[Federal Register Volume 63, Number 41 (Tuesday, March 3, 1998)]
[Notices]
[Pages 10440-10462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5424]



[[Page 10439]]

_______________________________________________________________________

Part III





Office of Personnel Management





_______________________________________________________________________



Laboratory Personnel Management Demonstration Project; Department of 
the Army, U.S. Army Medical Research and Materiel Command, Fort 
Detrick, Frederick, Maryland; Notice

  Federal Register / Vol. 63, No. 41 / Tuesday, March 3, 1998 / 
Notices  

[[Page 10440]]



OFFICE OF PERSONNEL MANAGEMENT


Laboratory Personnel Management Demonstration Project; Department 
of the Army, U.S. Army Medical Research and Materiel Command, Fort 
Detrick, Frederick, Maryland

AGENCY: Office of Personnel Management.

ACTION: Notice of approval of demonstration project final plan.

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

SUMMARY: The National Defense Authorization Act for Fiscal Year 1995 
authorizes the Secretary of Defense, with Office of Personnel 
Management (OPM) approval, to conduct personnel demonstration projects 
at Department of Defense (DoD) laboratories designated as Science and 
Technology Reinvention Laboratories. 5 U.S.C. 4703 authorizes OPM to 
conduct demonstration projects that experiment with new and different 
personnel management concepts to determine whether such changes in 
personnel policy or procedures would result in improved Federal 
personnel management.

DATES: This demonstration project may be implemented at the U.S. Army 
Medical Research and Materiel Command (MRMC) beginning June 3, 1998.

FOR FURTHER INFORMATION CONTACT: MRMC: Carol Dick, US Army Medical 
Research and Materiel Command, ATTN: MCHD-CP, 810 Schreider Street, 
Suite 120, Fort Detrick, Maryland 21702-5000, phone 301-619-2247. OPM: 
Fidelma A. Donahue, U.S. Office of Personnel Management, 1900 E Street, 
NW, Room 7460, Washington, DC 20415, phone 202-606-1138.

SUPPLEMENTARY INFORMATION:

1. Overview

    On March 12, 1997, [62 FR 11676] OPM published this proposed 
demonstration plan and received 125 comments (one letter had 62 
signatures and another had 35 signatures). Seven individuals commented 
on the Federal Register notice at the Public Hearings. These comments 
brought new and different perspectives to the attention of those 
responsible for implementing, overseeing, and evaluating the project. 
The comments highlighted instances of either miscommunication and/or 
misunderstanding of the present system as well as the project 
interventions. Further, the comments underscored the importance of 
providing training to employees and supervisors on the demonstration 
project. In consideration of the comments received, the demonstration 
project has been modified to remove the annual general increase from 
the performance pay pool. This change required modification, 
clarification, and/or expanded text in the plan to address technical 
provisions. A summary of comments received, along with accompanied 
responses, is provided below:

A. Pay-for-Performance

    1. Comment: There were 120 comments (one letter had 62 signatures 
and another had 35 signatures) that expressed concern over the 
inclusion of the annual general increase (often referred to as ``cost-
of-living allowance'' (COLA) by many commentors) in the performance pay 
pool. Several indicated they believed it was inappropriate and may be 
illegal to deny their annual general increase, which they believed was 
provided to them by Congress to off-set inflation. Several stated that 
the annual general increase is not tied to performance, therefore, it 
should not be included in a pay-for-performance experimental program. 
One commentor stated this will be the first time a demonstration 
project will include the annual general increase in its ``merit pay 
pool,'' and another stated neither China Lake nor the National 
Institute of Standards and Technology included the annual general 
increase in their demonstrations, and that the China Lake demonstration 
had ended because of problems with the experimental personnel system. 
Several commentors stated they were never informed prior to the 
proposed plan that the annual general increase/COLA would be part of 
the performance pay pool, while others claimed they had raised 
objections to the annual general increase/COLA being part of the 
performance pay pool prior to the publication of the Federal Register, 
yet their objections were ignored. Many expressed concern that without 
sufficient safeguards to prevent favoritism and abuse of power, 
inclusion of the annual general increase in the performance pay pool 
will result in supervisors denying increases to employees' base pay 
and/or bonuses and will reduce teamwork, i.e., pit employee against 
employee, and destroy morale. One employee suggested that because 
employees have no control over inflation, but do control their 
performance, that the awards budget should be increased to reward 
performance. Some commentors, however, did agree with the pay-for-
performance concept.
    Response: The comments on the annual general increase demonstrated 
both miscommunication and misunderstanding of both the present and 
proposed personnel systems. Briefings were provided to all employees at 
each subordinate activity which included the fact that the ``annual 
general increase'' would be included in the performance pay pool. 
During the 2\1/2\ years of project development and design, many changes 
occurred. Periodic updates were provided to the activity Commanders and 
Directors for dissemination to the workforce. Commentors believed the 
term ``annual general increase'' was a cost of living allowance. For 
clarification purposes, the General Schedule (GS) pay adjustments 
authorized under 5 U.S.C. 5303 are based on the cost of labor, not the 
cost of living. Pay adjustments are linked to changes in the Employment 
Cost Index (ECI). The ECI measures the overall rate of change in 
employer's compensation costs in the private and public sectors, 
excluding the Federal Government. The ECI does not measure the cost of 
consumer goods and services. Additionally, the Department of Navy's 
``China Lake'' demonstration project did include the annual general 
increase in its incentive pay pool for the purposes of rewarding 
employees based on performance. This compensation mechanism was 
designed to send a clear message that top performers are valued in the 
organization. The evaluations showed that a higher retention rate among 
top performers resulted under the China Lake demonstration project. 
Based on its success, Congress made permanent the China Lake 
demonstration project under the same authority that granted 
authorization of the DoD laboratory demonstration projects. We 
acknowledge concerns expressed by employees and have attempted to build 
a number of checks and balances in the new personnel system to ensure 
an equitably administered program. The awards program is separate from 
pay for performance and does not impact the performance pay pool. In 
light of the comments received, the annual general increase was removed 
from the performance pay pool. This change necessitated modification/
revision in various parts of the plan. These changes are in Section 
III. C (Pay for Performance Management System), (Pay for Performance), 
and (Performance Pay Increases and/or Performance Bonus).
    2. Comment: Two commentors were concerned that any type of 
performance bonus, rather than an increase in base pay, will have a 
negative effect on their retirement (e.g., determination of high-three 
salaries/matching funds for Thrift Savings Plan).
    Response: Employees will have the potential for higher salaries 
(base pay

[[Page 10441]]

and performance bonus) than currently afforded in the GS system, based 
on their performance. The demonstration proposal clearly changes the 
methods of providing incentives to employees, including the provision 
of individual incentive bonuses or pay. Changing the method of 
determining base pay increases does not change any provision of the 
retirement system or any other benefit program. Under demonstration 
authority, retirement provisions cannot be changed.

B. Performance Pay Pool

    1. Comment: Two comments received asked why employees rated at the 
``C'' level in the lower half of the pay band receive an increase to 
their basic rate of pay while employees whose salary is beyond the mid-
point with the same rating, will receive no increase to their basic 
rate of pay. They concluded that an employee who continues to perform 
at the ``C'' level could also end up in a lower pay band. Further, they 
felt that those employees who perform at the ``A'' or ``B'' level and 
have reached the top of their pay band may not move into the next pay 
band, and that the most these employees may receive is a performance 
bonus, which defeats the whole concept of rewarding outstanding 
performance.
    Response: References to the mid-point of the pay bands (lower and 
upper half) no longer apply throughout the text of the proposed plan 
because of the change to remove the annual general increase from the 
performance pay pool (reference A1). Employees who are rated ``C'' will 
receive the annual general increase and locality adjustment, but will 
not be eligible for a performance based increase to their basic rate of 
pay or a performance bonus. Employees who perform at the ``A'' or ``B'' 
level will receive an adjustment in their basic rate of pay, a 
performance bonus, or a combination of both to reward them for 
performance, in addition to the annual general increase and locality 
adjustment. These changes are in Section III. C (Pay for Performance). 
Employees who have reached the top of their pay band may not move into 
the next pay band without a promotion. Movement into the next higher 
pay band constitutes a ``promotion'' which requires the employee to 
perform ``higher level duties,'' not just continue to perform their 
current duties at the ``A'' or ``B'' level in their current pay band.
    2. Comment: Two comments received requested clarification on the 
upper versus lower half of the pay bands and questioned why employees 
were compensated differently depending on their performance and 
location within the pay band. A single comment was received on the size 
of the Engineers and Scientists (E&S) Pay Band II, specifically why it 
contains 8 pay bands when the proposed plan stated: ``Each occupational 
family will be divided into three to five pay bands * * *''
    Response: The decision to withdraw the annual general increase from 
the performance pay pool and continue granting the annual general 
increase to employees rated ``A,'' ``B,'' or ``C'' eliminates the need 
to determine upper and lower half of each pay band. The size of Pay 
Band II of the E&S Occupational Family encompasses 8 grades (not pay 
bands) under the current General Schedule (GS) system and was designed 
to allow progression from entry level to full-performance level of 
those positions. As illustrated in the proposed plan, the E&S 
Occupational Family is divided into 5 pay bands. The elimination of the 
distinctions between the upper and lower halves of the pay band and the 
mid-point principle have been removed in Section III. C (Performance 
Pay Pool).

C. Supervisory Bonus

    Comment: Three commentors were concerned that no guidelines were 
established to avoid supervisory/managerial misuse of power, and one 
expressed concern that supervisors would be rewarded via supervisory 
bonuses, prior to demonstration of performance and that payment of the 
supervisory bonus from the performance pay pool was inappropriate.
    Response: The supervisory bonus may be granted to recognize 
supervisory responsibilities required most often of those in the same 
pay band as non-supervisory subordinates. The Personnel Demonstration 
Project Standard Operating Procedures will delineate the criteria 
Commanders/Directors are to use when making a decision to grant these 
bonuses, which must be negotiated annually, and will not be treated as 
basic pay. The funds to pay supervisory bonuses are not a part of the 
pay-for-performance pool. It is anticipated that situations warranting 
supervisory bonuses will be minimal. Clarification has been added to 
Section III. C (Supervisory Bonus).

D. Revised Reduction-in-Force (RIF) Procedures

    Comment: Five commentors expressed concerns about the proposed RIF 
procedures. Two were concerned that their rights during a RIF have been 
withdrawn or limited. One expressed concern that length of service was 
the last retention factor considered. Another individual requested an 
explanation of the order of the retention factors and the definition of 
tenure. One individual requested a comparison of current versus 
proposed RIF procedures.
    Response: The RIF rights and protections afforded to employees have 
not been removed. Current RIF procedures are covered under 5 CFR 351 
and are complicated, costly, and relatively unresponsive to the needs 
of the organization. MRMC believes that flexible and responsive 
alternatives are needed that will place greater emphasis on performance 
rather than length of service. Only four elements in the RIF procedures 
have been modified: competitive areas, assignment rights, credit for 
performance ratings, and service computation date, as outlined below:
    (1) Competitive areas have been modified to make each of the four 
occupational families a separate competitive area within each activity.
    (2) Assignment rights have been modified to restrict bumping and 
retreating to positions within the employee's current occupational 
family, one pay band below the employee's current pay band. A 
preference eligible veteran with a compensable service-connected 
disability of 30% or more may retreat to positions, within the 
employee's current occupational family, two bands (or the equivalent of 
five (5) grades) below his/her current band.
    (3) Credit for performance has been modified to be cumulative 
rather than averaged, and the number of years applied to specific 
ratings have been changed to A-10, B-7, C-3, and F-0. Cumulative 
performance ratings will serve as a stand alone retention determination 
in the RIF process after consideration of tenure and veterans 
preference.
    (4) The service computation date (as determined by length of 
service) includes all creditable service (civilian and military) and 
will be used in situations where credit for performance results in 
equal standing of two or more individuals in a RIF situation. Tenure is 
the employee's type of appointment, i.e., career, career-conditional, 
temporary, term, excepted service, etc. Clarification has been provided 
in Section III. F (Revised Reduction-in-Force (RIF) Procedures) to 
explain when service computation date (length of service) will be 
applied.

E. Conversion

    1. Comment: One comment concerned employees being adversely 
affected by receiving a lump sum bonus instead of an increase in their 
basic rate of pay if

[[Page 10442]]

the demonstration project ends or if employees transfer out of the 
project.
    Response: The lump-sum bonus referred to by the commentor is the 
prorated within-grade increase (WGI) buyout as described in the 
conversion procedures in the project plan. However, the inclusion of 
pay banding, as outlined in the demonstration project, provides the 
potential for higher pay (base pay and performance bonus) than 
currently afforded in the GS system. Basic rates of pay attained during 
participation in the demonstration project will continue upon lateral 
conversion from the demonstration project to a GS position or if the 
demonstration project ends. (Except for Pay Band V positions in certain 
circumstances).
    2. Comment: Two commentors asked exactly when the WGI buyout would 
be paid (either at the beginning of the demonstration project or on the 
one year anniversary date). Another commentor expressed concern over 
the fiscal burden of the lump-sum payment of the prorated WGIs.
    Response: Clarification is provided under Part V of this plan. The 
funding required to pay employees for time served towards their WGI 
will be calculated/documented prior to implementation of the project 
and those funds will be set aside to be paid in a lump-sum at the one 
year anniversary of the demonstration project. These funds will be 
separate and apart from the performance pay pool for this one time 
payment.

F. Evaluation Plan

    Comment: One commentor stated he did not see anything which listed 
an employee's increased satisfaction with pay, pay equity or 
performance awards or with the agency's understanding of personal or 
family issues as an expected or desired benefit.
    Response: Part VII of the proposed plan provided information on the 
Evaluation Plan. Employee attitudes and feedback using surveys, 
structured interviews and focus groups, will be included in the 
evaluation methods used to assess the impact of the project and will be 
ongoing for the duration of the project. The personnel demonstration 
project will not be evaluating personal or family issues. Because these 
current policies and practices are not changed, these issues will not 
be evaluated by the proposal.

G. Personnel Management Board

    Comment: Four comments expressed concerns regarding the Personnel 
Management Board (Board). Specifically, will the selection procedures 
provide for a true representation of the civilian workforce, what are 
the qualifications to be on the board, and will there be checks and 
balances to ensure equitable treatment?
    Response: The composition of the Personnel Management Board will be 
determined by the Commander, MRMC. We are sensitive to the concerns 
raised as to the composition of the Personnel Management Board. These 
concerns will be considered as the Commander, MRMC appoints members to 
the Personnel Management Board. The Personnel Management Board will be 
particularly sensitive to issues of fairness and equity, and is charged 
with the responsibility of providing oversight, policy, guidelines, and 
corrective action. Section II. H (Personnel Management Board) of the 
proposed plan spelled out the Board responsibilities which are 
delegated to the subordinate activity Commanders/Directors.

H. Miscellaneous Comments

    1. Comment: A single comment stated that the proposed system 
violated the first principle of personnel management in that the people 
(i.e., military supervisors) administering the demonstration plan will 
not be subject to its provisions.
    Response: It is true that military supervisors will not be covered 
by the demonstration project. However, it is also true that all 
supervisors (military and civilian) must comply with the rules and 
regulations set forth by the project. Project oversight will be 
provided by the Personnel Management Board and an executive steering 
committee made up of top level executives within the Department of 
Army.
    2. Comment: A single commentor wanted to know why employees in the 
Senior Executive Service (SES), the Civilian Intelligence Personnel 
Management System (CIPMS), and the Federal Wage System (FWS) were not 
covered by the MRMC demonstration project.
    Response: The SES, CIPMS, and FWS employees are all covered by 
personnel regulations, separate and apart from those governing General 
Schedule employees. The number of employees covered by these personnel 
systems were too small to attempt proposing changes and to realize any 
meaningful results at this time.
    3. Comment: One commentor requested the demonstration project plan 
be written in terms that everyone understands.
    Response: The comment is a good suggestion; however, the project 
plan replaces many of the existing title 5 provisions, thus it must 
contain technical language. Wherever possible, we have tried to use 
language as simple as possible throughout the project plan.
    4. Comment: One employee expressed concern that the Defense Finance 
and Accounting System (DFAS) can't handle formula driven payroll now, 
therefore, how can DFAS be expected to handle the new payroll system 
under the demo?
    Response: Management from DFAS has been involved as DoD Research 
and Development Laboratories have moved towards implementing 
demonstration projects. Every effort is being made to allow for a 
smooth transition.

2. Demonstration Project System Changes

    The following summarizes the changes and clarifications to the 
project plan that were of paramount interest to employees:
    (1) Section II. E (Participating Employees). Deleted reference to 
ST employees following performance appraisal and awards provisions of 
the demonstration project.
    (2) Section III. C (Pay for Performance Management System). Deleted 
the annual general increase from the funding for performance pay 
increases and/or bonuses, and to correct the computation in the example 
from ``1,750,000'' to ``750,000''; adjusted shares to the following: 
``A''=2 shares, ``B''=1 share, ``C''=0; and reflected modifications 
required due to the withdrawal of the annual general increase from the 
performance pay pool funding. In addition, references to mid-point 
(upper/lower pay band) within a pay band have been deleted since they 
no longer apply.
    (3) Section III. C (Pay for Performance Management System). 
Clarified the reason for granting a supervisory bonus and that funding 
for such will not be part of the performance pay pool.
    (4) Section III. F (Revised Reduction in Force (RIF) Procedures). 
Clarified when service computation date (length of service) will be 
used in RIF procedures.
    (5) Section V (Conversion). Provided for certain pay increases for 
non-competitive promotion equivalents during the first 12 months 
following conversion.

    Dated: February 26, 1998.

Office of Personnel Management.
Janice R. Lachance,
Director.

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose

[[Page 10443]]

    B. Problems with the Present System
    C. Changes Required/Expected Benefits
    D. Participating Organization
    E. Participating Employees
    F. Labor Participation
    G. Project Design
    H. Personnel Management Board
III. Personnel System Changes
    A. Broadbanding
    B. Classification
    C. Pay-for-Performance Management System
    D. Hiring and Appointment Authorities
    E. Expanded Developmental Opportunities Program
    F. Revised Reduction-In-Force (RIF) Procedures
IV. Training
V. Conversion
VI. Project Duration
VII. Evaluation Plan
VIII. Demonstration Project Costs
IX. Required Waivers to Law and Regulation
Appendix A: Occupational Series by Occupational Family
Appendix B: Project Evaluation and Oversight
Appendix C: Performance Elements
Appendix D: Benchmark Performance Standards

I. Executive Summary

    This project was designed by the Department of the Army (DA), with 
participation of and review by the Department of Defense (DoD) and the 
Office of Personnel Management (OPM). The purpose of the project is to 
achieve the best workforce for the Medical Research & Materiel Command 
(MRMC) mission, adjust the workforce for change, and improve workforce 
quality.
    The MRMC strives to exceed the greatest expectations of its many 
customers. To achieve this, the MRMC must be able to balance customer 
requirements for near-term technical and scientific products and 
information with the evolving capabilities of the workforce. These 
purposes will be significantly enhanced by interventions such as 
expanded developmental opportunities, the contingent employee 
appointment authority, broadbanding, pay for performance, etc.
    The foundations of this project are based on the concept of linking 
performance to pay for all covered positions; simplifying paperwork and 
the processing of classification and other personnel actions; 
emphasizing partnerships among management, employees and unions 
representing covered employees; and delegating classification and other 
authorities to line managers. Additionally, the research intellect of 
the MRMC workforce will be revitalized through the use of expanded 
developmental opportunities. The use of these expanded opportunities 
will reinvigorate the creative intellect of the research and 
development community.
    Development and execution of this project will be in-house budget 
neutral, based on a baseline of September 1996 in-house costs and 
consistent with the DA plan to downsize laboratories. Army managers at 
the DoD S&T Reinvention Laboratory sites will manage and control their 
personnel costs to remain within established in-house budgets. An in-
house budget is a compilation of costs of the many diverse components 
required to fund the day-to-day operations of a laboratory. These 
components generally include pay of people (labor, benefits, overtime, 
awards), training, travel, supplies, non-capital equipment, and other 
costs depending on the specific function of the activity.
    This project will be under the joint sponsorship of the Assistant 
Secretary of the Army for Research, Development and Acquisition and the 
Assistant Secretary of the Army for Manpower and Reserve Affairs. The 
Commander, U.S. Army Medical Command (MEDCOM), will execute and manage 
the project. External project oversight within the Army will be 
achieved by an executive steering committee made up of top-level 
executives, co-chaired by the Deputy Assistant Secretary of the Army 
for Research and Technology and the Deputy Assistant Secretary of the 
Army (Civilian Personnel Policy). Oversight external to the Army will 
be provided by DoD and OPM.

II. Introduction

A. Purpose

    The purpose of the project is to demonstrate that the effectiveness 
of DoD laboratories can be enhanced by allowing greater managerial 
control over personnel functions and, at the same time, expanding the 
opportunities available to employees through a more responsive and 
flexible personnel system. The quality of DoD laboratories, their 
people, and products has been under intense scrutiny in recent years. 
The perceived deterioration of quality is due, in substantial part, to 
the erosion of control which line managers have over their human 
resources. This demonstration, in its entirety, attempts to provide 
managers, at the lowest practical level, the authority, control, and 
flexibility needed to achieve quality laboratories and quality 
products.

B. Problems with the Present System

    The MRMC provides medical solutions for military requirements to 
protect and sustain the force. To do this, its management must acquire 
and retain an enthusiastic, innovative, and highly educated/trained 
workforce. The MRMC must be able to compete with the private sector for 
the best talent and be able to make job offers in a timely manner with 
the attendant bonuses and incentives to attract high quality employees. 
Today, industry laboratories can make an offer of employment to a 
promising new hire before the government can prepare the paperwork 
necessary to begin the recruitment process.
    Currently, jobs are described using a classification system that is 
overly complex and specialized. This hampers a manager's ability to 
shape the workforce and match the positions while making best use of 
the employees. Managers must be given local control of positions and 
their classification to move both their employees and vacancies freely 
within their organization to other lines of the business activities to 
match the life cycle needs of supported customers.
    These issues work together to hamper supervisors in all areas of 
human resource management. Hiring restrictions and overly complex job 
classifications, coupled with poor tools for rewarding and motivating 
employees and a system that does not assist managers in removing poor 
performers, builds stagnation in the workforce and wastes valuable 
time.

C. Changes Required/Expected Benefits

    This project is expected to demonstrate that a human resource 
system tailored to the mission and requirements of the MRMC will result 
in: (a) Increased quality in the total workforce and the products they 
produce; (b) increased timeliness of key personnel processes; (c) 
increased retention of high quality employees and increased non-
retention of poor quality employees; and (d) increased satisfaction 
with the MRMC and its products by all customers served.
    The MRMC demonstration project builds on the successful features of 
demonstration projects at China Lake and the National Institute of 
Standards and Technology (NIST). These demonstration projects have 
produced impressive statistics on the job satisfaction for their 
employees versus that for the federal workforce in general. Therefore, 
in addition to expected benefits mentioned above, the MRMC 
demonstration project expects to find more satisfied employees on many 
aspects of the demonstration project including pay equity, 
classification accuracy, and fairness of performance management. A full 
range of measures

[[Page 10444]]

will be collected during Project Evaluation (Section VII).

D. Participating Organization

    This demonstration project will cover approximately 1,000 MRMC 
civilian employees at all geographic sites within the United States. It 
should be noted that many sites currently employ fewer than 10 people 
and that the sites may change as the MRMC reorganizes, realigns, and 
complies with Base Realignment and Closure Act requirements. Successor 
organizations will continue coverage in the demonstration project. 
Approximately 46 percent of covered employees are located at Fort 
Detrick, Frederick, Maryland. The remaining employees are located at 
the following sites: Aberdeen Proving Ground, Maryland; Falls Church, 
Virginia; Fort Rucker, Alabama; Fort Sam Houston, Texas; Natick, 
Massachusetts; Washington, DC; Tobyhanna Army Depot, Pennsylvania; Fort 
Lee, Virginia; Tracy, California; Ogden, Utah; Brooks Air Force Base, 
Texas; Dayton, Ohio; Tripler Army Medical Center, Hawaii; and Fort 
Bragg, North Carolina. Additionally, the MRMC has some employees 
participating in the Flexiplace Program who are geographically located 
at Fort Collins, Colorado; Clarksville, Tennessee; and Jefferson, 
Maryland.

E. Participating Employees

    The demonstration project includes appropriated funded civilian 
employees in the competitive and excepted service (to include non-
citizens hired in the absence of qualified citizens) paid under the 
General Schedule (GS) pay system and DA Interns. The project plan does 
not cover Senior Executive Service (SES) employees, Scientific and 
Professional (ST) employees, Federal Wage System employees, and 
employees assigned to the GS-080 series and presently covered by the 
Civilian Intelligence Personnel Management System (CIPMS). Employees on 
temporary appointments will not be covered in the demonstration 
project. Personnel added to the MRMC in like positions, either through 
appointment, promotion, reassignment, change to lower grade or where 
their functions and positions have been transferred into the MRMC, will 
be converted to the demonstration project.

F. Labor Participation

    The National Federation of Federal Employees (NFFE) and the 
American Federation of Government Employees (AFGE), represent 
professional and nonprofessional GS employees at some sites within the 
MRMC. The MRMC will fulfill its obligations to consult and/or negotiate 
with the NFFE and AFGE, as appropriate, in accordance with 5 U.S.C. 
4703(f) and 7117. The participation with the NFFE, and AFGE is within 
the spirit and intent of Executive Order 12871. The bargaining units of 
MRMC not endorsing the demonstration project will not participate.

G. Project Design

    In October 1994, the MRMC began development of the specifics of 
this personnel demonstration proposal. A Personnel Demonstration 
Project Office was established and administrative support added in 
April 1995. Briefings of the proposal were initially conducted for the 
workforce at every participating subordinate activity with subsequent 
briefings provided upon request by Commanders/Directors.
    Status of the project was provided to subordinate activity 
Commanders/Directors for dissemination to all employees. An electronic 
mail address was established in the Fall of 1994 and made available to 
all employees and managers for the purpose of expressing opinions and/
or obtaining specific information about the project.
    Review of the proposal and input by the MEDCOM, MRMC workforce, as 
well as critical and extensive reviews by Headquarters DA, the Office 
of the Secretary of Defense, and OPM since April 1995, led to the 
publication of the proposal in the March 12, 1997 Federal Register. 
Subsequently, Public Hearings were held, and comments from interested 
parties and the workforce were reviewed and considered, culminating in 
the publication of the final MRMC demonstration project plan.

H. Personnel Management Board

    The MRMC intends to establish an appropriate balance between the 
personnel management authority/accountability delegated to subordinate 
activity Commanders/ Directors and MRMC management/oversight 
responsibilities by establishing a Personnel Management Board (PMB). 
The Chairperson and members will be appointed by the Commander MRMC. 
The PMB will serve to provide oversight, policy, guidelines, corrective 
action, and evaluation as subordinate activity Commanders/Directors 
execute the following:
    1. formulate and execute the civilian pay budget;
    2. determine the composition of the pay-for-performance pay pools 
in accordance with the guidelines of this proposal and internal 
procedures;
    3. administer funds allocation to pay pool managers;
    4. determine hiring and promotion salaries as well as exceptions to 
pay-for-performance salary increases;
    5. provide guidance to pay pool managers;
    6. manage the awards pools;
    7. select participants for the Expanded Developmental Opportunities 
Program, long term training, and any special developmental assignments;
    8. adhere to guidelines concerning the promotion of employees into 
salary ranges designated ``high grades';
    9. ensure in-house budget neutrality to include tracking of average 
salaries, FTEs, etc.;
    10. contact the PMB designee for problem resolution, recommending 
changes in policy/procedure, etc.; and
    11. ensure that all employees are treated in a fair and equitable 
manner in accordance with all policies, regulations, and guidelines 
covering this demonstration project.

III. Personnel System Changes

A. Broadbanding

Occupational Families
    Occupations at the MRMC will be grouped into occupational families. 
Occupations will be grouped according to similarities in type of work 
and customary requirements for formal training or credentials. The 
common patterns of advancement within the occupations as practiced at 
DoD Laboratories and in the private sector will also be considered. The 
current occupations and grades have been examined, and their 
characteristics and distribution have served as guidelines in the 
development of the four occupational families described below. 
Positions included in each occupational family are listed in Appendix 
A.
    1. Engineers and Scientists. This occupational family includes all 
technical professional positions, such as positions in the biological, 
physical and social sciences, medical, veterinary, mathematical, and 
engineering fields. Ordinarily, specific course work or educational 
degrees are required for these occupations.
    2. E&S Technicians. This occupational family contains specialized 
functions in fields that provide direct technical support to the 
scientific/engineering effort. Positions in these occupations may or 
may not require completion of formal college course work. However, 
training and skills in the various specialties are generally required.
    3. Administrative. This occupational family contains specialized 
functions in

[[Page 10445]]

such fields as management analysis, accounting, budgeting, contracting, 
purchasing, legal, business and industry, library, quality assurance, 
and supply. Special skills in administrative fields or special degrees 
are required.
    4. General Support. This occupational family is composed of 
positions requiring special skills and knowledge, such as typing, 
shorthand, or office automation skills, and job related experience. 
Clerical work usually involves the processing and maintenance of 
records. Assistant work requires knowledge of methods and procedures 
within a specific administrative area. Support functions include 
positions such as secretary, mail clerk, medical clerk, accounting 
technician and supply technician.
Pay Bands
    Each occupational family will be composed of discrete pay bands 
(levels) corresponding to recognized advancement within the 
occupations. These pay bands will replace grades. They will not be the 
same for all occupational families. Each occupational family will be 
divided into three to five pay bands, each pay band covering the same 
pay range now covered by one or more grades. A salary overlap, similar 
to the current overlap between GS grades, will be maintained.
    Ordinarily, an individual will be hired at the lowest salary in a 
pay band. Exceptional qualifications, specific organizational 
requirements, or other compelling reasons may lead to a higher entrance 
level within a band.
    The MRMC broadbanding plan expands the broadbanding concept used at 
China Lake and NIST by creating Pay Band V of the Engineers and 
Scientists Occupational Family. This pay band is designed for Senior 
Scientific Technical Managers.
    Current OPM guidelines of Senior Executive Service (SES) and 
Scientific and Professional (ST) positions do not fully meet the needs 
of MRMC. The SES designation is appropriate for executive level 
managerial positions whose classification exceeds the GS-15 grade 
level. The primary knowledges and abilities of SES positions relate to 
supervisory and managerial responsibilities. Positions classified as ST 
are reserved for bench research scientists and engineers; these 
positions require a very high level of technical expertise and they 
have little or no supervisory responsibility.
    MRMC currently has many positions, typically division/directorate 
chiefs, that have characteristics of both SES and ST classifications. 
Most division/directorate chiefs in MRMC are responsible for 
supervising other GS-15 positions, including branch chiefs, non-
supervisory researcher scientists and engineers, and possibly ST 
positions. Most division/directorate chief positions are classified at 
the GS-15 level, although their technical expertise warrants 
classification beyond GS-15. Because of their management 
responsibilities, these individuals are excluded from the ST system. 
Because of management considerations, they cannot be placed in the SES. 
Management considers the primary requirement for division/directorate 
chiefs to be knowledge of, and expertise in, the specific scientific 
and technology areas related to the mission of their divisions/
directorates. Historically, incumbents of these positions have been 
recognized within the community as scientific and engineering leaders, 
who possess primarily scientific/engineering credentials and are 
considered experts in their field. However, they must also possess 
strong managerial and supervisory abilities. Therefore, although some 
of these employees have scientific credentials that might compare 
favorably with ST criteria, classification of these positions as STs is 
not an option, because the managerial and supervisory responsibilities 
inherent in the positions cannot be ignored.
    The purpose of Pay Band V (which will reinforce the equal pay for 
equal work principle) is to solve a critical classification problem. It 
will also contribute to an SES ``corporate culture'' by excluding from 
the SES positions for which technical expertise is paramount. Pay Band 
V proposes to overcome the difficulties identified above by creating a 
new category of positions, the Senior Scientific Technical Manager, 
which has both scientific/technical expertise and full managerial and 
supervisory authority.
    Current GS-15 division/directorate chiefs will convert into the 
demonstration project at Pay Band IV. After conversion, they will be 
reviewed against established criteria to determine if they should be 
reclassified to Pay Band V. Other positions possibly meeting criteria 
for classification to Pay Band V will be reviewed on a case-by-case 
basis. The proposed salary range is a minimum of 120% of the minimum 
rate of basic pay for GS-15 with a maximum rate of basic pay 
established at the rate of basic pay (excluding locality pay) for SES 
level 4 (ES-4). Vacant positions in Pay Band V will be competitively 
filled to ensure that selectees are preeminent researchers and 
technical leaders in the specialty fields who also possess substantial 
managerial and supervisory abilities. MRMC will capitalize on the 
efficiencies that can accrue from central recruiting by continuing to 
use the expertise of the Army Materiel Command SES Office as the 
recruitment agent. Panels will be created to assist in filling Pay Band 
V positions. Panel members will be selected from a pool of current MRMC 
senior military and SES members, ST employees, and later those in Pay 
Band V, and an equal number of individuals of equivalent stature from 
outside the activity to ensure impartiality, diversity, breadth of 
technical expertise, and a rigorous and demanding review. The panel 
will apply criteria developed largely from the current OPM Research 
Grade Evaluation Guide for positions exceeding the GS-15 level.
    DoD will test the establishment of Pay Band V for a five-year 
period. Positions established in Pay Band V will be subject to 
limitations imposed by OPM and DoD. Pay Band V positions will be 
established only in an S&T Reinvention Laboratory which employs 
scientists, engineers, or both. Incumbents of Pay Band V positions will 
work primarily in their professional capacity on basic or applied 
research and secondarily perform managerial or supervisory duties. The 
number of Pay Band V positions within the DoD will not exceed 40. These 
40 positions will be allocated by ASD (FMP), DoD, and administered by 
the respective Services. The number of Pay Band V positions will be 
reviewed periodically to determine appropriate position requirements. 
Pay Band V position allocations will be managed separately from SES, 
ST, and SL positions. An evaluation of the Pay Band V concept will be 
performed during the fifth year of the demonstration project.
    The final component of Pay Band V is the management of all Pay Band 
V assets. Specifically, this authority will be exercised at the DA 
level, and includes the following: authority to classify, create, or 
abolish positions within limitations imposed by OPM and DoD; recruit 
and reassign employees in this pay band; set pay and to have their 
performance appraised under this project's Pay for Performance System. 
The laboratory wants to demonstrate increased effectiveness by gaining 
greater managerial control and authority, consistent with merit, 
affirmative action, and equal employment opportunity principles.
    High-grade controls within the agency currently restrict movement 
into high grade positions (GS-14/15). OPM's definition of ``high grade 
position'' is a position where the base pay exceeds

[[Page 10446]]

that of a GS-13, Step 10. Unless the high-grade controls are lifted, 
demonstration employees will not be able to advance into the currently 
defined pay level of a high-grade, unless a high-grade authorization is 
available. To accommodate this, employees whose salary adjustment would 
place them above the high-grade pay limit in activities where high-
grade authorizations are unavailable will receive permanent adjustments 
to basic salary up to an amount equivalent to one dollar less than the 
base of the defined high-grade pay structure. Any additional amount 
granted under pay-for-performance will be paid as a one-time bonus 
payment from pay-pool funds. This pattern of payout will continue until 
high-grade authorizations become available.
    The proposed pay bands for the occupational families and how they 
relate to the current GS grades are shown in Figure 1. Application of 
the Fair Labor Standards Act (FLSA) within each pay band is also shown 
in Figure 1. This pay band concept has the following advantages:
    1. It reduces the number of classification decisions required 
during an employee's career.
    2. It simplifies the classification decision-making process and 
paperwork. A pay band covers a larger scope of work than a grade, and 
thus will be defined in shorter and simpler language.
    3. It supports delegation of classification authority to line 
managers.
    4. It provides a broader range of performance-related pay for each 
level. In many cases, employees whose pay would have been frozen at the 
top step of a grade will now have more potential for upward movement in 
the broader pay band.
    5. It prevents the progression of low performers through a pay band 
by mere longevity, since job performance serves as the basis for 
determining pay.

                                                                         Figure 1.--Occupational Families and Pay Bands                                                                         
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Corresponding GS grades                                                           
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
              Occupational Families                                                                                                                                                       Above 
                                                     1        2        3        4        5        6        7        8        9        10       11       12       13       14       15       15  
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                
(15)BANDS                                                                                                                                                                                       
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Engineers & Scientists (DB).....................                                                                                                                                                
(3)I                                                                                                                                                                                            
(7)II                                                                                                                                                                                           
(1)III                                                IV        V                                                                                                                               
                                                                                                                                                                                                
(3)(N)                                                                                                                                                                                          
(7)(*)                                                                                                                                                                                          
(1)(E)                                               (E)      (E)                                                                                                                               
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
E&S Technicians (DE)............................                                                                                                                                                
(3)(I)                                                                                                                                                                                          
(3)II                                                                                                                                                                                           
(2)III                                                                                                                                                                                          
(1)IV                                                                                                                                                                                           
                                                                                                                                                                                                
(3)(N)                                                                                                                                                                                          
(3)(*)                                                                                                                                                                                          
(2)(*)                                                                                                                                                                                          
(1)(E)                                                                                                                                                                                          
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Administrative (DJ).............................                                                                                                                                                
(3)I                                                                                                                                                                                            
(5)II                                                                                                                                                                                           
(1)III                                                                                                                                                                                          
(1)IV                                                  V                                                                                                                                        
                                                                                                                                                                                                
(3)(N)                                                                                                                                                                                          
(5)(*)                                                                                                                                                                                          
(1)(E)                                                                                                                                                                                          
(1)(E)                                               (E)                                                                                                                                        
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
General Support (DK)............................                                                                                                                                                
(3)I                                                                                                                                                                                            
(3)II                                                                                                                                                                                           
(1)III                                                                                                                                                                                          
                                                                                                                                                                                                
(3)(N)                                                                                                                                                                                          
(3)(*)                                                                                                                                                                                          
(1)(*)                                                                                                                                                                                          
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
FLSA CODES: N--Nonexempt E--Exempt *--Nonexempt or Exempt                                                                                                                                       
Note: Although typical exemption status under the various pay bands is shown in the above table, actual FLSA exemption determinations are made on a case-by-case basis.                         

Fair Labor Standards Act
    The FLSA exemption and nonexemption determinations will be made 
consistent with criteria found in 5 CFR Part 551. Supervisors with 
classification authority will make the determinations on a case-by-case 
basis with reference to documentation in the operating procedures 
manual and the advice and assistance of the Civilian Personnel Offices 
(CPO)/Civilian Personnel Advisory Centers (CPAC)/Civilian Personnel 
Operations Centers (CPOC). The generic position descriptions will not 
be the sole basis for the determination. The basis for exemption/non-
exemption will be documented and attached to each description. 
Exemption criteria will be narrowly construed and applied only to those 
employees who clearly meet the spirit of the exemption. The basis for 
determinations will be reviewed as a part of the performance review 
process and when salary adjustments are warranted. Changes will be 
documented and provided to the CPO/CPAC/CPOC, as appropriate.
Simplified Assignment Process
    Today's environment of rightsizing and workforce transition 
mandates that the MRMC have maximum flexibility to assign duties and 
responsibilities to individuals. Broadbanding can be used to address 
this need. As a result of the assignment to a particular level 
descriptor, the organization will have maximum flexibility to assign an 
employee with no change in basic pay, within broad descriptions 
consistent with the needs of the organization, and the individual's 
qualifications and rank or level. Subsequent assignments to projects, 
tasks, or functions anywhere within the organization requiring the same 
level and area of expertise, and qualifications would not constitute an 
assignment outside the scope or coverage of the current level 
descriptor, or benchmark position description.
    Such assignments within the coverage of the generic descriptors are 
accomplished without the need to process a personnel action. For 
instance, a technical expert can be assigned to any project, task, or 
function requiring similar technical expertise. Likewise, a manager 
could be assigned to manage any similar function or organization 
consistent with that individual's qualifications. This flexibility 
allows a broader latitude in assignments and further streamlines the 
administrative process and system.
Promotions
    A promotion is the movement of an employee to a higher pay band 
within the same occupational family or to a pay band in a different 
occupational family which results in an increase in the employee's 
salary. Progression within a pay band is based upon performance pay 
increases; as such, these actions are not considered promotions and are 
not subject to the provisions of this section.
    Promotions will be processed under competitive procedures in 
accordance with merit principles and requirements. The following 
actions are excepted from competitive procedures:
    (a) Re-promotion to a position which is in the same pay band and 
occupational family as the employee previously held on a permanent 
basis within the competitive service.
    (b) Promotion, reassignment, demotion, transfer or reinstatement to 
a position having promotion potential no greater than the potential of 
a position an employee currently holds or previously held on a 
permanent basis in the competitive service.
    (c) A position change permitted by reduction-in-force procedures.

[[Page 10447]]

    (d) Promotion without current competition when the employee was 
appointed through competitive procedures to a position with a 
documented career ladder.
    (e) A temporary promotion, or detail to a position in a higher pay 
band, of 180 days or less.
    (f) Impact of person on the job, accretion of duties, and Factor IV 
process (application of the Research Grade Evaluation Guide, Equipment 
Development Grade Evaluation Guide or similar guides) promotions.
    (g) A promotion resulting from the correction of an initial 
classification error or the issuance of a new classification standard.
Link Between Promotion and Performance
    To be promoted competitively or noncompetitively from one band to 
the next, an employee must meet the minimum qualifications for the job 
and have a current performance rating of ``B'' or better (see 
Performance Evaluation) or equivalent under a different performance 
management system.

B. Classification

Introduction
    The objectives of the new classification system are to simplify the 
classification process, make the process more serviceable and 
understandable, and place more decision-making authority and 
accountability with line managers. All positions listed in Appendix A 
will be in the classification structure. Provisions will be made for 
including other occupations as employment requirements change in 
response to changing missions and technical programs.
Occupational Series
    The present GS classification system has over 400 occupations (also 
called series), which are divided into 22 groups. The occupational 
series will be maintained. New series, established by OPM, may be added 
as needed to reflect new occupations in the workforce. Appendix A lists 
the occupational series currently represented at the MRMC by 
occupational family.
Classification Standards
    MRMC will use a classification system that is a modification of the 
system now in use at the US Navy, Naval Command, Control and Ocean 
Surveillance Center, San Diego, California. The present classification 
standards will be used to create local benchmark position descriptions 
for each pay band, reflecting duties and responsibilities comparable to 
those described in present classification standards for the span of 
grades represented by each pay band. There will be at least one 
benchmark position description for each pay band. A supervisory 
benchmark position description will be added to those pay bands that 
include supervisory employees. Present titles and series will continue 
to be used in order to recognize the types of work being performed and 
educational backgrounds and requirements of incumbents. Locally 
developed speciality codes and OPM functional codes will be used to 
facilitate titling, making qualification determinations, and assigning 
competitive levels to determine retention status.
Position Descriptions and Classification Process
    The MRMC Commander will have delegated classification authority and 
will redelegate this authority to subordinate activity Commanders/
Directors for redelegation to activity managers as appropriate. New 
position descriptions will be developed to assist managers in 
exercising delegated position classification authority. Managers will 
identify the occupational family, job series, the functional code, the 
speciality code, pay band level, and the appropriate acquisition codes. 
The manager will document these decisions on a cover sheet similar to 
the present DA Form 374. Speciality codes will be developed by Subject 
Matter Experts (SMEs) to identify the special nature of work performed. 
Functional codes are those currently found in the OPM Introduction to 
the Classification Standards which defines certain kinds of activities, 
e.g., Research, Development, Test and Evaluation, etc., and covers 
Engineers & Scientists (E&S).
Classification Appeals
    An employee may appeal the occupational series or pay band level of 
his or her position at any time. An employee must formally raise the 
areas of concern to supervisors in the immediate chain of command, 
either verbally or in writing. If an employee is not satisfied with the 
supervisory response, he or she may then appeal to the DoD appellate 
level. If an employee is not satisfied with the DoD response, he or she 
may then appeal to the Office of Personnel Management, only after DoD 
has rendered a decision under the provisions of this demonstration 
project. Appellate decisions from OPM are final and binding on all 
administrative, certifying, payroll, disbursing, and accounting 
officials of the Government. Time periods for case processing under 
Title 5 apply. An employee requesting a classification decision that 
would exceed the equivalent of a GS-15 level may not submit the appeal 
to OPM.
    An employee may not appeal the assignment of the occupational 
series to an occupational family; the accuracy of the occupational 
family; the title of a position; the accuracy of the position 
description; the demonstration project classification criteria, or the 
pay-setting criteria; the propriety of a salary schedule; or matters 
grievable under an administrative or negotiated grievance procedure or 
an alternative dispute resolution procedure.
    The evaluation of classification appeals under this demonstration 
project are based upon the demonstration project classification 
criteria. Case files will be forwarded for adjudication through the 
CPO/CPAC/CPOC providing personnel services and will include copies of 
appropriate demonstration project criteria.

C. Pay-for-Performance Management System

Performance Evaluation
Introduction
    The performance appraisal system will link compensation to 
performance through annual performance evaluations and performance 
ratings. The performance appraisal system will allow optional use of 
peer evaluation input and/or input from subordinates whenever 
appropriate. The system will have the flexibility to be modified, if 
necessary, as more experience is gained under the project. Details of 
the system may be found in the implementing instructions.
Performance Objectives
    Performance objectives are statements of job responsibilities based 
on the work unit's mission, goals, and supplemental benchmark position 
descriptions. Employees and supervisors will jointly develop 
performance objectives which will reflect the types of duties and 
responsibilities expected at the respective pay level. Absent agreement 
between employees and supervisors, final authority to establish 
performance objectives and element weights rests with line management. 
The performance objectives, representing joint efforts of employees and 
their rating chains, should be in place within 30 days from the 
beginning of each rating period.
Performance Elements
    New performance elements and rating forms will be designed to 
implement a new scoring and rating system. The new

[[Page 10448]]

performance evaluation system will be based on critical performance 
elements defined in Appendix C. All elements in the new performance 
evaluation system are critical. Non-critical elements will not be used. 
Each performance element is assigned a weight between a specified 
range. The total weight of all elements in a performance plan is 100 
points. The supervisor assigns each element some portion of the 100 
points in accordance with its importance for mission attainment. These 
weights will be developed along with employee performance objectives.
Mid-Year Review
    A mid-year review between a supervisor and employee will be held to 
determine whether objectives are being met and whether performance 
objectives should be modified to reflect changes in planning, workload, 
and resource allocation. Additional reviews may be held as deemed 
necessary by the supervisor. The weights assigned to performance 
elements will be changed, if necessary.
Performance Appraisal
    A performance appraisal is scheduled for the final weeks of the 
annual performance cycle, although an individual performance appraisal 
may be conducted at any time after 60 days on approved standards. The 
performance appraisal process brings supervisors and employees together 
for formal discussions on performance and results in (1) written 
appraisals, (2) performance ratings, (3) performance pay increases and/
or bonuses, (4) cash awards, and (5) other individual performance-
related actions, as appropriate. A performance appraisal may consist of 
two meetings held between employee and supervisor: the performance 
review meeting and the evaluation feedback meeting.
Performance Review Meeting Between Employee and Supervisor
    The review meeting is to discuss job performance and 
accomplishments. Supervisors do not assign scores, ratings, pay 
increases, or awards at this meeting. The supervisor notifies the 
employee of the review meeting in time to allow the employee to prepare 
a list of accomplishments. Employees will be given an opportunity at 
the meeting to give a personal performance assessment and describe 
accomplishments. The supervisor and employee discuss job performance 
and accomplishments in relation to the performance elements, 
objectives, and planned activities established in the performance plan.
Evaluation Feedback Meeting Between Employee and Supervisor
    In this second meeting between employee and supervisor, the 
supervisor informs the employee of management's appraisal of the 
employee's performance, the employee's performance score and rating, 
and any recommended related pay increase, bonus, award, or other 
personnel action. During this second meeting, the supervisor and 
employee will discuss and document performance objectives for the next 
rating period.
Performance Scores
    Selection of the weighted points to assign to an employee's 
performance is assisted by use of benchmark performance standards 
(appendix D). Each benchmark performance standard describes the level 
of performance associated with a particular point on a rating scale. 
Supervisors may add supplemental standards to the performance plans of 
the employees they supervise to further elaborate the benchmark 
performance standards.
    The overall score is the sum of the individual element scores. 
Employees will receive an academic-type rating of ``A'', ``B'', ``C'', 
or ``F'' depending upon the percentage of goal attainment. These 
summary ratings are representative of Pattern E in Summary Level Chart 
in 5 CFR 430.208(d)(1). This rating will become the rating of record, 
and
    (1) Employees rated ``B'' or higher will be eligible to receive 
performance-based pay increases and/or bonuses; and
    (2) Retention years credit for RIF will be received by employees 
rated ``C'' or higher. (Note: except when a PIP does not result in an 
annual rating of ``C'' prior to the end of the rating cycle).
    (3) Employees rated ``F'' will not receive the general increase, 
retention years credit for RIF, or be eligible to receive performance 
based pay increases and/or bonuses.
    A rating of ``A'' will be assigned for cumulative scores of 85 to 
100 points, ``B'' for cumulative scores of 70 through 84, and ``C'' for 
cumulative scores of 50 through 69. An overall rating of ``F'' 
indicates failure to perform at the 50 percent level for any one of the 
assigned weighted elements. (In such a case, even though the cumulative 
score may exceed 49, the employee will nonetheless receive an overall 
rating of ``F''. NOTE: An ``F'' constitutes an unacceptable rating). 
The academic-type ratings will be used to determine pay or bonus values 
and to award additional RIF retention years as follows:

------------------------------------------------------------------------
                                                  RIF                   
                                Compensation   Retention      General   
            Rating                (shares)       years     increase \2\ 
                                                 added                  
------------------------------------------------------------------------
``A''.........................            2           10  YES           
``B''.........................            1            7  YES           
``C''.........................            0            3  YES           
``F''.........................            0            0  NO            
------------------------------------------------------------------------
\1\ Employees rated ``B'' or higher will be eligible to receive         
  performance-based pay increases and/or bonuses. Retention years credit
  for RIF will be received by employees rated ``C'' or higher, except   
  when a PIP does not result in an annual rating of ``C'' prior to the  
  end of the rating cycle.                                              
\2\ The maximum pay rate for pay band V cannot exceed rate for ES-4.    
  Therefore, employees at or near the top pay band V may not receive the
  full general increase if it is not authorized for SES employees.      

Performance Based Actions
    MRMC will implement a two step process to deal with poor 
performers. This process may lead to involuntary separations if the 
employee receives a score of less than 50 percent of the points for any 
weighted element.
    The process will begin with the recognition that an employee's 
performance is unacceptable (any element that would be rated at less 
than the 50 percent level of its assigned benchmark weight). The two 
steps are as follows: (1) Performance improvement plan (PIP), and (2) 
separation.
    When the employee is determined to be performing below the 50% 
level for any element, the supervisor and employee will develop a 
structured PIP that will be monitored for a reasonable period of time.
    If the employee fails to improve during this structured plan, the 
employee will be given notice of proposed appropriate action. The 
activity may consider a change in assignment or reduction in pay as

[[Page 10449]]

opposed to removal if the mission, organizational structure and 
available resources warrant such action. If employees are separated, 
they will have due process recourse as a former employee.

    (Note: Performance based adverse actions may be taken under 5 
U.S.C., Chapter 75 or Chapter 43).

    Actions taken under Chapter 75 do not require a PIP.
    If a PIP ends prior to the end of the annual performance cycle and 
the employee's performance improves to the 50% or above level in all 
assigned elements, the employee is appraised again at the end of the 
annual performance cycle.
    If, in conjunction with the completion of the PIP, the employee 
attains an annual rating of ``C'' or higher, they will receive the 
annual general increase and RIF retention years credit will be earned. 
In addition, employees attaining an annual rating of ``B'' or higher 
will also be eligible for an increase to base pay and/or bonus.
    If a PIP ends after the end of the annual performance cycle and the 
employee's performance has improved to the 50% or above level in all 
assigned elements, employment continues but no retroactive annual 
general increase, performance bonus, or RIF retention years credit is 
granted for that performance cycle period.
Employee Relations
    Employees covered by the project will be evaluated under a 
performance evaluation system that affords grievance rights comparable 
to those provided currently. The MRMC will maintain the substantive and 
procedural appeal rights currently afforded when taking action for 
misconduct and poor performance.
Awards
    The MRMC currently has an extensive awards program consisting of 
both internal and external awards. While not linked to the pay-for-
performance system, awards will continue to be given for special acts 
and other categories as they occur. Awards may include, but are not 
limited to, special acts, patents, suggestions, on-the-spot, and time-
off, and may be modified or expanded as appropriate. Major Army Command 
(MACOM) and DoD awards and other honorary noncash awards will be 
retained.
    In an effort to foster and encourage team work among its employees, 
a Commander/Director may allocate a sum of money to a team for 
outstanding completion of a special task or significant achievement, 
and the team may decide the individual distribution of the total 
dollars among themselves.
Pay Administration
Introduction
    The objective is to establish a pay system that will improve the 
ability of the MRMC to attract and retain quality employees. The new 
system will be a pay-for-performance system and, when implemented, will 
result in a redistribution of pay resources based upon individual 
performance.
Pay-for-Performance
    MRMC will use a simplified performance appraisal system that will 
permit both the supervisor and the employee to focus on quality of the 
work. The proposed system will permit the manager/supervisor to base 
compensation on performance or value added to the goal of the 
organization rather than on longevity and risk aversion. This system 
will allow managers to withhold pay increases from nonperformers, 
thereby giving the nonperformer the incentive to improve performance or 
leave government service.
    Pay-for-performance has two components: Performance pay increases 
(i.e. base pay increases) and/or bonuses. All covered employees will be 
given the full amount of locality pay adjustments (as applicable) when 
they occur, regardless of performance. The funding for performance pay 
increases and/or bonuses is composed of money previously available for 
within-grade increases, quality step increases, and promotions from one 
grade to another when the grades are now in the same pay band.
Performance Pay Pool
    The funding in the performance pay pool will be used for base pay 
increases and/or performance bonus pay. The payouts made to employees 
from the performance pay pool may be a mix of base pay increases, 
subject to the pay ceiling in the pay bands, and bonus payments.
    The Headquarters, MRMC Comptroller, in conjunction with each 
subordinate activity Commander/Director, will calculate the total 
performance pay pool and allocate pay pools to subordinate activities. 
Each subordinate activity Commander/Director will allocate pay pools to 
organizational units or teams as appropriate.

Performance Pay Increases and/or Performance Bonuses

    A pay pool manager is accountable for staying within pay pool 
limits. The pay pool manager assigns pay increases and/or bonuses to 
individuals on the basis of an academic-type rating, the value of the 
performance pay pool resources available, and the individual's current 
basic rate of pay within a given pay band. A pay pool manager may 
request approval from the Commander/Director or his/her designee to 
grant a higher performance pay increase/performance bonus than is 
generated by the compensation formula to recognize an employee's 
extraordinary achievement or to provide accelerated compensation for 
local interns.
    A performance payout will be initially calculated for each 
individual based upon a pay pool assignment that will be composed of 
monies outlined previously. For illustration purposes, approximately 
2.4 percent of the value of the combined basic rates of pay of the 
assigned employees will be used. A share will be calculated so that a 
pay pool manager will not exceed the resources that are available in 
the pay pool. The performance payout for an individual will be 
determined as follows:
[GRAPHIC] [TIFF OMITTED] TN03MR98.000

Where:

Pool Value = 0.024 * SUM (SALk); K = 1 to n
n = number of employees in pay pool
N = Number of Shares (0-2) earned by an employee based on their 
performance rating
SAL = An individual's basic rate of pay
SUM = The summation of the entities in parenthesis over the range 
indicated
i = individual
    To illustrate the formula, the basic rates of pay of the 10 
employees in a pay pool, who each earn $50,000 per year, total to 
$500,000. The employees earned a total of 15 shares based on their

[[Page 10450]]

ratings (5 individuals earned an ``A'' rating, and 5 individuals earned 
a ``B'' rating). The pay pool value is then 2.4 percent of the sum of 
$500,000, or $12,000. The individual performance payout being 
determined is for an individual who earns $50,000 per year and receives 
an ``A'' on the appraisal, thus earning 2 shares. Using the formula, 
the individual performance payout is calculated by multiplying the pay 
pool value, $12,000, by the individual basic rate of pay, $50,000, by 
the number of shares earned, 2. This product is divided by the sum of 
the products of the individual basic rates of pay times the number of 
shares earned, or 750,000. The resulting individual performance payout 
is $1,600.00 for the year.
    An annual performance base pay increase could be all, none, or part 
of the compensation formula depending on the current basic rate of pay 
of the employee. Annual performance base pay increases will be limited 
to the difference between the particular band pay cap and the 
employee's current basic rate of pay, or total dollar value of shares, 
whichever is less, with the balance converted to a performance bonus. 
This means that employees whose basic rates of pay have reached the 
upper limits of a particular pay band will receive most performance 
compensation as a performance bonus. Cash bonuses will not become a 
part of the employee's basic rate of pay. Employees receiving retained 
rates are subject to special rules governing basic pay adjustments. An 
employee receiving a retained rate whose performance rating is ``F'' at 
the time of a general pay increase will receive no increase in the 
retained rate. All other employees receiving a retained rate will 
receive a general pay increase equal to 50 percent of the amount of the 
increase in the maximum rate of basic pay payable for the pay band of 
the employee's position.
Supervisory Bonus
    Supervisory bonuses of up to 10% of the basic rate of pay may be 
paid at the discretion of Commanders/Directors to supervisors with 
employees in the same pay band. In exceptional cases (approved by HQ, 
MRMC), supervisors who do not have employees in the same pay band may 
be compensated up to 5% of basic rate of pay. Employees who qualify for 
the bonus include supervisors in all occupational families with formal 
supervisory authority meeting that required for coverage under the OPM 
GS Supervisory Guide. The supervisory bonus is to recognize supervisory 
responsibilities required of supervisors most often receiving the same 
pay as non-supervisory subordinates. There are two situations in which 
a supervisory bonus may be warranted:
    (1) Supervisors may be granted up to 10 percent of the basic rate 
of pay if they supervise employees within the same pay band or,
    2) Up to 5 percent of the basic rate of pay for those supervising 
employees in lower or other pay bands.

    Note: Pay band V employees in the E&S occupational family are 
excluded.

    Bonuses, which must be negotiated annually, will not be treated as 
basic pay and are not a part of the performance pay pool.
    Because the bonus is paid at the beginning of the appraisal period, 
if the individual leaves a supervisory position or is removed from 
supervisory responsibilities (unless effected through RIF action), the 
prorated portion of the bonus for the non-supervisory portion of the 
performance year will be recovered as a debt due the Government. Before 
any supervisory bonus is paid, the supervisor will sign an agreement to 
make any required repayment.
Pay and Compensation Ceilings
    An employee's total monetary compensation paid in a calendar year 
may not exceed the basic rate of pay paid in level I of the Executive 
Schedule consistent with 5 U.S.C. 5307 and 5 CFR Part 530, Subpart B.
    In addition, each pay band will have its own pay ceiling, just as 
grades do in the current system. Pay rates for the various pay bands 
will be directly keyed to the GS rates, except the maximum rate for pay 
band V of the engineer and scientist occupational family which cannot 
exceed ES-4. Basic pay will be limited to the maximum rates payable for 
each pay band, except for retained rates as previously described.
Pay Setting for Promotion
    The minimum basic pay increase upon promotion to a higher pay band 
will be 6 percent or the minimum rate of the new pay band. The maximum 
amount of pay increase upon promotion will not exceed $10,000.
    When a temporary promotion is terminated, the employee's pay 
entitlements will be redetermined based on the employee's position of 
record, with appropriate adjustments to reflect pay events during the 
temporary promotion, subject to the specific policies and rules 
established by MRMC. In no case may those adjustments increase the pay 
for the position of record beyond the applicable pay range maximum 
rate.
Placement in a Lower Pay Band
    Employees who receive 50 percent or less of an assigned benchmark 
score in any element or who are on a performance improvement plan at 
the time pay determinations are made, do not receive performance 
payouts or the general increase. This action may result in a base 
salary that is identified in a lower pay band. This occurs because the 
minimum rates of basic pay in a pay band increase as the result of the 
general increase (5 U.S.C. 5303). This situation, (a reduction in band 
level with no reduction in pay) will not be considered an adverse 
action, nor will band retention provisions apply.

D. Hiring and Appointment Authorities

Hiring Authority
    A candidate's basic eligibility will be determined using OPM's 
Qualification Standards Handbook of General Schedule Positions. 
Candidates must meet the minimum standards for entry into the payband. 
For example if the payband includes positions in grades GS-5 and GS-7, 
the candidates must meet the qualifications for positions at GS-5 
level. Specific experience/education required will be determined based 
on whether a position to be filled is at the lower or higher end of the 
band. As a general rule, pay will be set at the lowest level in a pay 
band. Appointments made above the minimum level will be based upon 
superior qualifications of the candidate. A candidate appointed toward 
the higher end of a pay band should have qualifications approaching the 
lowest General Schedule grade incorporated into the next higher pay 
band. For example, a person appointed at the higher end of Pay Band II 
in the Engineers and Scientists Occupational Family would have 
education, experience, or a combination of the two approaching the 
qualifications of the GS-13 level, which is the lowest General Schedule 
grade incorporated into Pay Band III. Under the demonstration 
authority, the MRMC is authorized to modify by increasing QSH 
qualifications and/or experience or substitutable education 
requirements. Substitutable education can be modified; however, no 
changes can be made to standards with positive education requirements 
or minimum education requirements. In some cases, MRMC will update 
these standards to reflect current practices in the occupational 
families and modern curricula in recognized degree programs. Selective 
placement factors may be established when judged to be critical to 
successful job performance.

[[Page 10451]]

These factors must be communicated to all candidates for specific 
vacancies and must be met for basic eligibility.
    In the proposed system, as with the current system, the individual 
manager will decide whether to fill a position from among internal 
candidates or to recruit from outside.
    The MRMC is committed to positive affirmative action and equal 
employment opportunity goals. Line managers will be accountable for 
understanding and implementing policies designed to meet these goals.
Appointment Authority
    Under the demonstration project, there will continue to be career 
and career conditional appointments. These appointments will use 
existing authorities and entitlements. Non-permanent positions 
(exceeding one year) needed to meet fluctuating or uncertain workload 
requirements will be filled using a Contingent Employee appointment 
authority.
    Employees hired for more than one year, under the contingent 
employee appointment authority are given term appointments in the 
competitive service for no longer than five years. The MRMC Commander 
is authorized to extend a contingent appointment one additional year. 
These employees are entitled to the same rights and benefits as term 
employees and will serve a one year trial period. The Pay-for 
Performance Management System outlined in this Plan applies to 
contingent employees.
    Appointment will be made under the same appointment authorities and 
processes as regular term appointments, but recruitment bulletins must 
indicate that there is a potential for conversion to permanent 
employment.
    Employees hired under the contingent employee authority may be 
eligible for conversion to career-conditional appointments. To be 
converted, the employee must (1) have been selected for the term 
position under competitive procedures, with the announcement 
specifically stating that the individual(s) selected for the term 
position(s) may be eligible for conversion to career-conditional 
appointment at a later date; (2) served two years of substantially 
continuous service in the term position; (3) be selected under merit 
promotion procedures for the permanent position; and (4) have a current 
rating of ``B'' or better.
    Employees serving under regular term appointments at the time of 
conversion to the demonstration project will be converted to the new 
contingent employee appointments provided they were hired for their 
current positions under competitive procedures. These employees will be 
eligible for conversion to career-conditional appointment if they have 
a current rating of ``B'' or better (or the equivalent of ``B'' in 
their current evaluation system), and are selected under merit 
promotion procedures for their permanent position after having 
completed two years of continuous service. Time served in term 
positions prior to conversion to the contingent employee appointment is 
creditable, provided the service was continuous.
Extended Probationary Period
    The current one-year probationary period will be extended to ``up 
to three years'' for all newly hired employees in all pay bands. The 
purpose of extending the probationary period is to allow supervisors an 
adequate period of time to fully evaluate an employee's ability to 
complete a research cycle and/or to fully evaluate an employee's 
contribution and conduct. The length of the probationary period for the 
Engineers and Scientists Occupational Family will be three years. The 
probationary period for all other occupational families will be two 
years.
    Aside from extending the time period, all other features of the 
current probationary period are retained including the potential to 
remove an employee without providing the full substantive and 
procedural rights afforded a non-probationary employee. Any employee 
subject to serving a probationary period that was appointed prior to 
the implementation date will not be affected. The ``up to three year'' 
probation will apply to new hires or those who do not have reemployment 
rights or reinstatement privileges.
    Probationary employees will be terminated when the employee fails 
to demonstrate proper conduct, technical competency, and/or adequate 
contribution for continued employment. When the MRMC decides to 
terminate an employee serving a probationary period because his/her 
work performance or conduct during this period fails to demonstrate 
his/her fitness or qualifications for continued employment, it shall 
terminate his/her services by written notification of the reasons for 
separation and the effective date of the action. The information in the 
notice as to why the employee is being terminated shall, as a minimum, 
consist of the manager's conclusions as to the inadequacies of his/her 
performance or conduct.
Supervisory Probationary Periods
    Supervisory probationary periods will be made consistent with 5 CFR 
315.901. Employees that have successfully completed the initial 
probationary period will be required to complete an additional one-year 
probationary period for the initial appointment to a supervisory 
position. If, during the probationary period, the decision is made to 
return the employee to a non-supervisory position for reasons solely 
related to supervisory performance, the employee will be returned to a 
comparable position of no lower pay band and basic pay than the 
position from which he/she was promoted.
Voluntary Emeritus Program
    Under the demonstration project, Commanders/Directors will have the 
authority to offer retired or separated individuals voluntary 
assignments in their activities. This authority will include 
individuals who have retired or separated from Federal service. 
Voluntary Emeritus Program assignments are not considered 
``employment'' by the Federal Government (except for the purposes of 
injury compensation). Thus, such assignments do not affect an 
employee's entitlement to buy-outs or severance payments based on an 
earlier separation from Federal service. The Voluntary Emeritus Program 
will ensure continued quality research while reducing the overall 
salary line by allowing individuals to accept retirement incentive with 
the opportunity to retain a presence within their community. The 
program will be of most benefit during manpower reductions as 
individuals could accept retirement and return to provide valuable on-
the-job training or mentoring to less experienced individuals.
    To be accepted into the emeritus program, a volunteer must be 
approved by the subordinate activity Commander/Director. Everyone who 
applies is not entitled to a voluntary assignment. The laboratory 
Commander/Director must clearly document the decision process for each 
applicant (whether accepted or rejected) and retain the documentation 
throughout the assignment. Documentation of rejections will be 
maintained for two years.
    To ensure success and encourage participation, the individual's 
Federal retirement pay (whether military or civilian) will not be 
affected while serving in a voluntary capacity. Retired or separated 
Federal individuals may accept an emeritus position without a break or 
mandatory waiting period.
    Volunteers will not be permitted to monitor contracts on behalf of 
the government or to participate on any contracts where a conflict of 
interest exists. The same rules that currently

[[Page 10452]]

apply to source selection members will apply to volunteers.
    An agreement will be established between the volunteer, the 
subordinate activity Commander/Director, and the servicing CPO/CPAC/
CPOC. The agreement will be reviewed by the Headquarters, MRMC legal 
office for ethics determinations under the Joint Ethics Regulations. 
The agreement must be finalized before the assumption of duties and 
shall include:
    (a) a statement that the voluntary assignment does not constitute 
an appointment in the civil service and is without compensation, and 
any and all claims against the Government because of the voluntary 
assignment are waived by the volunteer;
    (b) a statement that the volunteer will be considered a Federal 
employee for the purpose of injury compensation;
    (c) volunteer's work schedule;
    (d) length of agreement (defined by length of project or time 
defined by weeks, months, or years);
    (e) support provided by the subordinate activity (travel, 
administrative, office space, supplies);
    (f) a one-page or less Statement of Duties and Experience;
    (g) a provision that states no additional time will be added to a 
volunteer's service credit for such purposes as retirement, severance 
pay and leave as a result of being a member of the Voluntary Emeritus 
Program;
    (h) a provision allowing either party to void the agreement with 10 
working days written notice; and
    (i) the level of security access required (any security clearance 
required by the position will be managed by the subordinate activity 
while the volunteer is a member of the Voluntary Emeritus Program).

E. Expanded Developmental Opportunities Program

    The MRMC Expanded Developmental Opportunities Program will cover 
all demonstration project employees. An expanded developmental 
opportunity complements existing developmental opportunities such as 
(1) long-term training, (2) one-year work experiences in an industrial 
setting via the Relations With Industry Program, (3) one-year work 
experiences in laboratories of allied nations via the Science and 
Engineer Exchange Program, (4) rotational job assignments within the 
MRMC, (5) developmental assignments in higher headquarters within the 
Army and DoD, (6) self-directed study via correspondence courses and 
local colleges and universities, (7) details within MRMC and to other 
Federal Agencies, and (8) Intergovernmental Personnel Act Agreements.
    Each developmental opportunity period should benefit the MRMC, as 
well as increase the employee's individual effectiveness. Various 
learning or uncompensated developmental work experiences may be 
considered, such as advanced academic teaching or research, 
sabbaticals, or on-the-job work experience with public or non-profit 
organizations.
    An expanded developmental opportunity period will not result in 
loss of (or reduction in) basic pay, leave to which the employee is 
otherwise entitled, or credit for time or service. Input for 
performance rating purposes will be obtained from the gaining 
organization to ensure a rating of record is on file and, if warranted, 
a performance award and/or bonus and retention years credit for RIF 
purposes is documented.
    The opportunity to participate in the Expanded Developmental 
Opportunities Program will be announced as opportunities arise. 
Instructions for application and the selection criteria will be 
included in the announcement. Final selection/approval for 
participation in the program will be made by activity Commanders/
Directors. The position of employees on an expanded developmental 
opportunity may be backfilled by temporary promotion, or temporary/
contingent employees. However, that position or its equivalent must be 
made available to the employee returning from the expanded 
developmental opportunity.
    An employee accepting an Expanded Developmental Opportunity must 
sign a continuing service agreement. If the employee voluntarily leaves 
the MRMC before the service obligation is completed, the employee is 
liable for repayment. However, the MRMC Director has the authority to 
waive this agreement.

F. Revised Reduction-in-Force (RIF) Procedures

Introduction
    When an employee in the MRMC demonstration project is faced with 
separation or downgrading due to lack of work, shortage of funds, 
reorganization, insufficient personnel ceiling, the exercise of 
reemployment or restoration rights, or furlough for more than 30 
calendar days or more than 22 discontinuous days, RIF procedures will 
be used.
    The procedures in 5 CFR Part 351 will be followed with the 
modifications specified below pertaining to competitive areas, 
assignment rights, credit for performance ratings and service 
computation date.
Competitive Areas
    The Headquarters and each subordinate activity of the MRMC will be 
in a separate competitive area for RIF purposes. Further, within each 
subordinate activity, detachments located at different geographic sites 
will be in a separate competitive area for RIF purposes. Each of the 
four occupational families will be a separate competitive area within 
each activity. (Competitive service and excepted service employees will 
compete separately within a competitive area.) DA Interns will continue 
to be part of the ACTEDS competitive area.
Retention
    Within each competitive area, competitive levels will be 
established consisting of all positions in the same occupational family 
and pay band which are similar enough in duties, qualifications, and 
working conditions that the incumbent of one position can perform 
successfully the duties of any other position in the competitive level 
without unduly interrupting the work program.
    Current RIF regulations will be modified to restrict bumping and 
retreating to positions within the employee's current occupational 
family. This feature will minimize the disruption associated with the 
RIF process. An employee may displace another employee within the same 
occupational family by bump or retreat to one band below the employee's 
existing band. A preference eligible veteran with a compensable 
service-connected disability of 30% or more may retreat to positions 
two bands (or the equivalent of five (5) grades) below his/her current 
band.
    Reductions-in-force are accomplished using the retention factors of 
tenure, veterans preference, credit for performance ratings, and length 
of service, in that order.
    Contingent employees are in Tenure Group III for reduction-in-force 
purposes. Reduction-in-force procedures are not required when 
separating these employees when their appointments expire.
Link Between Performance and Retention
    Credit for performance based on the last three (3) ratings of 
record during the preceding four (4) years will be applied as follows: 
a rating of ``A'' equals 10 years; a rating of ``B'' equals 7 years; a

[[Page 10453]]

rating of ``C'' equals 3 years, and a rating of ``F'' adds no credit 
for retention. Credit for performance is cumulative, not averaged. 
Ratings given under non-demonstration systems will be converted to the 
demonstration rating scheme and provided the equivalent performance 
rating credit.
    In some cases, an employee may not have three (3) annual 
performance ratings of record. In these situations, performance credit 
will be given on the basis of either an average of the ratings actually 
on record or if no actual ratings, modal rating (most common) given 
within the employee's competitive area. When an employee is missing a 
rating of record, the credit assigned for the actual ratings received 
will be averaged, and the result thus derived will be used as the 
credit for the missing rating. For an employee who has no ratings of 
record, all credit will be based on the repeated use of a single modal 
rating from the most recently completed appraisal period on record.
    An employee who has received a written decision to demote him/her 
to a lower pay band because of unacceptable performance, competes in 
RIF from the position to which he/she will be/has been demoted. 
Employees who have been demoted for unacceptable performance, and as of 
the date of the issuance of the RIF notice have not received a 
performance rating in the position to which demoted, will receive 
either an average of the ratings actually on record or if no actual 
ratings, modal rating (most common) given within the employee's 
competitive area.
    An employee with a current annual performance rating of ``F'' has 
assignment rights only to a position held by another employee who has 
an ``F'' rating. An employee who has been given a written decision of 
removal because of unacceptable performance or conduct will be placed 
at the bottom of the retention register for their competitive level.
Link Between Service Computation Date ( Length of Service) and 
Retention
    Service computation date (length of service) will be used in RIF 
procedures when performance retention procedures result in two or more 
employees with the same standing. When this occurs, all creditable 
service (both civilian and military) will be used to determine which 
employee(s) will be separated.
Notice Period
    The RIF notice period will follow OPM guidelines.
Grade and Pay Retention
    Except where waived or modified in the waiver section of this plan, 
grade and pay retention will follow current law and regulations (e.g. 
occupational family pay bands will substitute for grade.)
Use of Voluntary Incentives
    Subordinate activity Commanders/Directors currently have delegated 
authority to grant payments under the VSIP. This authority will 
continue under this project.

IV. Training

Introduction

    The key to the success or failure of the proposed demonstration 
project will be the training provided for all involved. This training 
will not only provide the necessary knowledge and skills to carry out 
the proposed changes, but will also lead to commitment to the program 
on the part of participants.
    Training at the beginning of implementation and throughout the 
demonstration will be provided to supervisors, employees, and the 
administrative staff responsible for assisting managers in effecting 
the changeover and operation of the new system.
    The elements to be covered in the orientation portion of this 
training will include at a minimum:
    (1) A description of the personnel system, (2) how employees are 
converted into and out of the system, (3) the pay adjustment and/or 
bonus process, (4) familiarization with the new position descriptions 
and performance objectives, (5) the performance evaluation management 
system, (6) the reconsideration process, and (7) the demonstration 
project administrative and formal evaluation process.

Supervisors

    The focus of this project on management-centered personnel 
administration, with increased supervisory and managerial personnel 
management authority and accountability, demands thorough training of 
supervisors and mangers in the knowledge and skills that will prepare 
them for their new responsibilities. Training will include detailed 
information on the policies and procedures of the demonstration 
project, training in using the classification system, position 
description preparation, and performance evaluation. Additional 
training may focus on non-project procedural techniques such as 
interpersonal and communication skills.

Administrative Staff

    The administrative staff, including personnel specialists, 
subordinate activity administrative officers, and personnel points of 
contact will play a key role in advising, training, and coaching 
supervisors and employees in implementing the demonstration project. 
This staff will need training in the procedural and technical aspects 
of the project.

Employees

    The MRMC Demonstration Project Office will make and coordinate all 
arrangements necessary to train employees covered under the 
demonstration project. In the months leading up to the implementation 
date, meetings will be held for employees to fully inform them of all 
project decisions, procedures, and processes.

V. Conversion

Conversion to the Demonstration Project

    a. Initial entry into the demonstration project will be 
accomplished through a full employee protection approach that ensures 
each employee an initial place in the appropriate pay band without loss 
of pay. Employees serving under regular term appointments at the time 
of the implementation of the demonstration project will be converted to 
the contingent employee appointments so long as the original term 
appointment was made under competitive procedures. An automatic 
conversion from current GS/GM grade and pay into a new broadband system 
will be accomplished. Each employee's initial total salary under the 
demonstration project will equal the total salary received immediately 
before conversion. If conversion into the demonstration project is 
accomplished by a geographic move, the employee's GS pay entitlements 
in the new geographic area must be determined before performing the pay 
conversion.
    b. Employees who are on temporary promotions at the time of 
conversion will be converted to a pay band commensurate with the grade 
of the position to which temporarily promoted. At the conclusion of the 
temporary promotion, the employee will revert to the pay band which 
corresponds to the grade of record. When a temporary promotion is 
terminated, the employee's pay entitlements will be determined based on 
the employee's position of record, with appropriate adjustments to 
reflect pay events during the temporary promotion, subject to the 
specific policies and rules established by the MRMC. In no case may 
those

[[Page 10454]]

adjustments increase the pay for the position of record beyond the 
applicable pay range maximum rate. The only exception will be if the 
original competitive promotion announcement stipulated that the 
promotion could be made permanent; in these cases, actions to make the 
temporary promotion permanent will be considered, and if implemented, 
will be subject to all existing priority placement programs.
    c. Employees who are covered by special salary rates, prior to the 
demonstration project, will no longer be considered a special rate 
employee under the demonstration project. These employees will, 
therefore, be eligible for full locality pay. The adjusted salaries of 
these employees will not change. Rather, the employees will receive a 
new basic pay rate computed by dividing their adjusted basic pay 
(higher of special rate or locality rate) by the locality pay factor 
for their area. A full locality adjustment will then be added to the 
new basic pay rate. Adverse action and pay retention provisions will 
not apply to the conversion process as there will be no change in total 
salary.
    d. During the first 12 months following conversion, employees will 
receive pay increases for non-competitive promotion equivalents when 
the grade level of the promotion is encompassed within the same 
broadband, the employee's performance warrants the promotion and 
promotions would have otherwise occurred during that period. Employees 
who receive an in-level promotion at the time of conversion will not 
receive a prorated step increase equivalent as defined below.
    e. Under the current pay structure, employees progress through 
their assigned grade in step increments. Since this system is being 
replaced under the demonstration project, employees will be awarded 
that portion of the next higher step based upon the portion of the 
waiting period they have completed prior to the date of implementation. 
Payment will be lump sum in nature (not added to base pay) and will be 
paid at the one-year anniversary of the date of implementation of the 
demonstration project. Those employees added to the MRMC by actions 
such as transfer of function, BRAC, etc., after initial implementation, 
will be awarded that portion of the next higher step based upon the 
portion of the waiting period they have completed at the time they 
convert into the demonstration project. This lump sum payment will be 
made upon conversion but no earlier than one year after the 
implementation of the project. Rules governing within-grade increases 
under the current Army performance plan will continue in effect until 
the implementation date. Employees at step 10, or receiving retained 
rates, on the date of implementation will not be eligible for a 
prorated lump sum buyout of the WGI since they are already at or above 
the top of the step scale.

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

    If a demonstration project employee is moving to a General Schedule 
(GS) position not under the demonstration project, or if the project 
ends and each project employee must be converted back to the GS system, 
the following procedures will be used to convert the employee's project 
pay band to a GS-equivalent grade and the employee's project rates of 
pay to GS-equivalent rates of pay. The converted GS grade and GS rates 
of pay must be determined before movement or conversion out of the 
demonstration project and any accompanying geographic movement, 
promotion, or other simultaneous action. For conversions upon 
termination of the project and for lateral reassignments, the converted 
GS grade and rate will become the employee's actual GS grade and rate 
after leaving the demonstration project (before any other action). For 
transfers, promotions, and other actions, the converted GS grade and 
rate will be used in applying any GS pay administration rules 
applicable in connection with the employee's movement out of the 
project (e.g., promotion rules, highest previous rate rules, pay 
retention rules), as if the GS converted grade and rate were actually 
in effect immediately before the employee left the demonstration 
project.

Grade-Setting Provisions

    An employee in a pay band corresponding to a single GS grade is 
converted to that grade. An employee in a pay band corresponding to two 
or more grades is converted to one of those grades according to the 
following rules:
    (a) The employee's adjusted rate of basic pay under the 
demonstration project (including any locality payment) is compared with 
step 4 rate in the highest applicable GS rate range. (For this purpose, 
a ``GS rate range'' includes a rate range in (1) the GS base schedule, 
(2) the locality rate schedule for the locality pay area in which the 
position is located, or (3) the appropriate special rate schedule for 
the employee's occupational series, as applicable.) If the series is a 
two-grade interval series, only odd-numbered grades are considered 
below GS-11.
    (b) If the employee's adjusted project rate equals or exceeds the 
applicable step 4 rate of the highest GS grade in the band, the 
employee is converted to that grade.
    (c) If the employee's adjusted project rate is lower than the 
applicable step 4 rate of the highest grade, the adjusted rate is 
compared with the step 4 rate of the second highest grade in the 
employee's pay band. If the employee's adjusted rate equals or exceeds 
step 4 rate of the second highest grade, the employee is converted to 
that grade.
    (d) This process is repeated for each successively lower grade in 
the band until a grade is found in which the employee's adjusted 
project rate equals or exceeds the applicable step 4 rate of the grade. 
The employee is then converted at that grade. If the employee's 
adjusted rate is below the step 4 rate of the lowest grade in the band, 
the employee is converted to the lowest grade.
    (e) Exception: If the employee's adjusted project 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 
(i.e., between step 1 and step 4), then the employee shall be converted 
to that next higher applicable grade.
    (f) Exception: 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 into the project, unless 
since that time, the employee has undergone a reduction in band.

Pay-Setting Provisions

    An employee's pay within the converted GS grade is set by 
converting the employee's demonstration project rate of pay to GS rate 
of pay in accordance with the following rules:
    (a) The pay conversion is done before any geographic movement or 
other pay-related action that coincides with the employee's movement or 
conversion out of the demonstration project.
    (b) An employee's adjusted rate of basic pay under the project 
(including any locality payment) is converted to a GS adjusted rate on 
the highest applicable GS rate range for the converted GS grade. (For 
this purpose, a ``GS rate range'' includes a rate range in (1) the GS 
base schedule, (2) an applicable locality rate schedule, or (3) an 
applicable special rate schedule.)
    (c) If the highest applicable GS rate range is a locality pay rate 
range, the employee's adjusted 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

[[Page 10455]]

GS unadjusted rate of basic pay would be 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.)
    (d) If the highest applicable GS rate range is a special rate 
range, the employee's adjusted 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 
unadjusted rate of basic pay will be the GS rate corresponding to the 
converted special rate (i.e., same step position).

E&S Pay Band V Employees

    An employee in Pay Band V of the E&S Occupational Family will 
convert out of the demonstration project at the GS-15 level. The MRMC, 
in consultation with the CPOs/CPACs/CPOCs, will develop a procedure to 
ensure that employees entering Pay Band V understand that if they leave 
the demonstration project and their adjusted pay exceeds the GS-15, 
step 10 rate, there is no entitlement to retained pay; their GS-
equivalent rate will be deemed to be the rate for GS-15, step 10. For 
those Pay Band V employees paid below the adjusted GS-15, step 10 rate, 
the converted rates will be set in accordance with Pay-Setting 
Provisions above.

Employees With Band or Pay Retention

    If an employee is retaining a band level under the demonstration 
project, apply the procedures in the Grade-Setting and Pay-Setting 
Provisions above, using the grades encompassed in the employee's 
retained band to determine the employee's GS-equivalent retained grade 
and pay rate. The time in a retained band under the demonstration 
project counts toward the 2-year limit on grade retention in 5 U.S.C. 
5382.
    If an employee is receiving a retained rate under the demonstration 
project, the employee's GS-equivalent grade is the highest grade 
encompassed in his or her band level. MRMC will coordinate with OPM to 
prescribe a procedure for determining the GS-equivalent pay rate for an 
employee retaining a rate under the demonstration project.

Within-Grade Increase--Equivalent Increase Determinations

    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).

Personnel Administration

    All personnel laws, regulations, and guidelines not waived by this 
plan will remain in effect. Basic employee rights will be safeguarded 
and merit principles will be maintained. Supporting personnel 
specialists in CPOs/CPACs/CPOCs will continue to process personnel-
related actions and provide consultative and other appropriate 
services.

Automation

    The MRMC will continue to use the Defense Civilian Personnel Data 
System (DCPDS) for the processing of personnel-related data. Payroll 
servicing will continue from the respective payroll offices.
    Local automated systems will be developed to support computation of 
performance-related pay increases and awards and other personnel 
processes and systems associated with this project.

Experimentation and Revision

    Many aspects of a demonstration project are experimental. 
Modifications may be made from time to time as experience is gained, 
results are analyzed, and conclusions are reached on how the system is 
working. The MRMC will make minor modifications, such as changes in the 
occupational series in an occupational family without further notice. 
Major changes, such as a change in the number of occupational families, 
will be published in the Federal Register.

VI. Project Duration

    Public Law 103-337 removed any mandatory expiration date for this 
demonstration. The project evaluation plan adequately addresses how 
each intervention will be comprehensively evaluated for at least the 
first 5 years of the demonstration (Proposed Plan for Evaluation of the 
DoD Laboratory Demonstration Program, OPM, 1995). Major changes and 
modifications to the interventions can be made through announcement in 
the Federal Register and would be made if formative evaluation data 
warranted. At the 5-year point, the entire demonstration will be 
reexamined for either: (a) Permanent implementation, (b) a continuing 
test period, or (c) expiration.

VII. Evaluation Plan

Introduction

    In response to the Reinvention Project legislation, OPM will 
evaluate the project annually and provide briefings and written reports 
of the findings. The Evaluation Plan stipulates both internal and 
external evaluation efforts. The phases of the plan are outlined below.

Evaluation Phases

    The evaluation effort will be carried out in three phases: 
implementation, formative, and summative evaluation. Monitoring of the 
project will be concurrent with the implementation phase. An evaluation 
of this phase is necessary to determine whether the project is 
implemented as designed and to ascertain when the monitored processes 
become stable and fully operational. The formative phase evaluation 
will extend for the duration of the project. Data will be collected 
annually and periodic reports will be issued by OPM. The summative 
evaluation phase will assess overall impact of the project during 
appropriate time intervals and/or after 5 years of operation.

Evaluation Methodology

    The evaluation will focus on the continuum of personnel issues and 
will be based on before-and-after comparison of the personnel data, 
using both quantitative and qualitative criteria. Personnel records and 
reports, as well as previously validated survey instruments, will be 
used to develop appropriate measures. New data collection methods and 
measures, or modifications to existing instruments, may be required for 
some criteria. Baseline data will be collected before the demonstration 
project implementation. The baseline survey was administered in the 
Summer of 1996.

Evaluation Criteria

    While it is not possible to prove a direct causal link between 
intermediate and ultimate outcomes (personnel system changes and 
improved organizational performance), indirect cause and effect 
relationships can be evidenced through the establishment of relevant 
effectiveness measures. An intervention impact model (Appendix B) will 
be used to measure the effectiveness of the various personnel system 
changes or interventions. Additional measures will be developed as new 
interventions are introduced or existing interventions modified 
consistent with expected effects. Measures may also be deleted when

[[Page 10456]]

appropriate. Activity specific measures may also be developed to 
accommodate specific needs or interests which are locally unique. The 
evaluation model for the demonstration project identifies elements 
critical to an evaluation of the effectiveness of the interventions. 
The overall evaluation approach will also include consideration of 
context variables that are likely to have an impact on project 
outcomes: e.g., HRM regionalization, rightsizing, cross-service 
integration, and the general state of the economy. However, the main 
focus of the evaluation will be on intermediate outcomes, i.e., the 
results of specific personnel system changes which are expected to 
improve human resources management. The ultimate outcomes are defined 
as improved organizational effectiveness, mission accomplishment and 
customer satisfaction.
    Data from a variety of different sources will be used in the 
evaluation. Information from existing management information systems 
supplemented with perceptual data will be used to assess variables 
related to effectiveness. Multiple methods provide more than one 
perspective on how the demonstration project is working. Information 
gathered through one method will be used to validate information 
gathered through another. Confidence in the findings will increase as 
they are substantiated by the different collection methods. The 
following types of data will be collected as part of the evaluation: 
(1) Workforce data; (2) personnel office data; (3) employee attitudes 
and feedback using surveys, structured interviews and focus groups; (4) 
local activity histories; and (5) core measures of subordinate activity 
performance.

VIII. Demonstration Project Costs

    Costs associated with the development of the personnel 
demonstration system include software automation, training, and project 
evaluation. All funding will be provided through the MEDCOM/MRMC 
budget. The projected annual expenses are as summarized in Table 1. 
Project evaluation costs are not expected to continue beyond the first 
5 years unless the results warrant further evaluation. Projected 
developmental costs do not include potential contractor fees.

                         Table 1.--Projected Developmental Costs (Current Year Dollars)                         
                                                   [Thousands]                                                  
----------------------------------------------------------------------------------------------------------------
                                      Baseline       FY97         FY98         FY99         FY00         FY01   
----------------------------------------------------------------------------------------------------------------
Training..........................  ...........          $99          $19          $19          $19          $19
Project Eval......................          $17           28           60           60           60           60
Automation........................           80           10           10           10           10           10
                                   -----------------------------------------------------------------------------
    Totals........................           97          137           89           89           89           89
----------------------------------------------------------------------------------------------------------------

IX. Required Waivers to Law and Regulation

    Public Law 103-337 gave the DoD the authority to experiment with 
several personnel management innovations. In addition to the 
authorities granted by the law, the following are the waivers of law 
and regulation that will be necessary for implementation of the 
demonstration project. In due course, additional laws and regulations 
may be identified for waiver request.

1. Waivers to Title 5, U.S. Code

    Chapter 31, Section 3111: Acceptance of volunteer service--To the 
extent that the acceptance of retired or separated civilian and 
military are included as volunteers under current statute in addition 
to student volunteers.
    Chapter 31, Section 3132: The Senior Executive Service, Definitions 
and Exclusions.
    Chapter 33, Section 3324: Appointments to Positions Classified 
Above GS-15.
    Chapter 33, Section 3341: Details; within Executive or military 
departments--Increasing 120-Day Increments for Details to 180 days.
    Chapter 35, Section 3502: Order of Retention--Applies only to the 
extent that performance score is placed before length of service.
    Chapter 43, Sections 4302 and 4303: To the extent necessary to (1) 
substitute ``pay band'' for ``grade'' and (2) provide that moving to a 
lower pay band as a result of not receiving the full amount of a 
general pay increase because of poor performance is not an action 
covered by the provisions of section 4303.
    Chapter 51, Sections 5101-5111: Purpose, definitions, basis, 
classification of positions, review, authority--Applies to the extent 
that white collar employees will be covered by broadbanding. Pay 
category determination criteria for federal wage system positions 
remain unchanged.
    Chapter 53, Sections 5301, 5302 (8) and (9), 5303 and 5304: Pay 
Comparability System--Sections 5301, 5302, and 5304 are waived only to 
the extent necessary to allow (1) demonstration project employees to be 
treated as General Schedule employees, (2) basic rates of pay under the 
demonstration project to be treated as scheduled rates of pay , and (3) 
employees in Pay Band V of the Engineers and Scientists Occupational 
Family to be treated as ST employees for the purposes of these 
provisions.
    Chapter 53, Section 5305: Special Salary rates.
    Chapter 53, Sections 5331-5336: General Schedule Pay Rates.
    Chapter 53, Sections 5361-5366: Grade and pay retention--This 
waiver applies only to the extent necessary to (1) replace ``grade'' 
with ``pay band''; (2) allow demonstration project employees to be 
treated as General Schedule employees; (3) provide that pay band 
retention provisions do not apply to movements to a lower pay band as a 
result of not receiving the general increase due to an annual 
performance rating of ``F''; (4) provide that pay retention provisions 
do not apply to conversions from General Schedule special rates to 
demonstration project pay, as long as total pay is not reduced; (5) 
provide that an employee receiving a retained rate whose performance 
rating is ``F'' at the time of a general pay increase will receive no 
increase in the retained rate; (6) ensure that, for employees in Pay 
Band V of the E&S Occupational Family, pay band retention is not 
applicable and pay retention provisions are modified so that no rate 
established under these provisions may exceed the rate of basic pay for 
GS-15, step 10 (i.e., there is no entitlement to a retained rate).
    Chapter 53, Section 5371: Health Care Positions--This waiver 
applies only to the extent necessary to allow demonstration project 
employees to be treated as if they hold positions subject to Chapter 51 
of title 5.

[[Page 10457]]

    Chapter 55, Section 5545(d): Hazardous Duty Differential--This 
waiver applies only to the extent necessary to allow demonstration 
project employees to be treated as General Schedule employees. This 
waiver does not apply to employees in Pay Band V of the Engineers and 
Scientists Occupational Family.
    Chapter 57, Sections 5753, 5754, and 5755: Recruitment and 
Relocation Bonuses; Retention Allowances and Supervisory 
Differentials--This waiver applies only to the extent necessary to 
allow (1) employees and positions under the demonstration project to be 
treated as employees and positions under the General Schedule and (2) 
employees in Pay Band V of the Engineers and Scientists Occupational 
Family to be treated as ST employees.
    Chapter 59, Section 5941: Allowances based on living costs and 
conditions of environment; employees stationed outside continental U.S. 
or Alaska. This waiver applies only to the extent necessary to provide 
that COLA's paid to employees under the demonstration project are paid 
in accordance with regulations prescribed by the President (as 
delegated to OPM).
    Chapter 59, Section 5948(1): Physicians Comparability Allowances--
This waiver applies only to the extent necessary to allow (1) physicans 
under the demonstration project to be treated as employees paid under 
the General Schedule and (2) physicians in Pay Band V of the Engineers 
and Scientists Occupational Family who are performing research and 
technology assignments to be treated as ST positions.
    Chapter 75, Section 7512(3): Adverse actions--This provision is 
waived only to the extent necessary to (1) replace ``grade'' with ``pay 
band'' and (2) provide that a reduction in band level is not an adverse 
action if it results from the employee's rate of basic pay being 
exceeded by the minimum rate of basic pay for his or her pay band.
    Chapter 75, Section 7512(4): Adverse actions--This provision is 
waived only to the extent that adverse action provisions do not apply 
to conversions from General Schedule special rates to demonstration 
project pay, as long as total pay is not reduced.

2. Title 5, Code of Federal Regulations

    Part 300.601-605: Time-In-Grade Restrictions--Restrictions 
eliminated under the demonstration.
    Part 308.101-103: Volunteer Service--To the extent that retired/
separated civilians and military can perform voluntary services in 
addition to student volunteers.
    Part 315.801 and 315.802: Probation on Initial Appointment to a 
Competitive Position--Demonstration project employees in some 
occupational families will have extended probationary period.
    Part 316.301: Term Employment--Adding years to exceed 4 and 
establishment of Contingent appointments.
    Part 316.303: Tenure of term employees--Demonstration allows for 
conversion to career/career-conditional appointments.
    Part 316.305: Eligibility for within-grade increases--Demonstration 
employees no longer receive WGIs.
    Part 334, Section 334.102: Temporary Assignment of Employees 
Outside the Agency.
    Part 335.103: Covering the length of details and temporary 
promotions.
    Part 351.402(b): Competitive Area--To the extent that occupational 
family is the competitive area.
    Part 351.403: Competitive Level--To the extent that pay band is 
substituted for grade.
    Part 351.504: Credit for Performance--Retention standing to the 
extent that service credit will not be modified based on performance 
rating.
    Part 351.701: Assignment Involving Displacement--To the extent that 
bumping and retreating will be limited to no more than one pay band 
except for 30 percent compensable veterans who can retreat to the 
equivalent of 5 GS grades.
    Part 430.201 thru 210: Subpart B, Performance Appraisal for General 
Schedule, Prevailing Rate, and Certain Other Employees--Employees under 
the demonstration project will not be subject to the requirements of 
this subpart.
    Part 432: Performance Based Reduction In Grade and Removal 
Actions--Modified to the extent that an employee may be removed, 
reduced in band level with a reduction in pay, and reduced in pay 
without a reduction in band level based on unacceptable performance. 
For employees who are reduced in band level without a reduction in pay 
as a result of non-receipt of a general increase, Sections 432.105 and 
432.106 (a) and (c) do not apply.
    Part 432, Sections 104 and 105: Addressing unacceptable performance 
and proposing and taking action based on unacceptable performance--In 
so far as references to ``critical elements'' are deleted (all elements 
are critical), and adding that the employee may be ``reduced in band 
level, or pay, or removed'' if performance does not improve to 
acceptable levels after a reasonable opportunity.
    Part 511: Classification Under the General Schedule--To the extent 
that grades are changed to broadbands, and that white collar positions 
are covered by broadbanding.
    Part 530, subpart C: Special Salary Rate Schedules for Recruitment 
and Retention.
    Part 531, subparts B, D, and E: Pay Under the General Schedule--
Determining rate of basic pay, within-grade increases, and quality step 
increases.
    Part 531, subpart F: Locality Based Comparability Payments--This 
waiver applies only to the extent necessary to allow (1) Demonstration 
project employees to be treated as General Schedule employees, (2) 
basic rates of pay under the demonstration project to be treated as 
scheduled annual rates of pay, and (3) employees in Pay Band V of the 
Engineers and Scientists Occupational Family to be treated as ST 
employees for the purposes of these provisions.
    Part 536: Grade and pay retention--This waiver applies only to the 
extent necessary to (1) Replace ``grade'' with ``pay band'; (2) allow 
demonstration project employees to be treated as General Schedule 
employees; (3) provide that pay band retention provisions do not apply 
to movements to a lower pay band as a result of not receiving the 
general increase due to an annual performance rating of ``F'; (4) 
provide that pay retention provisions do not apply to conversions from 
General Schedule special rates to demonstration project pay, as long as 
total pay is not reduced; (5) provide that an employee receiving a 
retained rate whose performance rating is ``F'' at the time of a 
general pay increase will receive no increase in the retained rate; (6) 
ensure that, for employees in Pay Band V of the E&S Occupational 
Family, pay band retention is not applicable and pay retention 
provisions are modified so that no rate established under these 
provisions may exceed the rate of basic pay for GS-15, step 10 (i.e., 
there is no entitlement to a retained rate).
    Part 550.703: Severance Pay--This waiver applies only to the extent 
necessary to modify the definition of ``reasonable offer'' by replacing 
``two grade or pay levels'' with ``one band level'' and ``grade or pay 
level'' with ``band level.''
    Part 550.902: Hazardous Duty Differential--This waiver applies only 
to the extent necessary to allow demonstration project employees to be 
treated as General Schedule employees. This waiver does not apply to

[[Page 10458]]

employees in Pay Band V of the Engineers and Scientists Occupational 
Family.
    Part 575, subparts A, B, C and D: Recruitment and Relocation 
Bonuses; Retention Allowances; Supervisory Differentials--This waiver 
applies only to the extent necessary to allow (1) Employees and 
positions under the demonstration project to be treated as employees 
and positions under the General Schedule and (2) employees in Pay Band 
V of the Engineers and Scientists Occupational Family to be treated as 
ST employees for the purposes of these provisions.
    Part 591, subpart B: Cost-of-Living Allowances and Post 
Differential-Non-foreign Areas--This waiver applies to the extent 
necessary to allow (1) Demonstration project employees to be treated as 
employees under the General Schedule and (2) employees in Pay Band V of 
the Engineers and Scientists Occupational Family to be treated as ST 
employees for the purposes of these provisions.
    Part 752.401(a)(3): Adverse Actions--This waiver applies only to 
the extent necessary to (1) replace ``grade'' with ``pay band'' and (2) 
provide that a reduction in pay band level is not an adverse action if 
it results from the employee's rate of basic pay being exceeded by the 
minimum rate of basic pay for his or her pay band.
    Part 752.401(a)(4): Adverse Actions--This waiver applies only to 
the extent that adverse action provisions do not apply to conversions 
from General Schedule special rates to demonstration project pay, as 
long as total pay is not reduced.

Appendix A: Occupational Series by Occupational Family

I. Engineers and Scientists
    0101  Social Science
    0180  Psychology
    0190  Anthropology
    0401  Biology
    0403  Microbiology
    0405  Pharmacology
    0408  Ecology
    0410  Zoology
    0413  Physiology
    0414  Entomology
    0415  Toxicology
    0440  Genetics
    0601  General Health Science
    0602  Medical Officer
    0610  Nurse
    0630  Dietitian & Nutritionist
    0644  Medical Technologist
    0662  Optometrist
    0701  Veterinary Medical Science
    0801  General Engineering
    0808  Architecture
    0830  Mechanical Engineering
    0855  Electronics Engineering
    0858  Biomedical Engineering
    1301  General Physical Science
    1306  Health Physics
    1310  Physics
    1320  Chemistry
    1520  Mathematics
    1529  Mathematical Stat
    1530  Statistician
II. E&S Technicians
    0181  Psychology Aid/Technician
    0404  Biological Science Technician
    0499  Biological Science Student Trainee
    0620  Practical Nurse
    0640  Health Aid & Technician
    0645  Medical Technician
    0646  Pathology Technician
    0647  Diagnostic Radiologic Technologist
    0649  Medical Instrument Technician
    0802  Engineer Technician
    0809  Construction Control
    0818  Engineering Drafting
    0856  Electronics Technician
    1311  Physical Sciences Technician
    1521  Mathematics Technician
III. Administrative
    0018  Safety & Occupational Health Management
    0028  Environmental Protection Spec
    0080  Security Administration
    0201  Civilian Personnel Management
    0205  Military Personnel Management
    0301  Misc Administration & Program
    0332  Computer Operation
    0334  Computer Specialist
    0340  Program Management
    0341  Administrative Officer
    0342  Support Services Administration
    0343  Management/Program Analysis
    0346  Logistics Management
    0391  Telecommunications
    0501  Financial Administration & Program
    0505  Financial Management
    0510  Accounting
    0511  Auditing
    0560  Budget Analysis
    0905  General Attorney
    1020  Illustrating
    1035  Public Affairs
    1040  Language Specialist
    1060  Photography
    1071  Audiovisual Production
    1082  Writing & Editing
    1083  Technical Writing & Editing
    1084  Visual Information
    1102  Contracting
    1105  Purchasing
    1152  Production Control
    1222  Patent Attorney
    1410  Librarian
    1412  Technical Information Services
    1601  General Facilities & Equipment
    1640  Facility Management
    1670  Equipment Specialist
    1710  Educational & Vocational Training
    1740  Education Services
    1801  General Inspection, Investigation and Compliance
    1910  Quality Assurance
    2001  General Supply
    2003  Supply Program Management
    2010  Inventory Management
    2050  Supply Cataloging
    2181  Aircraft Operation
IV. General Support
    0086  Security Clerical & Asst
    0204  Military Personnel Technician
    0302  Messenger
    0303  Misc Clerk and Asst
    0304  Information Receptionist
    0305  Mail and File
    0312  Clerk-Stenographer/Reporter
    0318  Secretary
    0322  Clerk-Typist
    0326  Office Automation Clerical/Asst
    0335  Computer Clerk/Asst
    0344  Management Clerical/Asst
    0525  Accounting Technician
    0561  Budget Clerical/Asst
    0675  Medical Records Technician
    0679  Medical Clerk
    1016  Museum Specialist & Technician
    1087  Editorial Asst
    1106  Procurement Clerical/Tech
    1411  Library Technician
    1499  Library and Archives Student Trainee
    1531  Statistical Asst
    2005  Supply Clerical/Tech
    2102  Transportation Clerk/Asst

     Appendix B: Project Evaluation and Oversight--Intervention Impact Model--DoD Lab Demonstration Program     
----------------------------------------------------------------------------------------------------------------
           Intervention                 Expected effects              Measures                 Data source      
----------------------------------------------------------------------------------------------------------------
                                                 1. Compensation                                                
----------------------------------------------------------------------------------------------------------------
a. Broad banding.................  --Increased                --Perceived flexibility.  --Attitude survey       
                                    organizational                                                              
                                    flexibility.                                                                
                                   --Reduced administrative   --Actual/perceived time   --Personnel office data,
                                    workload, paperwork        savings.                  PME results, attitude  
                                    reduction.                                           survey                 
                                   --Advanced in-hire rates.  --Starting salaries of    --Workforce data        
                                                               banded v. non-banded                             
                                                               employees.                                       
                                   --Slower pay progression   --Progression of new      --Workforce data        
                                    at entry levels.           hires over time by                               
                                                               band, career path.                               

[[Page 10459]]

                                                                                                                
                                   --increased pay potential  --mean salaries by band,  --Workforce data        
                                                               career path,             --Personnel office data 
                                                               demographics.                                    
                                                              --total payroll cost....                          
                                   --increased satisfaction   --employee perceptions    --Attitude survey       
                                    with advancement.          of advancement.                                  
                                   --Increased pay            --Pay satisfaction,       --Attitude survey       
                                    satisfaction.              internal/external                                
                                                               equity.                                          
                                   --Improved recruitment...  --Offer/acceptance        --Personnel office data 
                                                               ratios.                                          
                                                              --Percent declinations..                          
                                   --No change in high grade  --Number/percentage of    --Workforce data        
                                    (GS-14/15) distribution.   high grade salaries pre/                         
                                                               post banding.                                    
b. Conversion buy-in.............  --Employee acceptance....  --Employee perceptions    --Workforce data        
                                                               of equity, fairness.                             
                                                              --Cost as a percent of                            
                                                               payroll.                                         
----------------------------------------------------------------------------------------------------------------
                                            2. Performance Management                                           
----------------------------------------------------------------------------------------------------------------
a. Cash awards/bonuses...........  --Reward/motivate          --Perceived motivational  --Attitude survey       
                                    performance.               power.                                           
                                   --To support fair and      --Amount and number of    --Workforce data        
                                    appropriate distribution   awards by career path,   --Attitude survey       
                                    of awards.                 demographics,.           --Attitude survey       
                                                              --Perceived fairness of                           
                                                               awards.                                          
                                                              --Satisfacttion with                              
                                                               monetary awards.                                 
b. Performance/contribution based  --Increased pay-           --Perceived pay           --Attitude survey       
 pay progression.                   performance link.          performance link.        --Attitude survey       
                                                              --Perceived fairness of                           
                                                               ratings.                                         
                                   --Improved performance     --Satisfaction with       --Attitude survey       
                                    feedback.                  ratings.                 --Attitude survey       
                                                              --Employee trust in       --Attitude survey       
                                                               supervisors.                                     
                                                              --Adequacy of                                     
                                                               performance feedback.                            
                                   --Decreased turnover of    --Turnover by             --Workforce data        
                                    high performers/           performance rating                               
                                    increased turnover of      category.                                        
                                    low performers.                                                             
                                   --Differential pay         --Pay progression by      --Workforce data        
                                    progression of high/low    performance rating                               
                                    performers.                category, career path.                           
                                   --Alignment of             --Linkage of performance  --Performance           
                                    organizational and         expectations to           expectations, strategic
                                    individual performance     strategic plans/goals.    plans                  
                                    expectations and results.                                                   
                                   .........................  --performance             --Attitude survey/focus 
                                                               expectations,.            groups                 
                                   --Increased employee       --Perceived involvement.  --Attitude survey/focus 
                                    involvement in                                       groups                 
                                    performance planning and                                                    
                                    assessment.                                                                 
                                   .........................  --Performance management  --Personnel regulations 
                                                               procedures.                                      
c. New appraisal process.........  --Reduced administrative   --Employee and            --Attitude survey       
                                    burden.                    supervisor perception                            
                                                               of revised procedures.                           
                                   --Improved communication.  --Perceived fairness of   --Focus group           
                                                               process.                                         
d. Performance development.......  --Better communication of  --Feedback and coaching   --Focus group           
                                    performance expectations.  procedures used.         --Personnel office data 
                                                              --Time, funds spent on    --Training records      
                                                               training by                                      
                                                               demographics.                                    
                                                              --Organizational                                  
                                                               commitment.                                      
                                   --Improved satisfaction    --Perceived workforce     --Attitude survey       
                                    and quality of workforce.  quality-attitude survey. Attitude survey         
----------------------------------------------------------------------------------------------------------------
                                                3. Classification                                               
----------------------------------------------------------------------------------------------------------------
a. Improved classification         --Reduction in amount of   --Time spent on           --Personnel office data 
 systems with generic standards.    time and paperwork spent   classification           --Personnel office data 
                                    on classification.         procedures.                                      
                                                              --Reduction of paperwork/                         
                                                               number of personnel                              
                                                               actions (classification/                         
                                                               promotion).                                      
                                   --Ease of use............  --Managers' perceptions   --Attitude survey       
                                                               of time savings, ease                            
                                                               of use, improved                                 
                                                               ability to recruit.                              
                                   --Improved recruitment of  --Quality of recruits...  --Attitude survey       
                                    employees with            --Perceived quality of    --Focus groups/         
                                    appropriate skills.        recruits.                 interviews             
                                                              --GPAs of new hires,      --Personnel office data 
                                                               educational levels.                              
b. Classification authority        --Increased supervisory    --Perceived authority...  --Attitude survey       
 delegated to managers.             authority/accountability.                                                   

[[Page 10460]]

                                                                                                                
                                   --Decreased conflict       --Number of               --Personnel records     
                                    between management and     classification disputes/                         
                                    personnel staff.           appeals pre/post.                                
                                                              --Management                                      
                                                               satisfaction with                                
                                                               service provided by                              
                                                               personnel office.                                
                                                              --Attitude survey.......                          
                                   --No negative impact on    --Internal pay equity...  --Attitude survey       
                                    internal pay equity.                                                        
c. Dual career ladder............  --Increased flexibility    --Assignment flexibility  --Focus groups, survey  
                                    to assign employees.                                                        
                                   --Improved internal        --Supervisory/non-        --Workforce data        
                                    mobility.                  supervisory ratios.      --Attitude survey       
                                                              --Perceived internal                              
                                                               mobility.                                        
                                   --Increased pay equity...  --Perceived pay equity..  --Attitude survey       
                                   --Flatter organization...  --Supervisory/non-        --Workforce data        
                                                               supervisory ratios.                              
                                   --Improved quality of      --Employe perceptions of  --Attitude survey       
                                    supervisory staff.         quality of supervisors.                          
----------------------------------------------------------------------------------------------------------------
                                                     4. RIF                                                     
----------------------------------------------------------------------------------------------------------------
Modified RIF.....................  --Prevent loss of high     --Separated employees by  --Workforce data        
                                    performing employees       demographics,            --Attitude survey/focus 
                                    with need skills.          performance.              groups                 
                                   --Contain cost and         --Satisfaction with RIF   --Attitude survey/focus 
                                    disruption.                process.                  groups                 
                                                              --Cost comparisons of     --Personnel office/     
                                                               traditional v. modified   budget data            
                                                               RIF.                     --Personnel office data 
                                                              --Time to conduct RIF...  --Personnel office data 
                                                              --Number of appeals/                              
                                                               reinstatements.                                  
----------------------------------------------------------------------------------------------------------------
                                       5. Combination of all Interventions                                      
----------------------------------------------------------------------------------------------------------------
All..............................  --Improved organizational  --Combination of          --All data sources      
                                    effectiveness.             personnel measures.                              
                                   --Improved management of   --Employee/management     --Attitude survey       
                                    R&D workforce.             job satisfaction                                 
                                                               (intrinsic/extrinsic).                           
                                   --Improved planning......  --Planning procedures...  --Strategic planning    
                                                              --Perceived                documents              
                                                               effectiveness of         --Organizational charts 
                                                               planning procedures.                             
                                   --Improved cross           --Actual/perceived        --Attitude survey       
                                    functional coordination.   coordination.                                    
                                   --Increased product        --Customer satisfaction.  --Customer satisfaction 
                                    success.                                             surveys                
                                   --Cost of innovation.....  --Project training/       --Demo project records  
                                                               development cost (staff  --Contract documents    
                                                               salaries, contract                               
                                                               cost, training hours                             
                                                               per employee).                                   
----------------------------------------------------------------------------------------------------------------
                                                   6. Context                                                   
----------------------------------------------------------------------------------------------------------------
a. Regionalization...............  --reduced servicing        --HR servicing ratios...  --personnel office data,
                                    ratios/cost.                                         workforce data         
                                                              --Average cost per        --Workforce data/       
                                                               employee served.          personnel office data  
                                   --No negative impact on    --Service quality,        --Attitude survey/focus 
                                    service quality.           timeliness.               groups                 
b. GPRA..........................  --Improved organizational  --Other measures to be    --As established        
                                    performance.               developed.                                       
----------------------------------------------------------------------------------------------------------------

Appendix C. Performance Elements

    Each performance element is assigned a weight between a 
specified range. The total weight of all elements in a performance 
plan is 100 points. The supervisor assigns each element some portion 
of the 100 points in accordance with its importance for mission 
attainment.
    All employees will be rated against at least the five generic 
performance elements listed through ``e'' below. However, only those 
employees whose duties require supervisor or manager/leader 
responsibilities will be rated on element ``f''. Supervisors will be 
rated against an additional performance element, listed at ``g'' 
below:
    a. Technical Competence. Exhibits and maintains current 
technical knowledge, skills, and abilities to produce timely and 
quality work with the appropriate level of supervision. Makes 
prompt, technically sound decisions and recommendations that add 
value to mission priorities and needs. For appropriate career paths, 
seeks and accepts developmental and /or special assignments. 
Adaptive to technological change. (Weight Range: 15 to 50)

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    b. Working Relationships. Accepts personal responsibility for 
assigned tasks. Considerate of others views and open to compromise 
on areas of difference, if allowed by technology, scope, budget, or 
direction. Exercises tact and diplomacy and maintains effective 
relationships, particularly in immediate work environment and 
teaming situations. Always willing to give assistance. Shows 
appropriate respect and courtesy. (Weight Range: 5 to 15)
    c. Communications. Provides or exchanges oral/written ideas and 
information in a manner that is timely, accurate and cogent. Listens 
effectively so that resultant actions show understanding of what was 
said. Coordinates so that all relevant individuals and functions are 
included in, and informed of, decisions and actions. (Weight Range: 
5 to 15)
    d. Resource Management. Meets schedules and deadlines, and 
accomplishes work in order of priority; generates and accepts new 
ideas and methods for increasing work efficiency; effectively 
utilizes and properly controls available resources; support 
organization's resource development and conservation goals. (Weight 
Range: 15 to 50)
    e. Customer Relations. Demonstrates care for customers through 
respectful, courteous, reliable and conscientious actions. Seeks out 
and develops solid working relationships with customers to identify 
their needs, quantifies those needs, and develops practical 
solutions. Keeps customers informed and prevents surprises. Within 
the scope of job responsibility, seeks out and develops new programs 
and /or reimbursable customer work. (Weight Range: 10 to 50)
    f. Management/Leadership. Actively furthers the mission of the 
organization. As appropriate, participates in the development and 
implementation of strategic and operational plans of the 
organization. Develops and implements tactical plans. Exercises 
leadership skill within the environment. Mentors junior personnel in 
career development, technical competence, and interpersonal skills. 
Exercises due responsibility to oversee technical/acquisition/
organizational positions assigned to them. (Weight Range: 0 to 50)
    g. Supervision/EEO. Works toward recruiting, developing, 
motivating, and retaining quality team members; takes timely/
appropriate personnel actions, applies EEO/merit principles; 
communicates mission and organizational goals; by example, creates a 
positive, safe, and challenging work environment; distributes work 
and empowers team members. (Weight Range: 15 to 50)
BILLING CODE 6325-01-P

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[GRAPHIC] [TIFF OMITTED] TN03MR98.001



[FR Doc. 98-5424 Filed 3-2-98; 8:45 am]
BILLING CODE 6325-01-C