[Federal Register Volume 62, Number 247 (Wednesday, December 24, 1997)]
[Notices]
[Pages 67434-67463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33458]



[[Page 67433]]

_______________________________________________________________________

Part II





Office of Personnel Management





_______________________________________________________________________



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

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

[[Page 67434]]



OFFICE OF PERSONNEL MANAGEMENT


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

AGENCY: Office of Personnel Management.

ACTION: Notice of approval of a demonstration project final plan.

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

SUMMARY: Title VI of the Civil Service Reform Act, now codified in 5 
U.S.C. 4703, 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 
policies and 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 units of four Department of 
Commerce (DoC) organizations:
(1) Technology Administration
    --Office of the Under Secretary
    --Office of Technology Policy
(2) Economics and Statistics Administration
    --Bureau of Economic Analysis
(3) National Telecommunications and Information Administration
    --Institute for Telecommunication Sciences
(4) National Oceanic and Atmospheric Administration
    --Units of the Office of Oceanic and Atmospheric Research
    --Units of the National Environmental Satellite, Data, and 
Information Service
    --Units of the National Marine Fisheries Service

DATES: This demonstration project will be implemented on March 24, 
1998.

FOR FURTHER INFORMATION CONTACT: (1) Department of Commerce: Darlene F. 
Haywood, U.S. Department of Commerce, 1400 Constitution Avenue, N.W., 
Room 5004, Washington, DC 20230, 202-482-3620; (2) OPM: Judith B. 
White, U.S. Office of Personnel Management, 1900 E Street, N.W., Room 
7460, Washington, DC 20415, 202-606-1526.

SUPPLEMENTARY INFORMATION:

1. Background

    The NIST Demonstration Project was successful and was made 
permanent by Congress in 1996 (Pub. L. 104-113). Independent surveys 
have demonstrated that a majority of NIST employees are satisfied with 
the demonstration project. The Federal Employees Pay Comparability Act 
of 1990 included many of the interventions tested successfully at NIST. 
The DoC project is designed to test whether the interventions of the 
NIST project can be successful in DoC environments with different 
missions and different organizational hierarchies. Like the NIST 
project, the DoC Demonstration Project involves simplified position 
classification, pay for performance, and simplified recruiting and 
examining processes.

2. Overview

    A total of 67 oral and written comments were received in response 
to the first Federal Register Notice of May 2, 1997. These comments 
were a valuable source of input for the Department of Commerce 
Demonstration Project. All comments have been considered, and changes 
to the project plan have been made where deemed appropriate. Changes to 
the plan involve supervisory pay, performance-based reduction-in-force 
retention credit, and the extended probationary period for employees in 
the Scientific and Engineering Career Path. In addition to these 
changes, several sections of the plan have been clarified and expanded. 
Some editorial changes and corrections were also made.

3. Summary of Comments

    Nine speakers commented on the first Federal Register Notice at the 
five public hearings. A total of 58 letters were received, with one 
letter bearing 20 signatures. A variety of issues and concerns were 
raised; however, recurring comments addressed five major topics:
    (1) accountability, (2) reduction-in-force (RIF) retention credit, 
(3) impact of the project on equal employment opportunity (EEO)/
Diversity, (4) pay administration, and
    (5) performance appraisal. Other issues raised include 
classification, employee input, project evaluation, and communication. 
The following summarizes the written and oral comments by topic and 
provides a response to each.

(1) Accountability

    Comments. A majority (about two-thirds) of the comments from 
individuals and organized groups expressed a high level of concern that 
the demonstration project gives more authority and responsibility to 
supervisors and managers. Believing that many supervisors do not 
properly and fairly execute supervisory responsibilities or utilize the 
power and tools provided under the current management system, these 
employees fear a new system that gives supervisors additional authority 
over their career and pay. Employees specifically questioned whether 
proper controls would be in place to prevent management abuse in the 
administration of the performance appraisal and classification systems. 
Comments focused on the potential for favoritism and unfair treatment 
of employees in the distribution of ratings and awards. Employees also 
questioned whether pay pool managers would have the requisite knowledge 
to make fair decisions about the work of all employees in the pay pool.
    Response. The Department will implement a number of measures to 
ensure management accountability. These will include: (1) employee 
focus groups, (2) supervisory training, and (3) oversight.
    Employee focus groups: Annual project evaluations will utilize 
employee focus groups as an important source of data in measuring the 
degree to which project interventions are accomplishing desired 
objectives.
    Training: Supervisors and managers will receive detailed training 
in the new authorities they are to exercise. Classification training 
will emphasize the underlying principles of project classification and 
will instruct supervisors on the application of these principles to 
classification decisions. Training on the performance appraisal system 
will cover performance planning, monitoring, feedback, and appraisal. 
In addition, supervisors will receive training on the automated 
performance pay increase system and will be required to conduct a 
simulation of the performance evaluation and rewards system prior to 
the actual end-of-year performance appraisal. The training will also 
cover the pay pool manager's responsibilities for reviewing and 
reconciling ratings and ensuring equity and consistency in performance 
plans and ratings.
    Oversight: The authorities delegated to supervisors under this 
demonstration project will be subject to three levels of oversight. The 
Office of Personnel Management will oversee the project under the 
authority of 5 U.S.C. 4703. The DoC Departmental Personnel Management 
Board (DPMB) will manage and oversee authority delegated to the 
Operating Personnel Management Boards (OPMBs) in participating

[[Page 67435]]

organizations, and OPMBs will monitor authorities delegated to 
supervisors, withdrawing them when warranted.
    (a) Classification: Under authority delegated by the OPMBs, 
servicing human resources management staff will monitor and review 
classification decisions made by managers to ensure consistent and 
uniform application of classification policies and guidelines. When 
classification actions are found to be inconsistent with established 
policies, the servicing human resources management specialist will 
attempt to resolve the inconsistency with the responsible supervisor. 
If agreement cannot be reached, the issue will be referred to a 
Classification Review Panel (CRP). The CRP is an ad hoc advisory panel 
established by authority of the OPMB to review proposed classification 
actions referred to it by the servicing Human Resources Manager.
    (b) Performance Evaluation: OPMBs will oversee the operating unit 
annual performance appraisal process, from development of plans to 
individual pay increases and bonuses. OPMBs will also establish 
operating unit guidelines on performance elements.

(2) Reduction-in-Force (RIF) Retention Credit

    About half of all comments received addressed two related concerns 
with respect to RIF retention credit: loss of current performance-based 
credit and the percentage of employees eligible for credit under the 
project.
(a) Loss of current credit
    Comments. Employees thought it unfair that conversion to the 
demonstration project would result in the loss of performance-based RIF 
credit acquired under the current system.
    Response. The demonstration project will introduce a new ``pay-for-
performance'' personnel system, and it is intended that all employees 
enter the system on an equal basis, i.e, on a ``level playing field.'' 
Allowing some employees to bring forward performance-based RIF credit 
gained under the current system would give those employees an unfair 
advantage.
(b) Percentage of Employees Eligible for Credit
    Comments. A number of employees objected to the provision that 
would award performance-based credit for only those employees who rank 
in the top ten percent of their career paths.
    Response. The objective of this feature is to reward performance 
that is truly outstanding. Consequently, the group of employees 
receiving this credit must, by definition, be limited. However, in 
order to more closely parallel agency historical experience, the 
project plan has been revised to grant performance-based RIF retention 
credit to employees who rank in the top 20 percent of their career path 
within a pay pool, rather than the top 10 percent.

(3) Impact of the Project on EEO and Diversity

    Comments. Several employees expressed concern that the 
demonstration project would not support existing EEO and Diversity 
goals. Specific questions were raised about the impact of the project 
on the hiring of women and minorities and whether these groups would 
receive an equitable share of promotions, pay increases, and bonuses.
    Response. EEO and Diversity goals of the Department will not change 
under the demonstration project. On an annual basis, the Department 
will continue to submit an annual report and update of affirmative 
employment to the Equal Employment Opportunity Commission. In addition, 
Diversity Plans and Diversity Councils now in place will continue to be 
required for organizations participating in the demonstration project. 
Also, Senior Executive Service managers will continue to be rated on a 
Diversity critical element. The Project Evaluation Model will include 
criteria that will track hiring, award, promotion, and retention data 
in order to closely monitor the impact of the project on workforce 
diversity. A variety of data sources will be used. These include 
records in servicing human resources management offices (including 
records of recruitment sources) and records of EEO complaints.

(4) Pay Administration

    Two major compensation issues were raised. Several employees 
objected to the manner in which they would be compensated for time 
credited toward their next within-grade increase. In addition, some 
employees questioned the appropriateness of the supervisory pay 
differential.
(a) Within-Grade Increase (WIGI) Payout
    Comments. Employees objected to the one-time lump sum payment for 
time credited toward the next within-grade increase on the grounds that 
it would result in a negative impact on their salary and retirement 
contributions and earnings. In lieu of the lump sum, some suggested 
that the WIGI payout be processed as a base pay increase. Others felt 
that they should be given a choice between a one-time payment and a 
permanent salary increase.
    Response. Organizations participating in the demonstration project 
will be required to maintain compensation costs at the levels they 
would have reached under the current system. A decision to grant 
permanent salary increases for time credited toward within-grade 
increases would result in immediate cost escalation prior to 
implementation that would distort base cost calculations. Such a 
decision would be counter to Departmental cost containment goals. 
Moreover, under the demonstration project, the salaries of good 
performers will soon overtake salaries they would have reached with 
WIGIs through the following provisions of the project plan:
    (1) Annual Performance Pay Increases: The new pay system provides 
an opportunity for a performance pay increase each year, regardless of 
an employee's position in the band. This is in contrast to the waiting 
periods of one to three years for a WIGI in the General Schedule (GS) 
system. The potential size of a performance pay increase in the new 
system is significantly higher than the size of a GS within-grade 
increase.
    (2) Removal of Grade Barriers: Broad banding removes the pay 
barriers between the GS grades that are placed in the same band. For 
example, because grades GS-7 and GS-8 will be placed in the same band 
in the Support Career Path, employees who previously reached the top of 
the GS-7 grade will now have access to the GS-8 pay range.
    (3) Potential for Higher Pay Increases Upon Promotion: When an 
employee is promoted to a higher band, the employee's salary may be set 
at any point in the range of the higher band as long as the new salary 
represents an increase of at least 6 percent.
    (4) Supervisory Performance Pay: Through pay for performance, 
supervisors have salary potential 6 percent higher than the normal 
ceiling of a band.
(b) Supervisory Performance Pay
    Comments. Several employees questioned the appropriateness of the 
immediate salary increase that supervisors would receive under the 
demonstration project. Some stated that supervisors would receive 
additional compensation because they would convert to a higher pay band 
on the basis of their supervisory duties, and therefore, an automatic 
pay increase would result in double compensation for supervision. Some 
asserted that this policy conflicts with the basic ``pay-for-
performance'' concept and suggested that any pay incentive awarded 
supervisors should be given after the

[[Page 67436]]

first performance appraisal cycle, if earned through performance.
    Response. The proposed project plan provided for an automatic pay 
differential for supervisors in the Scientific and Engineering (ZP) 
Career Path only. The amount of this type of differential was to be 
fixed at 3 percent or 6 percent, for first-level and second-level (and 
higher) supervisors, respectively. However, as a result of comments 
received, this feature of the system has been eliminated. ZP 
supervisors will not be given an immediate salary increase upon 
conversion to the demonstration project. Supervisors in all career 
paths will be eligible for salaries up to 6 percent higher than the 
maximum rates of their pay bands, and there will be no differentiation 
in the amount of the increase based on supervisory level. Any employee 
who meets the demonstration project definition of ``supervisor'' will 
be eligible for the 6 percent increase, which may be reached through 
performance pay increases granted through the regular performance 
appraisal process (see Section III(D)(4) Supervisory Performance Pay).
1. (5) Performance Appraisal
    About half of all comments received addressed the performance 
appraisal process. Issues raised focused on three major areas: ranking 
versus teamwork, linking the annual comparability increase to 
performance, and the requirement for all performance elements to be 
critical.
(a) Impact of Ranking on Teamwork
    Comments. Several employees commented that ranking employees by 
performance score will pit employees against each other, create a 
competitive work environment, and destroy teamwork.
    Response. Under the demonstration project, employees will be rated 
against the criteria in their performance plans and ranked accordingly. 
There will be no direct comparison of employees' performance. It is 
expected that more competitive salaries that are directly tied to 
performance will improve both individual and organizational 
performance. Furthermore, the demonstration project performance 
appraisal system is flexible enough to reward those aspects of work 
that require cooperation and teamwork. For example, in units requiring 
high levels of cooperation and teamwork to accomplish organizational 
goals, supervisors may include contributions to the team's 
accomplishments in performance plans and rate employees accordingly.
(b) Linking the Annual Comparability Increase to Performance
    Comments. Several employees expressed concern about the proposal to 
allow only those employees with a current annual performance rating of 
Eligible to receive the annual general comparability increase. They 
consider the annual increase a cost-of-living increase, which should 
not be tied to performance.
    Response. The annual General Schedule (GS) pay adjustment is 
authorized under 5 U.S.C. 5303. It is based on the cost of labor, not 
the cost of living. GS pay adjustments are linked to changes in the 
Employment Cost Index (ECI), which measures the overall rate of change 
in employers' compensation costs in the private and public sector, 
excluding the Federal Government. The demonstration project is based on 
the principle of pay for performance; therefore, all pay increases, 
including the annual comparability increase, are tied to performance.
(c) Use of All Critical Elements in Performance Plans
    Comments. Some employees expressed concern about the requirement 
for all elements in a performance plan to be critical elements. In 
their opinion, this will make it easier for supervisors to withhold pay 
increases or bonuses, or even initiate removal, when one element is 
rated Unsatisfactory.
    Response. The requirement for all elements in a performance plan to 
be critical is not a departure from the current performance appraisal 
system. The demonstration project will not require that noncritical 
elements used in the current system be changed to critical elements 
under the project. The project simply eliminates noncritical elements. 
Also, while noncritical elements may now be included in an employee's 
performance plan, they have very little weight. Under the current 
system, unacceptable performance in one critical element results in a 
mandatory rating of Unacceptable. Likewise, under the demonstration 
project, unsuccessful performance on one element will result in a 
rating of Unsatisfactory.
(6) Other Comments
    Employees addressed a number of other issues including 
classification, employee input to the project, project evaluation, and 
communication.
(a) Classification
    Comments. One employee expressed concern that problems with the 
current GS classification standards would carry over into the 
demonstration project. Some questioned the basis for grouping 
occupations into four career paths, and a few employees questioned the 
career path decisions for their occupations. Others expressed 
dissatisfaction with what they consider the ``arbitrary'' structure of 
the pay bands, believing that employees who convert to the top of their 
bands will have minimal opportunity for pay increases.
    Response. (1) Classification Standards: Under the demonstration 
project, OPM classification standards will not be used. They will be 
replaced with more streamlined classification standards that have been 
developed to cover the work in the participating organizations. Each 
pay band in a career path will have a narrative standard that uses two 
factors:
    (1) Duties and Responsibilities and (2) Knowledge, Skills, and 
Abilities (KSAs). At each successively higher band, the standards 
describe a higher level of work and a higher level of KSAs required to 
successfully perform the work. These standards will simplify the 
classification process, make it more understandable to managers and 
employees, and reduce the time required to make classification 
decisions.
    (2) Career Paths: The four career paths are intended to replace the 
GS method of grouping occupations. Under the current system, GS 
occupations are placed in occupational groups according to general 
subject matter. Each group includes both two-grade and one-grade 
interval occupations, with each type receiving different treatment for 
classification and other purposes. By contrast, career paths group 
occupations that have parallel career patterns and can be similarly 
treated for staffing, classification, pay, and other personnel 
purposes.
    (3) Pay Bands: Pay bands are designed to parallel the typical 
career patterns for occupations in a career path. For example, in the 
Scientific and Engineering (ZP) Career Path, professional technical 
employees begin their careers as trainees (Band I), move through a 
developmental stage that builds on professional knowledge gained 
through undergraduate work (Band II), proceed to independent, full 
performance research or operational work (Band III), acquire program 
responsibility (Band IV), and achieve broad recognition as an authority 
in the field (Band V).
    (4) Potential for Pay Increases: Within each pay band, the maximum 
potential for a performance pay increase is highest for employees in 
interval one and lowest for employees in interval

[[Page 67437]]

three. This arrangement is intended to slow salary increases as 
employees move through a band, duplicating the effect of the longer 
waiting periods for GS within-grade increases as GS employees move 
through the steps of a grade.
    Comments. Some employees questioned whether their occupations were 
assigned to the appropriate career paths.
    Response. The four career paths used in the Department of Commerce 
Demonstration Project as well as placement of occupations in those 
paths replicate the NIST system. Career path determinations for 
occupations not covered by the NIST project are based on the 
definitions of career paths. However, after the first year of 
operation, questions concerning changes in career path may be 
considered.
(b) Employee Input
    Comment. A few employees felt that the project plan had not 
received any input from employees and that this could adversely impact 
relationships between management and employees.
    Response. Numerous briefings were provided to employees and union 
representatives prior to the public hearings. Employees were given an 
opportunity to provide oral comments at five public hearings held 
between June 9 and June 26, 1997. These hearings were held in locations 
across the country that were accessible to most employees. In addition, 
the first Federal Register Notice, published on May 2, 1997, informed 
employees that written comments would be accepted through July 10, 
1997. As a result of comments received from employees during the public 
comment period, several changes have been made to the project plan.
(c) Project Evaluation
    Comments. Several employees commented on the design of the Project 
Evaluation Model. Specifically, it was suggested that employee morale 
be measured since a direct link exists between morale and 
organizational performance, that employee opinions be one of the data 
sources for evaluation of the project, and that EEO complaints and 
grievance patterns be incorporated into the evaluations.
    Response. The Project Evaluation Model will include employee 
surveys as a source of data. The surveys will include criteria to 
measure organizational climate and general concerns. In addition, as 
part of the evaluation process, data on EEO complaints and grievances 
will be monitored.
(d) Communication
    Comment. One employee commented that the level of communication to 
employees about the project had been inadequate.
    Response. All employees were invited to attend general briefings on 
the proposed demonstration project in March, April, and early May of 
this year. At these briefings, employees received handouts describing 
the key features of the project. The publication of the first Federal 
Register Notice was announced in a general bulletin issued to all 
employees during the week of May 5, 1997. In that announcement, 
employees were informed that the Federal Register Notice was 
immediately available on the Office of Personnel Management Internet 
Home Page. Shortly thereafter, the publication of the Federal Register 
Notice was announced on the Department of Commerce Internet Home Page, 
and numerous copies were distributed to all servicing human resources 
offices for dissemination to employees. An article on the demonstration 
project appeared in the May/June 1997 issue of the Department's 
Commerce People magazine. In addition, a video which provides an 
overview of the project was developed and made available to employees, 
and several follow-up briefings were conducted. To ensure that 
employees are kept informed on the project, the Department will issue a 
Demonstration Project Newsletter periodically.

4. Demonstration Project System Changes

    The following directs readers to the substantive changes and 
clarifications to the project plan. The page numbers below refer to the 
pages of the proposed plan, published in the Federal Register on May 2, 
1997.
    (1) Page 24256, 24258, and 24260: The Office of the Chief Financial 
Officer/Assistant Secretary for Administration and the Office of the 
General Counsel have been deleted, as those organizations will not 
participate in the project.
    (2) Page 24259: Two laboratories of the Office of Oceanic and 
Atmospheric Research (OAR) that were inadvertently listed have been 
deleted since they will not participate in the demonstration project. 
These are the Geophysical Fluid Dynamics Laboratory, in Princeton, New 
Jersey, and the Pacific Marine Environmental Laboratory, in Seattle, 
Washington. In addition, all of the locations for each of the 
participating laboratories have been listed.
    (3) Page 24262: Table 3 has been changed to correct an error 
introduced by the printing process. Specifically the table has been 
corrected to show no GS-15 positions in the GS-1340 Meteorology Series 
and a total of 235 positions in this occupation.
    (4) Page 24262: Mountain Administrative Support Center (MASC) has 
been deleted from Table 4, since MASC will not participate in the 
demonstration project.
    (5) Page 24263: The definitions of the four career paths have been 
expanded for clarification.
    (6) Page 24265: Paragraph B2(a) has been revised to restrict direct 
examination and the associated requirement for Applicant Supply Files 
to occupations for which there is documented evidence that skills are 
in short supply.
    (7) The requirement for all employees in the Scientific and 
Engineering (ZP) Career Path to serve a three-year probationary period 
has been modified. The three-year probationary period will be 
applicable to only those ZP employees who are assigned to research and 
development positions as identified by the functional code assigned in 
conjunction with the classification process. All other ZP employees 
will serve a one-year probationary period. (For further explanation, 
see Section III(B)(10) Probationary Period.)
    (8) Page 24266: The provisions for awarding performance-based RIF 
retention credit have been changed. An employee with an overall 
performance score in the top 20 percent (as opposed to the top 10 
percent) of scores within a career path in a pay pool will be credited 
with 10 additional years of service for retention purposes.
    (9) Page 24267: The demonstration project definition of 
``supervisor'' has been clarified and expanded. Minimum criteria for 
classification of a position as ``supervisory'' have been included.
    (10) Page 24267: The section ``Locality Pay'' has been clarified. 
Specifically, the sentence dealing with special rates and locality 
rates has been rewritten to indicate that for bands affected by special 
rates, the maximum rate will be the higher of the special rate or the 
locality rate, rather than the special rate and the locality rate.
    (11) Page 24267: The policy on supervisory pay has been revised. 
Supervisors in the Scientific and Engineering (ZP) Career Path will not 
be eligible for immediate salary increases upon conversion to the 
demonstration project. Supervisors in all career paths will be eligible 
for salaries up to 6 percent higher than the maximum rates of their pay 
bands, and there will be no differentiation in the amount of the 
increase based on supervisory level.

[[Page 67438]]

Any employee who meets the demonstration project definition of 
``supervisor'' will be eligible for the maximum increase of 6 percent, 
which may be reached through performance pay increases granted through 
the regular performance appraisal process.
    (12) Page 24268: In the section entitled ``Pay Setting Upon 
Movement of an Employee to a Different Pay Area,'' the formula for 
determining the pay rate in the new area was printed incorrectly and 
has been corrected.
    (13) Page 24274: The Project Evaluation Model has been revised to 
include the objective of ``Support for EEO and Diversity goals.''
    (14) Page 24276: In the ``Project Management'' section, the role of 
the DoC Acting Chief Financial Officer/Assistant Secretary for 
Administration (now the Director of the National Institute of Standards 
and Technology) as chairman has been clarified to show that the role is 
specific to the individual, who will serve as Chair of the DPMB through 
the first cycle of the project's operation. After the first cycle, 
chairmanship of the Board will be assumed by one of the members of the 
Board.
Janice R. Lachance,
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 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 
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, 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 DoC 
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: 
(1) Hiring restrictions, (2) an overly complex job classification 
system, and (3) poor tools for rewarding and motivating employees. 
These impediments, embedded in 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

[[Page 67439]]

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. (See Section III(B)(10) Probationary Period.) 
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 a performance rating of Eligible. Other 
pay tools are supervisory performance pay, 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 performance pay provides an incentive for supervisors, 
addressing the objective of improved individual and organizational 
performance. Supervisory performance pay also addresses 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. Highly ranked employees within a 
peer group receive relatively high pay increases and lower ranked 
employees receive relatively lower pay increases. Bonuses are granted 
at the discretion of the supervisor following the performance appraisal 
process.
    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 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
    Under the demonstration project, greater authority and 
accountability will be delegated 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

[[Page 67440]]

be managed by the Departmental Personnel Management Board (DPMB). 
Through the first cycle, the Board will be chaired by the Director of 
the National Institute of Standards and Technology. Following that, one 
of the Board members will assume the role of Chairman. Each major 
operating unit will have its own Operating Personnel Management Board 
(OPMB) to manage and 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 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. The following 
organizations will participate in the project:
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 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. 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, 
N.W., Washington, D.C.
    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 a research and development (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 Laboratory--Boulder, CO
Atlantic Oceanographic and Meteorology Laboratory--Miami, FL; Silver 
Spring, MD; San Diego, CA; Norfolk, VA; and Seattle, WA.
Air Resources Laboratory--Silver Spring, MD; Boulder, CO; Research 
Triangle Park, NC; Oak Ridge, TN; Las Vegas, NV; and Idaho Falls, ID
Climate Diagnostic Center--Boulder, CO
Climate Monitoring and Diagnostics Laboratory--Boulder, CO; Hilo, HI; 
Barrow, AK; Pago Pago, American Samoa; South Pole, Antarctica
Environmental Technology Laboratory--Boulder, CO Forecast Systems 
Laboratory--Boulder, CO National Severe Storms Laboratory--Norman, OK 
Space Environmental Laboratory--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

[[Page 67441]]

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 (St. 
Petersburg, Florida); Northwest (Seattle, Washington); Southwest (Long 
Beach, California); and Alaska (Juneau). All the above units of NMFS 
will 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  
------------------------------------------------------------------------
TA............................................  ...........           35
BEA, ESA......................................  ...........          414
ITS, NTIA.....................................  ...........           82
NOAA..........................................  ...........         2114
    OAR.......................................        (640)             
    NESDIS....................................        (736)             
    NMFS......................................        (738)             
                                               -------------------------
        Total.................................  ...........         2645
------------------------------------------------------------------------


              Table 2.--Occupational Series, by Career Path             
------------------------------------------------------------------------
             Series                         Title               Number  
------------------------------------------------------------------------
              Scientific and Engineering (ZP) Career Path               
------------------------------------------------------------------------
101.............................  Social Scientist.........            2
110.............................  Economist................          247
184.............................  Sociologist *............            1
190.............................  Anthropologist *.........            1
334.............................  Computer Specialist......          267
401.............................  Biologist................           51
403.............................  Microbiologist...........            4
408.............................  Ecologist *..............            4
480.............................  Fish Administrator *.....           43
482.............................  Fish Biologist *.........          182
486.............................  Wildlife Biologist *.....            2
499.............................  Biological Science                   1
                                   Student.                             
701.............................  Veterinary Medical                   1
                                   Officer *.                           
801.............................  General Engineer.........            3
810.............................  Civil Engineer...........            8
830.............................  Mechanical Engineer......            3
850.............................  Electrical Engineer......            1
854.............................  Computer Engineer........            2
855.............................  Electronics Engineer.....           96
861.............................  Aerospace Engineer *.....            1
899.............................  Engineering Trainee......            1
1301............................  Physical Scientist.......          198
1310............................  Physicist................           71
1313............................  Geophysicist *...........           12
1315............................  Hydrologist *............            1

[[Page 67442]]

                                                                        
1320............................  Chemist..................           23
1330............................  Astronomer...............            8
1340............................  Meteorologist *..........          226
1350............................  Geologist................            2
1360............................  Oceanographer............           77
1372............................  Geodesist................            3
1382............................  Food Technologist *......            2
1399............................  Physical Science Student.            1
1515............................  Operations Research                  1
                                   Analyst.                             
1520............................  Mathematician............           24
1529............................  Mathematical Statistician            1
1530............................  Statistician.............           13
1550............................  Computer Scientist.......            7
                                                            ------------
    ZP..........................  Total....................         1591
------------------------------------------------------------------------
         Scientific and Engineering Technician (ZT) Career Path         
------------------------------------------------------------------------
332.............................  Computer Operator........            3
392.............................  Radio Frequency                      2
                                   Technician.                          
404.............................  Biology Technician.......            9
802.............................  Engineering Technician...           28
856.............................  Electronics Technician...           22
1311............................  Physical Science                    79
                                   Technician.                          
1341............................  Meteorological Technician           41
                                   *.                                   
1531............................  Statistical Clerk/                  21
                                   Assistant *.                         
                                                            ------------
    ZT..........................  Total....................          205
------------------------------------------------------------------------
                     Administrative (ZA) Career Path                    
------------------------------------------------------------------------
130.............................  Foreign Affairs                     11
                                   Specialist *.                        
131.............................  International Relations              7
                                   Specialist *.                        
260.............................  Equal Employment                     4
                                   Specialist.                          
301.............................  Miscellaneous                       77
                                   Administration.                      
340.............................  Program Manager..........            2
341.............................  Administrative Officer...           22
342.............................  Support Services                     3
                                   Specialist *.                        
343.............................  Management Analyst.......           76
346.............................  Logistics Management                 2
                                   Specialist *.                        
391.............................  Telecommunications                   1
                                   Specialist.                          
501.............................  Financial Administrator..           10
510.............................  Accountant...............           46
560.............................  Budget Analyst...........           28
610.............................  Nurse *..................            1
696.............................  Consumer Safety                      1
                                   Specialist *.                        
930.............................  Appeals Officer *........            2
1001............................  General Arts and                     3
                                   Information.                         
1035............................  Public Affairs Specialist            6
1082............................  Writer/Editor............           14
1083............................  Technical Writer/Editor..            4
1084............................  Visual Information                   7
                                   Specialist.                          
1101............................  General Business                    72
                                   Specialist.                          
1140............................  Trade Specialist.........            8
1165............................  Loan Specialist *........           16
1410............................  Librarian................           13
1412............................  Technical Information                5
                                   Specialist.                          
1654............................  Printing Manager.........            1
1670............................  Equipment Specialist.....            1
1712............................  Training Instructor *....            1
1750............................  Instructional Systems                1
                                   Specialist *.                        
    ZA..........................  Total....................         445 
                        Support (ZS) Career Path                        
------------------------------------------------------------------------
29..............................  Environmental Protection             1
                                   Assistant *.                         
303.............................  Miscellaneous Clerk/                72
                                   Assistant.                           
305.............................  Mail and File Clerk......            3
309.............................  Correspondence Clerk/                1
                                   Assistant.                           
318.............................  Secretary................          190
322.............................  Clerk-Typist.............            2
326.............................  Office Automation Clerk/            40
                                   Assistant.                           
335.............................  Computer Clerk/Assistant.           43

[[Page 67443]]

                                                                        
344.............................  Management Clerk/                    5
                                   Assistant.                           
399.............................  Student Trainee..........            8
525.............................  Accounting Technician....            8
561.............................  Budget Clerk/Assistant...            3
963.............................  Legal Instruments                    9
                                   Examiner *.                          
1087............................  Editorial Clerk/Assistant            1
1101............................  Trade Information/                   7
                                   Financial Assistant *.               
1105............................  Purchasing Agent.........            4
1411............................  Library Technician.......            4
2005............................  Supply Clerk/Assistant...            2
2102............................  Transportation Clerk/                1
                                   Assistant.                           
                                                            ------------
    ZS..........................  Total....................         404 
------------------------------------------------------------------------
* These occupations were not tested by the NIST project.                


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[[Page 67445]]

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[[Page 67446]]

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[[Page 67447]]

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BILLING CODE 6325-01-C
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 project. 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 within-grade 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

    All unions affected by the project are local units 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  
----------------------------------------------------------------------------------------------------------------
NESDIS.............................  Camp Springs, MD...........  AFGE 3680........................          118
                                     Asheville, NC..............  AFGE 146.........................          146
NMFS...............................  Silver Spring, MD..........  AFGE 2703........................          169
OAR................................  Research 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 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

[[Page 67448]]

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 sections 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): 
two-grade interval professional technical positions in the physical, 
engineering, biological, mathematical, computer and social science 
occupations; and student trainee positions in these disciplines.
    (b) Scientific and Engineering Technician (ZT): one-grade interval 
positions support scientific and engineering activities through the 
application of various skills and techniques in the electrical, 
mechanical, physical science, biological, mathematical, and computer 
fields; and student trainee fields.
    (c) Administrative (ZA): two-grade interval positions in such 
administrative and managerial fields as finance, procurement, 
personnel, librarianship, public information and program and management 
analysis; and student trainee positions in these fields.
    (d) Support (ZS): one-grade interval positions that provide 
administrative support through the application of typing, clerical, 
secretarial, assistant, and similar knowledge and skills; positions 
that provide specialized facilities support, such as guards and 
firefighters; and student trainee positions in these areas.
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 an occupation in the 
band is higher than the applicable locality rate, the Departmental 
Personnel Management Board will have to use the maximum applicable 
special rate to set the maximum rate of the band for specific 
occupations in certain geographical areas. (See Pay Administration.) 
For each regular band, there is a corresponding supervisory band for 
employees who receive supervisory performance pay. 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 supervisory band include positions that meet the DoC 
Demonstration Project definition of ``supervisor''. (See Pay 
Administration.) The following chart shows the four project career 
paths, the bands in each career path, and the relationship between 
bands and General Schedule grades.

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BILLING CODE 6325-01-C
4. Occupational Series
    The General Schedule occupational series will be retained. Existing 
OPM occupational series may be added or deleted in response to 
programmatic needs.
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 Operating Personnel Management Boards (OPMBs) 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 (when the position is in a series that may be assigned to 
more than one career path, e.g., GS-1101), 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 (DPMB or designee). 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 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 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.

[[Page 67450]]

    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 high-quality hires and a high-performing workforce (see 
Section III(B)(10)). 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: (a) 
Direct Examination: Critical Shortage Occupations and (b) 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 that require skills that are in short supply. Included in 
this group are specific occupations in two categories listed in the 
Project Operating Procedures: (1) some occupations for which there is a 
special rate under the General Schedule pay system, and (2) some 
occupations at Pay Band III and above in the ZP Career Path. 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 (that conforms with the requirements of 
5 U.S.C. 3327) 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 (a)(2) 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 for employees in the Scientific and Engineering 
(ZP) Career Path performing research and development (R&D) work. ZP 
employees performing R&D work will be required to serve a probationary 
period of three years, except that a supervisor may end the 
probationary period of a subordinate R&D employee at any time after one 
year. Near the end of the first year of the R&D 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 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 performing R&D work is to allow a hiring official to view 
the full cycle of a research assignment before

[[Page 67451]]

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 other positions, 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 20 percent 
of scores within a career path in a pay pool (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 scores 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 performance pay, 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 performance pay provides an extra performance incentive 
for supervisors, addressing the objective of improved individual and 
organizational performance. Supervisory performance pay also addresses 
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.
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

[[Page 67452]]

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 Performance Pay
    Employees who meet the demonstration project definition of 
``supervisor'' will be eligible for supervisory performance pay. 
Positions that require incumbents to spend 25 percent or more of their 
time performing all of the following duties will be titled 
``supervisory'' for classification and other official purposes and will 
be eligible for supervisory performance pay.
    1. Assign and review work daily, weekly, or monthly;
    2. Assure that production and accuracy requirements are met;
    3. Approve leave;
    4. Evaluate work performance of subordinates; and
    5. Exercise at least four of the following authorities and 
responsibilities: (a) plan work to be accomplished by subordinates, set 
and adjust short-term priorities, and prepare schedules for completion 
of work; (b) assign work to subordinates based on priorities, selective 
consideration of the difficulty and requirements of assignments, and 
the capabilities of employees; (c) give advice, counsel, or instruction 
to employees on both work and administrative matters; (d) interview 
candidates for positions in the unit and recommend appointment, 
promotion, or reassignment to such positions; (e) hear and resolve 
complaints from employees, referring group grievances and more serious 
unresolved complaints to a higher level supervisor or manager; (f) 
effect minor disciplinary measures, such as warnings and reprimands, 
recommending other action in more serious cases; (g) identify 
developmental and training needs of employees, providing or arranging 
for needed development and training; (h) find ways to improve 
production or increase the quality of the work developed; and (i) 
develop performance standards.
    Supervisory performance pay 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. 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.
    Supervisors in all career paths will be eligible for salaries up to 
6 percent higher than the maximum rate of their pay bands. The amount 
by which a supervisor's pay exceeds the maximum rate of the band 
constitutes supervisory performance pay. The higher salaries shall be 
reached through performance pay increases granted through the regular 
performance appraisal cycle.
    The payment of supervisory performance pay is not considered a 
promotion or a competitive action. Supervisory performance pay will be 
canceled when an employee's supervisory responsibilities are 
discontinued. The cancellation of supervisory pay 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 supervisory 
pay 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 supervisory performance pay) 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, as applicable. 
For bands affected by special rates, the maximum rate will be the 
higher of the special rate or 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

[[Page 67453]]

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 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] TN24DE97.005

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 career path would be considered a ``new band.''), except that 
the minimum pay increase upon promotion is 6 percent. OPMBs will 
establish operating unit guidelines and delegate approval authority for 
setting pay levels for promotions.
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. OPMBs will establish operating 
unit guidelines and delegate approval authority for setting pay levels 
for new hires.
13. Conversion of Employees From the General Schedule to the 
Demonstration Project
    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. 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 Project
    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). 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] TN24DE97.006

    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

[[Page 67454]]

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.''
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 
rewards for 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 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 of record are 
Eligible (for performance pay increase, bonus, and annual adjustment to 
basic pay) and Unsatisfactory. The Eligible rating of record 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 not satisfactory is 
placed on a performance improvement plan and given an opportunity to 
improve before a final rating of record 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 rating of 
record is Unsatisfactory and there is no performance score. If all 
elements meet at least the minimally acceptable benchmark, the rating 
of record is Eligible. Rating Officials score the performance of 
employees rated Eligible on a 100-point scale, which corresponds to the 
100-point element weighted 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

[[Page 67455]]

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 
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 an equivalent GS rate 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

[[Page 67456]]

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 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).

C. Equivalent Increase Determination

    Service under the demonstration project is creditable for within-
grade increase purposes upon conversion back to the GS pay system. 
Performance pay increases (including a zero increase) under the 
demonstration project are equivalent increases for the purpose of 
determining the commencement of a within-grade increase waiting period 
under 5 CFR 531.405(b).

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 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

[[Page 67457]]

monitoring actual spending under the project against these budget 
estimates. 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.
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 annual 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 Objectives column and the Interventions 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 means by which actual 
results will be measured. Other measures of results may be used in 
order to fully evaluate the hypotheses. The Data Sources column shows 
where 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. Tests of hypotheses will be made by comparing 
results to appropriately defined comparison groups.

                                       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      Interview
                                                       which well          officials'          s with hiring    
                                                       qualified           judgments of the    officials.       
                                                       individuals are     improvement in      Focus    
                                                       hard to find,       the quality of      groups.          
                                                       managers will be    new hires.          HRM      
                                                       able to hire good   Hiring      office records on
                                                       candidates as       officials'          offers and       
                                                       they find them,     judgments of        acceptances.     
                                                       thus avoiding the   improvements in     Periodic 
                                                       loss of well        the fit of          employee/        
                                                       qualified           qualifications of   supervisor       
                                                       individuals         new hires.          surveys.         
                                                       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.                                                 

[[Page 67458]]

                                                                                                                
                                  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.                                         
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         The ability to      Turnover rates      Automated history 
                                   Performance Pay.    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.                                             

[[Page 67459]]

                                                                                                                
                                  Supervisory         The promise of      Judgments of         Managemen
                                   Performance Pay.    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.                                               
                                  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.                                           
  More effective human resources  Delegated           Line managers       Judgments of         Interview
 management (cont.)                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 groups.     
                                                       to classify the                                          
                                                       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                                            
                                                       mangers.                                                 
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.    
Support for EEO/Diversity goals   Hiring              Managers will be     Increases   HRM and  
 in recruiting, rewarding,         Interventions       able to hire good   in the numbers of   EEO records on   
 paying, and retaining             (listed above).     minority            minorities hired.   offers and       
 minorities; providing                                 candidates as                           acceptances.     
 opportunities for a diverse                           they find them,                                          
 workforce; and in maximizing                          thus avoiding the                                        
 contributions of all employees.                       loss of well                                             
                                                       qualified                                                
                                                       minorities                                               
                                                       through delays.                                          
                                  Performance-Based   Performance-based   Comparisons          HRM      
                                   Pay Increases.      pay increases       between pay of      records.         
                                                       give an operating   minorities and                       
                                                       unit the ability    non-minorities.                      
                                                       to raise the pay                                         
                                                       of good                                                  
                                                       performers.                                              
                                  Bonuses...........  The ability to      Comparisons          HRM      
                                                       reward good         between the         records.         
                                                       performers will     bonuses received                     
                                                       allow managers to   by minorities and                    
                                                       more easily         non-minorities.                      
                                                       recognize the                                            
                                                       performance of                                           
                                                       minorities.                                              

[[Page 67460]]

                                                                                                                
                                  Pay Interventions   Supervisory pay     Comparisons          HRM      
                                   (listed above).     bands, flexible     between the         records.         
                                                       pay increases       salaries of                          
                                                       upon promotion,     minorities and                       
                                                       and flexible        non-minorities.                      
                                                       entry salaries                                           
                                                       will allow                                               
                                                       managers greater                                         
                                                       flexibilities in                                         
                                                       paying minorities                                        
                                                       at competitive                                           
                                                       salaries.                                                
                                  Retention           Broad-banding,      Turnover rates of    Automated
                                   Interventions       flexibilities in    minorities in       history file data/
                                   (listed above).     setting pay,        relation to pay     EEO records.     
                                                       performance pay     for performance.                     
                                                       increases, and                                           
                                                       bonuses, will                                            
                                                       make it easier                                           
                                                       for supervisors                                          
                                                       to retain good                                           
                                                       performing                                               
                                                       minorities.                                              
----------------------------------------------------------------------------------------------------------------

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 Operating 
Personnel Management Board to oversee local operations.
    The Director of NIST will chair the Departmental Personnel 
Management Board through the first cycle. After the first cycle, 
chairmanship of the Board will be assumed by one of the members of the 
Board. The DPMB members will be senior managers of the operating units 
in the project. The DoC Director for Human Resources Management will 
serve as Executive Secretary. 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.
    The following table lists the separate responsibilities of these 
three bodies.

                                          Table 6.--Project Authorities                                         
----------------------------------------------------------------------------------------------------------------
                                                                  Project authorities                           
                Arena                 --------------------------------------------------------------------------
                                                 OPM                      DPMB                     OPMB         
----------------------------------------------------------------------------------------------------------------
General..............................   Final approval   Approval         Establishing  
                                        authority for the        authority within the     operating unit project
                                        Project Plan,            Department for the       guidelines within the 
                                        operating procedures,    Project Plan and         Project Plan,         
                                        and any future changes   operating procedures.    operating procedures, 
                                        to the plan or           Approval         and DPMB policies.    
                                        operating procedures.    authority within the     Management of 
                                                                 Department for           authorities outlined  
                                                                 proposing changes in     below and any         
                                                                 the Project Plan or      additional athorities 
                                                                 operating procedures     delegated by the DPMB.
                                                                 to OPM.                                        
                                                                 Monitoring the   Delegating    
                                                                 success of project       authority to managers 
                                                                 interventions so as to   within the operating  
                                                                 propose appropriate      unit, including the   
                                                                 mid-course corrections   withdrawal of         
                                                                 to OPM.                  authority when        
                                                                 Setting          warranted.            
                                                                 project policies         Assuring      
                                                                 within the parameters    adequate resources for
                                                                 of the Project Plan      implementing and      
                                                                 and operating            operating the project 
                                                                 procedures.              within the operating  
                                                                 Delegating       unit.                 
                                                                 authority to OPMBs,      Overseeing    
                                                                 including the            training of operating 
                                                                 withdrawal of            unit managers,        
                                                                 authority when           employees, and support
                                                                 warranted.               staff in project      
                                                                 Exercising the   policies and          
                                                                 authority to make        procedures.           
                                                                 exceptions to normal                           
                                                                 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.                                    

[[Page 67461]]

                                                                                                                
Position Classification..............   Approval of      Setting          Establishing  
                                        the project              project classification   operating unit        
                                        Classification           policy within the        classification        
                                        Interventions.           Project Plan and         guidelines within the 
                                                                 operating procedures.    Project Plan,         
                                                                 Approving        operating procedures, 
                                                                 automated                and DPMB policies.    
                                                                 classification systems   Delegating    
                                                                 and classification       classification        
                                                                 standards.               authority to operating
                                                                                          unit 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        Establishing  
                                        the project Staffing     project staffing         operating unit        
                                        Interventions.           policies.                staffing guidelines   
                                                                 Establishing     within the Project    
                                                                 policy and criteria      Plan, operating       
                                                                 for recruiting and       procedures, and DPMB  
                                                                 retention payments.      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        Establishing  
                                        the project reduction-   project reduction-in-    operating unit        
                                        in-force Interventions.  force policies.          reduction-in-force    
                                                                                          guidelines within the 
                                                                                          Project Plan,         
                                                                                          operating procedures, 
                                                                                          and DPMB policies.    
                                                                                          Establishing  
                                                                                          procedures on         
                                                                                          operating unit        
                                                                                          competitive levels.   
                                                                                          Establishing  
                                                                                          guidelines for, and   
                                                                                          overseeing, reductions
                                                                                          in force within the   
                                                                                          operating unit.       
Pay Administration...................   Approval of      Approving        Establishing  
                                        the project Pay          project pay              operating unit pay    
                                        Administration           administration and pay   guidelines within the 
                                        Interventions.           for performance          Project Plan,         
                                                                 polices.                 operating procedures, 
                                                                 Approving        and DPMB policies.    
                                                                 project pay tables.      Establishing  
                                                                 Approving        operating unit        
                                                                 performance pay          performance pay       
                                                                 increase ranges.         increase pools.       
                                                                 Approving        Establishing  
                                                                 automated performance    operating unit        
                                                                 pay increase systems.    guidelines and        
                                                                 Approving        delegating approval   
                                                                 formulas used to         authorities for       
                                                                 develop performance      setting pay levels for
                                                                 pay increase pools.      new hires and         
                                                                                          promotions.           
Performance Evaluation...............   Approval of      Approving        Establishing  
                                        the project              project performance      operating unit        
                                        Performance Evaluation   evaluation policies.     performance evaluation
                                        Interventions.           Approving        guidelines within the 
                                                                 project-wide forms for   Project Plan,         
                                                                 performance plans and    operating procedures, 
                                                                 appraisals and for       and DPMB policies.    
                                                                 recording outcomes.      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.          

[[Page 67462]]

                                                                                                                
Bonuses..............................   Approval of      Approving        Establishing  
                                        the project Bonus        project bonus policies.  operating unit bonus  
                                        Interventions.           Delegating       guidelines within the 
                                                                 bonus limits to OPMBs.   Project Plan,         
                                                                                          operating procedures, 
                                                                                          and DPMB policies.    
                                                                                          Delegating    
                                                                                          bonus limits to pay   
                                                                                          pool managers.        
                                                                                          Establishing  
                                                                                          operating unit bonus  
                                                                                          pools.                
Costs and Budget Discipline..........   Approval of      Approving        Establishing  
                                        the project cost plan.   project budget           and overseeing        
                                                                 policies.                operating 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 Evaluation   approach for selecting   assuring operating    
                                        Model.                   an evaluator to carry    unit participation in 
                                        Approval of      out the annual project   project evaluations,  
                                        evaluation reports.      evaluation.              including data        
                                                                 Assuring         collection, focus     
                                                                 adequate resources for   group participation by
                                                                 project evaluation.      operating unit        
                                                                 Approving        employees, and        
                                                                 project policies for     availability of       
                                                                 internal Departmental    managers for          
                                                                 assessments.             interviews.           
                                                                                          Approving     
                                                                                          objectives and        
                                                                                          procedures for        
                                                                                          internal operating    
                                                                                          unit assessments.     
----------------------------------------------------------------------------------------------------------------

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 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

[[Page 67463]]

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 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
    Section 3502(a)(4) Order of retention

    (Waiver is applicable to allow the use of ``performance scores'' in 
lieu of ``efficiency or performance ratings.'')

Chapter 51  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 supervisory performance pay).

    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 supervisory 
performance pay.)

Title 5, Code of Federal Regulations

Section 315.801 Probationary period; when required

    (Waived only for research and development 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 
supervisory performance pay.)

Section 550.703  Definition of reasonable offer

    (Waiver is applicable 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 supervisory performance pay.)

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