chair the Departmental Personnel Management Board 
(DPMB). The DPMB members will be senior managers of the operating units 
in the project and the DoC Director of Human Resources Management. Each 
OPMB will typically be chaired by the senior manager designated to 
serve on the DPMB. The operating units will appoint other key managers 
to their boards as they think appropriate.

VIII. Training

    The project operating units will schedule training for managers, 
supervisors, employees, and support staff.

A. Manager and Supervisor Training

    The operating units will give managers and supervisors general 
training in the overall features of the project and specific hands-on 
training in the new authorities they are to exercise. Computer training 
facilities will be used to teach managers and supervisors how to use 
the automated classification system to produce position descriptions. 
The classification training will emphasize principles of project 
classification, such as the classification logic embedded in the 
automated classification system, career path coverage criteria, 
occupational series definitions and coverage, proper classification by 
bands in accordance with project classification standards, sound 
titling practices, and economic and effective position management.
    Managers and supervisors will also be given specific training in 
performance appraisal and pay-for-performance. A key part of this 
training will be a simulation of the performance evaluation and rewards 
system prior to the actual end-of-year performance evaluation. Prior to 
the simulation, each Rating Official and Pay Pool Manager will be 
trained in the automated performance pay increase system. During the 
simulation, rating officials and pay pool managers will carry out the 
appraisal, scoring, rating, and performance pay increase process just 
as they would at the end of a performance year, but for training 
purposes only. The results will not be official and will not

[[Page 24277]]

be communicated to employees. This training exercise was used in the 
first year of the NIST project and was found to be an effective 
approach to revealing and correcting problems and misunderstandings 
prior to the real end-of-year process.

B. Employee Training

    Through general presentations, handouts, and direct training from 
supervisors, employees will be given an understanding of project 
systems and how those systems affect them.
    In the general presentations scheduled for everyone covered by the 
project, employees will be led through all project systems, from 
classification to pay administration to pay for performance. As each 
system is presented, it will be contrasted with the General Schedule 
system so employees can see how the system is changing and how the 
changes affect them. The presentations will also cover employee rights 
and grievance procedures. Employees will be given ample opportunity to 
ask questions at the presentations and will be given the names and 
numbers of individuals to call if they have questions later.
    In addition to the general presentations that will be scheduled for 
all employees, supervisors will be instructed to pass along more 
individualized information about the system in conjunction with the 
implementation of those systems. For example, at the time supervisors 
give employees their new project position descriptions, the supervisors 
will explain the position descriptions, the process that produced them, 
and the process for keeping them current. Also, at the time of the 
performance appraisal simulation, supervisors will explain to employees 
how they fit into the performance scoring and peer-group ranking 
process and how the process leads to decisions on performance pay 
increases.

C. Support Staff Training

    There are three categories of support staff: (1) personnel 
specialists in the various HRM offices serving project operating units; 
(2) budget specialists in operating unit budget offices assigned to 
monitor and advise on budget discipline issues and specifically to 
assist in establishing performance pay increase and bonus pools; and 
(3) administrative officers in the operating units, who will assist in 
processing personnel actions, distributing local performance pay 
increase and bonus pools, and electronically transmitting pay pool 
manager decisions to the automated payroll system.
    Two of the HRM offices that will serve project operating units have 
served the NIST Demonstration Project since its implementation in 1988. 
These two offices will help train personnel specialists in the other 
HRM offices. Budget specialists in the operating units, besides 
receiving the general employee training, will receive advice from a 
NIST budget specialist and will receive further training on the 
distribution of performance pay increase and bonus pools during the 
simulation of the performance evaluation and rewards system. 
Administrative officers will be invited to take part in the supervisory 
training sessions and will also receive further training during the 
simulation of the performance evaluation and rewards system.

IX. Experimentation and Revision

    Many aspects of a demonstration project are experimental. 
Modifications must be made from time to time as experience is gained, 
results are analyzed, and conclusions are reached on how the system is 
working. The DPMB, with DoC and OPM approval, will authorize minor 
modifications, such as changes in the occupational series in a career 
path, without further notice. Major changes, such as a change in the 
number of career paths, will require OPM approval and will be published 
in the Federal Register.

X. Authorities and Waiver of Laws and Regulations Required

    The following waivers of law and regulation are necessary:

Title 5, U.S. Code

Section 3308  Competitive Service; examinations; educational 
requirements prohibited; exceptions
Chapter 51  Classification
Section 5303  Annual adjustments to pay schedules
Section 5304  Locality-based comparability payments
Section 5305  Special Pay Authority
Subchapter III of chapter 53 General Schedule Pay Rates
Subchapter VI of chapter 53 Grade and Pay Retention (Waiver is 
applicable only to allow the following modifications: (1) using bands 
in lieu of grades; (2) providing no band retention if reduction in band 
is caused by employee's pay being exceeded by band minimum rate; (3) 
providing no pay retention upon reduction in pay caused solely by 
geographic movement; (4) providing no pay retention upon conversion to 
the General Schedule as long as the employee's total rate of pay is not 
reduced; and (5) providing no pay retention upon cancellation of a 
supervisory differential.)
Section 5753-5754  Recruitment and relocation bonuses; Retention 
allowances (except that relocation bonuses under Section 5753 continue 
to apply)
Section 7512(3)  Actions covered (Waiver is applicable only to use 
bands in lieu of grades and to exclude from section 7512(3) reductions 
in band not accompanied by a reduction in pay, due to the employee's 
pay being exceeded by the band minimum rate.)
Section 7512 (4)  Actions covered (Waiver is applicable only to allow 
the following modifications: (1) exclude reductions in pay that are 
solely due to recomputation upon geographic movement; (2) exclude 
conversions to GS pay that do not result in a reduction in the 
employee's total rate of pay; and (3) exclude reductions in pay due to 
the cancellation of a supervisory differential.)

Title 5, Code of Federal Regulations

Section 315.801  Probationary period; when required (Waived only for 
positions in the Scientific and Engineering Career path)
Section 315.802  Length of probationary period (Waived only for 
positions in the Scientific and Engineering Career path)
Section 351.401  Determining retention standing
Section 351.402  Competitive area in RIF
Section 351.403  Competitive level in RIF
Section 351.504  Credit for performance
Section 351.701  Assignment involving displacement
Part 511  Classification under the General Schedule
Part 530,  Subpart C, Special salary rate schedules
Part 531  Pay under the General Schedule
Part 536  Grade and Pay Retention
    Waived only to allow the following modifications: (1) using bands 
in lieu of grades; (2) providing no band retention if reduction in band 
is caused by employee's pay being exceeded by band minimum rate; (3) 
providing no pay retention upon reduction in pay caused solely by 
geographic movement; (4) providing no pay retention upon conversion to 
the General Schedule as long as the employee's total rate of pay is not 
reduced; and (5) providing no pay retention upon cancellation of a 
supervisory differential.
Section 550.703  Definition of reasonable offer (Waiver is applicable

[[Page 24278]]

only to allow substitution of (1) ``one band'' for ``two grade or pay 
levels'' and ``two grades'' and (2) ``band'' for ``grade.'')
Part 575, Subpart A, Recruitment bonuses
Part 575, Subpart C, Retention allowances
Section 752.401(a)(3) Coverage, Reductions in grade (Waiver is 
applicable only to use bands in lieu of grades and to exclude 
reductions in band not accompanied by a reduction in pay due to the 
employee's pay being exceeded by the band minimum rate.)
Section 752.401(a)(4) Coverage, Reductions in pay (Waiver is applicable 
only to exclude reductions in pay that are solely due to recomputation 
upon geographic movement; (2) exclude conversions to GS pay that do not 
result in a reduction in the employee's total rate of pay; and (3) 
exclude reductions in pay due to the cancellation of a supervisory 
differential.)

[FR Doc. 97-11317 Filed 5-1-97; 8:45 am]
BILLING CODE 6325-01-P