[Federal Register Volume 63, Number 42 (Wednesday, March 4, 1998)]
[Notices]
[Pages 10680-10711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5426]



[[Page 10679]]

_______________________________________________________________________

Part II





Office of Personnel Management





_______________________________________________________________________



Science and Technology Reinvention Laboratory Demonstration Project at 
the U.S. Army Research Laboratory (ARL); Notice

  Federal Register / Vol. 63, No. 42 / Wednesday, March 4, 1998 / 
Notices  

[[Page 10680]]



OFFICE OF PERSONNEL MANAGEMENT


Science and Technology Reinvention Laboratory Demonstration 
Project at the U. S. Army Research Laboratory (ARL)

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 DoD laboratories designated as Science and Technology (S&T) 
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 Army 
Research Laboratory on June 3, 1998.

FOR FURTHER INFORMATION CONTACT: ARL: Mr. Jack R. Wilson, II, U.S. Army 
Research Laboratory Building 202, 2800 Powder Mill Road, Adelphi, MD 
20783-1197, 301-394-1105; OPM: Fidelma A. Donahue, U.S. Office of 
Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC 
20415, 202-606-1138.

SUPPLEMENTARY INFORMATION:

1. Overview

    On March 12, 1997, [62 FR 11646] OPM published this proposed 
demonstration plan and received comments from nineteen employees, both 
oral and written, including four speakers at the two public hearings. 
In addition, questions were received from approximately 45 Army 
Research Laboratory (ARL) employees who asked for clarifying 
information. This information was provided to the ARL workforce via 
mail posted to an electronic bulletin board. The following is a summary 
of written and oral comments by topical area and a response to each:

A. Management Concerns

    Comments: A number of employees who commented were greatly 
concerned that the demonstration project gives more authority and 
responsibility to laboratory supervisors and managers. It appears that 
many believe supervisors do not properly execute supervisory 
responsibilities under the current personnel management system and are 
not held accountable for their actions. These employees question the 
ability of ARL supervisors to competently and fairly implement their 
new authorities, and fear a new system that gives supervisors 
additional authority over their career and pay. Some also expressed 
concern over the absence of language in the proposal regarding 
diversity in the selection of representatives for various panels. For 
instance, one commenter indicated the demonstration project and 
specifically, the performance management system, would be used to 
discriminate against African American employees.
    Response: The text of the project proposal has been modified in 
several places to clearly state the laboratory's commitment to 
implement supervisory and managerial accountability processes and 
emphasize that sensitivity to diversity issues is an important goal in 
all phases of personnel management. The laboratory acknowledges 
concerns expressed by employees and has attempted to build a number of 
checks and balances in the new personnel system to ensure a fair and 
equitably-administered program. These features include a Personnel 
Management Board which will provide oversight for the project, 
including specific responsibility for developing internal controls and 
accountability processes. Other balances in the plan include a pay for 
performance system which features a reconciliation process designed to 
balance high and low rating profiles; expanded use of panels to provide 
input and advice to supervisors in making personnel decisions regarding 
training and promotion; enhanced use of Alternative Dispute Resolution 
procedures and Last Chance Agreements in resolving conflict situations; 
and a commitment to develop a mechanism for employees to provide 
feedback to supervisors in an effort to further develop and improve 
supervisory skills and abilities. The laboratory also plans a thorough 
training program for all supervisors in the added responsibilities and 
accountabilities associated with the personnel demonstration 
interventions.

B. Broadbanding

    Comments: The three comments received covered three distinct 
concerns. First, one comment stated that capping pay at the top of the 
highest grade in the pay band was discriminatory against older workers. 
Another reviewer recommended that GS-1102 Contract Specialists be 
deleted from the Administrative Occupational Family and be placed 
instead in either a ``professional'' family or in a separate family. 
Finally, one comment recommended that Installation Support Engineers 
and Scientists be moved into the Administrative Occupational Family and 
that the Engineer and Scientist Occupational Family be renamed 
``Research Engineers and Scientists.''
    Response: Salary caps outlined in the plan are essentially 
identical to the current pay caps inherent in Step 10 of each GS grade. 
Since traditional GS grades are combined into fewer pay bands under the 
plan, the effects of pay capping in the current system are somewhat 
diminished by the demonstration project. The Administrative 
Occupational Family in which GS-1102 positions have been placed already 
contains other professional occupational series such as Accountants and 
Attorneys. Placement of occupations within job families was based on 
similarity of qualification requirements, and the traditional OPM 
method of grouping work into professional, administrative, technical, 
clerical, and other (PATCO) categories, and with the understanding that 
under the demonstration competitive areas for reduction in force 
purposes have been defined in terms of occupational families. As a 
result we did not change the plan to place Research Engineers and 
Scientists in an occupational family apart from other engineering 
positions.

C. Engineer and Scientist Pay Band V

    Comments: Two comments objected to wording which stated that 
employees in this band required primarily technical knowledges and 
skills and that managerial skills were secondary. Another observed that 
because of the current make-up of the workforce, women and minorities 
would not be represented on selection panels for Band V positions. And 
finally, a question was raised as to how Band V employees convert out 
of the Demo plan.
    Response: Based on the comments received, the text concerning 
scientific and managerial skills and knowledges has been reworded to 
clearly state that Band V positions require expert scientific technical 
knowledges as well as strong managerial abilities. With regard to women 
and minority representation on the Band V panels, the commenter has 
raised an excellent point, and wording has been added to reflect the 
laboratory's commitment to constructing panel membership so that 
diversity of membership is ensured. The comment regarding how Band V 
employees convert out of the plan identified a serious oversight and 
wording has been added to describe

[[Page 10681]]

how this conversion will be handled. Revisions to this section also 
included technical changes to better describe how Pay Band V will 
function.

D. Pay for Performance

    Comments: A total of twenty-three different points were made under 
this general heading. These included the opinion that objectives should 
not change during the rating period, particularly in the last 120 days; 
that the new system did not appear to link organizational goals to 
individual performance objectives; that objectives are not 
quantitative; and that there was not enough space on the evaluation 
form for the employee to adequately address yearly achievements. One 
comment pointed out an error in a sentence dealing with Performance 
Improvement Plans (PIPs) and Last Chance Agreements (LCAs), another 
pointed out an inconsistency in the designation of Elements 7 and 8 as 
mandatory/critical elements, and another suggested adding EEO to 
Element 7. In addition, there were three suggested changes on how 
employees could rate their supervisors (delink it from the appraisal, 
create standardized criteria, and make it mandatory) and one reviewer 
suggested the use of forced distribution to ensure an incentivized pay 
pool. One reviewer commented that this new system is too subjective and 
that the Total Army Performance Evaluation System (TAPES) should be 
improved instead of creating a new system; that Civilian Intelligence 
Personnel Management System (CIPMS) employees should be excluded from 
the plan; and that the benchmark point fixing was such that meaningful 
distinction could not be justified. This was accompanied by the 
suggestion that benchmark points be in 5 point increments rather than 
in the one point increment outlined in the plan. One reviewer stated 
that the new Pay for Performance (PFP) system conflicted with teaming 
and that all Labs should use the same wording to describe their 
performance elements. ARL also received one comment which suggested 
that career interns will lose money under the new plan when compared to 
what would have been received under the current system. One commenter 
suggested clarifying language changes to the Performance Conference 
Form. Finally one commenter was concerned that Installation Support 
Engineers and Scientists would be treated unfairly if competing in the 
same pay pool as Research Engineers and Scientists.
    Response: Objectives and Performance Elements: Rather than having 
performance objectives remain fixed during the rating cycle, the 
ability to change objectives as work assignments change is considered 
an important flexibility in any performance management system. This 
flexibility prevents an employee from being rated against objectives 
that are no longer applicable or have changed due to fluctuations in 
the work. This ensures employees are properly recognized for the tasks 
they are actually performing. The proposed demonstration plan stated 
that the plan was designed to tie individual performance to 
organizational goals, and the description of the objective setting 
process clearly stated that objectives were ``to be based on the work 
unit's mission and goals.'' Regarding the comment that the objectives 
were not quantitative, there is nothing in the demonstration project 
that would prohibit wording objectives in quantitative terms. Training 
on the performance evaluation system will suggest that quantitative 
measures of objectives be incorporated wherever possible. As each of 
the five Army demonstration projects will operate in discrete 
environments, standardizing element titles serves no useful purpose. 
The only changes made to this section of the plan relate to the 
designation of Elements 7 & 8 as mandatory and/or critical and to the 
expansion of Element 7 to reflect sensitivity to diversity and to 
assure equity and fairness.
    Appraisal Form: The appraisal forms were included in the proposed 
plan as examples of the tools available for raters during the 
performance evaluation process. As with all forms, they can be improved 
upon and the commenter has several good suggestions that will be 
adopted before implementation.
    Employees Rating Supervisors: ARL has decided to delete the entire 
paragraph dealing with employees rating supervisors. More benefit would 
be derived by both the employee and the laboratory if employee feedback 
were given in a more informal setting and if the feedback were delinked 
from the performance appraisal process. A new provision has been 
included under Section F. ``Employee Development'' which calls for 
informal feedback to the supervisor which in turn will be used for 
developmental purposes.
    Forced Distribution of Ratings: During the development of the 
project, many town hall meetings with employees were held and the 
question of forced distribution arose. It was clear that the majority 
of the work force was against such a policy. Therefore, the plan, in 
conformance with existing DoD policy, specifically prohibits such a 
practice; to alter that position would break faith with what was 
promised to laboratory employees.
    Subjective System: The laboratory believes the proposed system 
improves on the current process. The use of benchmark standards in 
conjunction with the ability to weight performance elements to the 
exact requirements of each position provides the rater with a more 
quantitative way to rate performance than exists today. On the 
suggestion that benchmark point-fixing be in 5 point increments, there 
is nothing in the plan that would prohibit the rater from operating in 
5 point increments if he/she so desired. However, it was decided to 
maintain the flexibility of the 1 point increment so that close shading 
and distinctions can be made during the evaluation process.
    Intern Pay: With regard to the comments on intern pay, the twice 
annual appraisal process should provide ample opportunity for intern 
pay to be reviewed and adjusted as appropriate. The plan has been 
revised to reflect that procedures will be developed which will ensure 
comparability of the pay and promotion practices for interns.
    LCAs and PIPs: Finally, the laboratory appreciates being informed 
of an error in wording in the section dealing with Last Chance 
Agreements and Performance Improvement Plans. The original wording 
indicated that two conditions had to be met before the supervisor could 
take appropriate follow-on action after instituting a PIP. This 
situation has been corrected.
    Other: Language has been added to the Performance Conference Form 
for clarification. Since pay pools are based on organizational units, 
it is unlikely that Installation Support Engineers and Scientists would 
be in the same pay pool as Researchers. However, even if they were, the 
system is designed so that each is rated according to benchmark 
standards and objectives for his or her own job. As a result, no 
changes were made to the plan regarding the last two suggestions.

E. Pay Pools

    Comments: There were nine comments/suggestions on this topic. One 
suggested that pay pool size be specifically limited, i.e., between 10 
and 50; one suggested that specific penalties be levied on supervisors 
when appraisals were late; one suggested that the annual pay increase 
be added to the pay pool and that the Director have the ability to 
reward high performing pay pools. One reviewer wanted team leaders to 
be added to supervisory pay pools; another comment suggested that when 
team awards were granted that distribution be based on a unanimous

[[Page 10682]]

vote. One reviewer wanted the pay pool reconciliation process deleted. 
Finally, one reviewer wanted clarification of awards program language 
and wanted all pay pools to work under a single ARL-wide policy.
    Response: One of the philosophical underpinnings of the plan is to 
ensure pay pools are created along organizational lines. Constructing 
pay pools in this manner allows the use of existing managerial 
authorities and relationships to facilitate various aspects of the 
plan. It is also believed that organizationally focused pay pools will 
facilitate teaming. The Personnel Management Board will make 
recommendations to the ARL Director about the size of pay pools, but 
conventional thinking is that a size of approximately 50 is necessary 
to have a properly funded pool.
    The Personnel Management Board will develop methods to ensure 
performance appraisals are done on time. The Director's policy 
decisions will be published in the laboratory's implementing 
instructions for the demonstration.
    From the beginning of the plan's development the laboratory has 
promised that all employees would receive annual pay increases and 
locality pay (as applicable) as provided by law and Presidential 
authority. To alter the plan on this point would break faith with the 
ARL workforce.
    Team leaders within ARL function primarily as non-supervisory 
employees and are technically oriented, focused primarily on non-
managerial issues. Therefore, team leaders are more appropriately 
placed in non-supervisory pay pools rather than in supervisory pay 
pools where the duties and responsibilities of the work are materially 
different.
    The reviewer's suggestion that the distribution of team awards be 
based on a unanimous vote was considered, but the laboratory decided to 
maximize team autonomy and leave such decisions up to the individual 
teams.
    A cornerstone of the pay for performance system is that raters in a 
pay pool meet to reconcile preliminary ratings. This reconciliation 
process is considered vital to achieving equity and fairness within the 
pool. Reconciling scoring between raters is one of several checks and 
balances built into the demonstration project to ensure that 
supervisors execute their new authorities in a responsible manner. 
Based on these analyses, no changes were made to the plan.
    The project plan has been modified to permit the laboratory 
director to adjust the amount of funds in each pay pool as necessary to 
recognize exemplary performance of individuals or teams/groups. The 
plan also includes the provision that the Director may divert funds 
from other pay pools for this purpose.
    The confusing language regarding the awards program has been 
deleted. The issue is clearly stated elsewhere in the plan. Language 
was also added to the plan to indicate that pay pools would operate 
within the guidelines of the Personnel Management Board.

F. Employee Development and Training

    Comments: ARL received four comments generally related to employee 
development or training. One employee wanted to know whether managers 
would be tested for proficiency after demonstration program training 
was accomplished. One reviewer observed that encouraging rapid turnover 
of employees argued against the Laboratory's ability to develop its 
workforce and perform new mission work. One observed that the amount of 
money set aside for training employees on the plan's provisions was too 
small and finally, one suggested that some Cooperative Education 
Program (COOP) students be paid living expenses as an incentive to work 
at ARL.
    Response: There are no plans to test supervisor proficiency as part 
of the implementation process; however, wording has been added on 
enhanced supervisory accountability which should strengthen this 
concept throughout the plan.
    The Army Research Laboratory does not currently, or in any of the 
goals in this demonstration project, encourage rapid turnover in any 
form. In fact, it is believed that the demonstration project's 
provisions for correcting critical skills imbalances will indeed permit 
valued employees to be retrained to accomplish new mission work.
    The amount of money projected for training the workforce and 
supervisors on the new personnel system was too small. A revised 
estimate has been developed and the language describing demonstration 
project costs has been clarified.
    Regarding paying living expenses for COOPs, initiatives in this 
area do not fall within the purview of this demonstration authority 
which is limited to the rules and regulations contained in Title 5.

G. Reduction in Force

    Comments: ARL received two suggestions that years of extra credit 
for RIF be averaged as in the current system and not added as is 
provided for in the plan. A third reviewer observed that the reliance 
on weighting performance in RIF was inconsistent with Congressional 
intent. Finally, one commenter stated the number of years allowed was 
too high (should be divided by a factor of 2) and suggested that all 
employees enter the demonstration with no additional years of credit 
for RIF and begin the new system on a level playing field.
    Response: One of the basic foundations of the plan is to place 
increased emphasis on performance. One method of achieving this goal is 
to add and not average RIF retention years. In other words, one of the 
experimental ideas is that performance is more important than seniority 
by itself. Another goal of the demonstration project is to design a RIF 
system that will improve the retention of high performers.
    The legislative proposal referred to by the commenter (the Omnibus 
Civil Service Reform Bill of 1996) was never adopted, and no evidence 
has been presented to indicate that the majority of Congress preferred 
to alter current rules which permit performance to be a factor in 
reduction in force. In fact, the legislation which permits this 
personnel demonstration project charges DoD to implement plans which 
are similar in nature to China Lake. One of the foundations in the Navy 
China Lake demonstration is a performance-based reduction in force 
system. Since the emphasis in this plan is on pay-for-performance it 
was decided to maintain the technique of adding, rather than averaging 
the years of RIF service credit.

H. Miscellaneous Comments

    Comments: There were fifteen miscellaneous comments, suggestions 
and recommendations dealing with various aspects of the plan. One 
reviewer wanted all changes, not just major ones, to be published in 
the Federal Register, and suggested that requests for salary increases 
in excess of $5,000 be sent to higher headquarters. One reviewer 
observed that the current system should not be changed and did not want 
to participate. There were several suggestions that changes be made to 
the composition and operation of the Personnel Management Board. One 
employee wanted to know whether under the plan movement into the ``high 
grade'' category (old GS-14 and GS-15) was going to be as difficult as 
under the current system and another suggested that supervisors be 
placed under a three-year probationary period. One commenter suggested 
the Distinguished Scholar Program be considered as an addition to the 
project. Still another indicated that the plan was without

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evaluation or internal controls and that an alternative way to convert 
employees out of the plan should be considered: Under this alternative 
arrangement, the comment suggests that the duties actually being 
performed be evaluated before pay is set prior to converting employees 
out of the plan. One reviewer suggested adding the recent laboratory 
initiatives in Alternative Dispute Resolution. Finally, one commenter 
questioned whether a conflict of interest would exist for industry 
employed people eligible for the Voluntary Emeritus Corps; suggested 
that conversion out of the demonstration should use step 2 rather than 
step 4 salary; and recommended that the pro-rated within grade increase 
buy-ins should be rounded up to the next pay period rather than the 
nearest week as described.
    One commenter asked for an explanation of ``culturally relevant 
criteria'' used in Section II.B. ``Problems with the Current System''.
    Response: Several of the suggestions would result in increasing 
administrative burdens on the laboratory. This is in conflict with one 
of the basic goals of the demonstration project. Therefore, it was 
decided not to publish all changes since that would be both costly and 
a significant administrative workload. Similarly, forwarding proposed 
promotions exceeding $5,000 to higher headquarters imposes an 
additional review level in the process and reduces rather than 
increases laboratory flexibility. Finally, to conduct classification 
reviews for each employee leaving the laboratory places an unacceptable 
workload burden on the personnel offices administering the plan.
    Promotions from Pay Band 3 to Band 4 under this plan are expected 
to remain as difficult as promotions from GS-13 to GS-14 are under the 
current system for as long as controls on the number of high grade 
positions remain in place. The laboratory decided against changing the 
supervisory probationary period to three years because supervisory 
performance, unlike certain engineers and scientists can be adequately 
evaluated in a one-year period. Wording on Distinguished Scholar is not 
added as the current plan provides the full range of flexibilities 
necessary to recruit college graduates to the laboratory.
    Enhanced accountability is a central concept of this proposal and 
the Personnel Management Board will be one of several groups that will 
be involved in the oversight of the demonstration. Other oversight will 
come from the Office of Personnel Management as well as elements with 
DoD and DA.
    It was decided not to include the recent laboratory initiatives in 
the area of Alternate Dispute Resolution because they do not involve 
any waivers to law. Language was added to clarify that the 
demonstration project will enhance the use of Alternative Dispute 
Resolution for all conflict resolution to include grievances, 
disciplinary actions and EEO matters.
    The question regarding potential conflicts of interest for 
industry-employed personnel eligible for the laboratory's new Voluntary 
Emeritus Corps is a good one and has been discussed by the Personnel 
Management Board. The suggestion will be considered for inclusion in 
the operating instructions to be developed prior to implementation of 
the project. The conversion out method was carefully crafted by experts 
in the field of compensation and represents a joint agreement among the 
five Army laboratories who published proposed demonstration projects in 
March 1997; therefore, the suggestion was not adopted. Finally, the 
method of pro-rating the amount of within-grade increases using weeks 
of the waiting period completed is consistent with the definition of 
waiting periods in the existing law and offers the employee the full 
amount earned. To round up as suggested would add unnecessary costs.
    The statement regarding culturally relevant criteria is only part 
of the introductory material which attempts to explain why the 
cumbersome government-wide system is counterproductive to management in 
a changing environment. In particular, the culture of a research 
laboratory is considerably different from a typical bureau or agency, 
and the demonstration project attempts to tailor the personnel system 
to the laboratory environment.

2. Demonstration Project Changes

    The following is a summary of substantive changes and 
clarifications which have been made to the project proposal. While not 
specifically listed, the laboratory also made a number of technical 
changes to correct errors or omissions or to meet other regulatory 
requirements.
    (1) II. Introduction A. Purpose--Added wording to enhance 
supervisory accountability under the improved personnel management 
system.
    (2) II. Introduction E. Participating Employees and Union 
Representation--Added wording to clarify that CIPMS employees will not 
be covered by the plan, but will follow the same performance appraisal 
and employee development provisions of the plan except where found to 
be in conflict with CIPMS.
    (3) III. Personnel System Changes A. Broadbanding, Figure 1--An 
asterisk was added to the plan to more directly tie it to the text 
which follows.
    (4) III. Personnel System Changes A. Broadbanding--Changed wording 
from January pay increase to periodic pay increases to reflect that pay 
increases may not always occur in January.
    (5) III. Personnel System Changes A. Broadbanding--Clarified the 
requirement for significant managerial and supervisory expertise, and 
made several technical changes to reflect how Pay Band V will function.
    (6) III. Personnel System Changes A. Broadbanding--Revised the 
description of the Pay Band V selection panel to ensure diversity of 
membership.
    (7) III. Personnel System Changes B. Classification 8. 
Classification Appeals--Revised classification appeal rights to reflect 
that all appeals must go to the DoD appellate level before going to 
OPM.
    (8) III. Personnel System Changes C. Pay for Performance 1. 
Overview--Revised language to read ``a performance payout'' rather than 
``pay increases.''
    (9) III. Personnel System Changes, C. Pay for Performance, 1. 
Overview--Deleted paragraph 2, line 8, column 3 (under the chart) as it 
was redundant, because issue was already explained clearer in another 
section of the plan.
    (10) III. Personnel System Changes C. Pay for Performance 1. 
Overview--Changed the words ``base pay adjustment'' to ``performance 
payout.''
    (11) III. Personnel System Changes C. Pay for Performance 1. 
Overview--Revised the description of the Director's authority to adjust 
the amount of funds assigned to pay pools. The authority has been 
expanded to include adjustments needed to recognize exemplary 
performance of individuals or teams/groups and contains the provision 
that the director may divert funds from other pay pools for this 
purpose.
    (12) III. Personnel System Changes C. Pay for Performance 1. 
Overview--Added a sentence providing for the development of procedures 
which will ensure that intern salaries under the project will be 
comparable with current pay and promotion practices.
    (13) III. Personnel System Changes C. Pay for Performance 2. The 
PFP Assessment Process--Clarified language concerning employees current 
grievance rights.
    (14) III. Personnel System Changes C. Pay for Performance 2. The 
PFP

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Assessment Process--Revised language to read ``performance payout'' 
rather than ``salary increases.''
    (15) III. Personnel System Changes C. Pay for Performance 2. The 
PFP Assessment Process--Clarified definition of a critical element.
    (16) III. Personnel System Changes C. Pay for Performance 2. The 
PFP Assessment Process--Revised the definition of performance element 7 
``Management/Leadership'' to specifically include sensitivity to 
diversity and to ensure equity and fairness.
    (17) III. Personnel System Changes C. Pay for Performance 2. The 
PFP Assessment Process--Clarified internal inconsistency dealing with 
elements 7 & 8 being critical and/or mandatory for supervisors.
    (18) III. Personnel System Changes C. Pay for Performance 2. The 
PFP Assessment Process--Deleted provision for employees to provide 
input to supervisors appraisals.
    (19) III. Personnel System Changes C. Pay for Performance 3. 
Performance Which Fails to Meet Expectations C. Improving Performance--
Reworded the sentence describing a PIP and LCA to remove unnecessary 
restriction.
    (20) III. Personnel System Changes C. Pay for Performance 4. Pay 
Pools--Revised the wording describing the size of pay pools which will 
permit pay pool size to be greater than or less than 50.
    (21) III. Personnel System Changes C. Pay for Performance 4. Pay 
Pools--Added the provision that reconciliation panels will work within 
operating procedures established by the Personnel Management Board.
    (22) III. Personnel System Changes D. Hiring and Appointment 
Authorities 4. Voluntary Emeritus Corps--Removed the restriction which 
limited Voluntary Emeritus Corps to Engineers, Scientists and 
Technicians.
    (23) III. Personnel System Changes E. Internal Placement and Pay 
Setting 1. Promotions--Revised the amount of money to be reviewed by 
the PMB for promotions, permitting the PMB to adjust the amounts of 
money they review.
    (24) III. Personnel System Changes E. Internal Placement and Pay 
Setting 4. Staffing Supplements--Revised the wording concerning 
adjusting special rate schedules and the need to recompute the staffing 
supplement.
    (25) III. Personnel System Changes F. Employee Development 2. 
Employee Development Panels--Revised the provision that a Continued 
Service Agreement will be a commitment to ARL rather than the 
government for ARL Sponsored Training.
    (26) III. Personnel System Changes F. Employee Development--Added a 
new paragraph 4. Employee Feedback to Supervisors, which permits 
employees to provide feedback to their supervisors on their supervisory 
and managerial skills.
    (27) III. Personnel System Changes H. Grievances, Disciplinary 
Actions and EEO--Revised the section on grievances and disciplinary 
actions to include reference to EEO issues and specifically encourage 
the use of ADR for grievance, disciplinary and EEO matters.
    (28) V. Conversion B. Conversion or Movement From a Project 
Position to a General Schedule Position 2. Pay-Setting Provisions--
Added a new paragraph to provide for converting an employee out of the 
demo from Pay Band V.
    (29) V. Conversion B. Conversion or Movement From a Project 
Position to a General Schedule Position 2. Pay-Setting Provisions--
Added new paragraph d. to describe certain pay retention events and 
renumbered the remaining paragraphs.
    (30) VIII. Demonstration Project Costs C. Personnel Management 
Board--Revised overall responsibility of the Personnel Management Board 
to include: fair and equitable implementation; responsibility to 
establish internal controls and accountability; clarify description of 
membership; allow the Director to adjust membership on the board, and 
to clarify that the board's listed duties are examples. Made 
consistency changes to item VIII C. Personnel Management Board (f.).
    (31) VIII. Demonstration Project Costs D. Developmental Costs--
Revised wording to show that money reflected in Figure 4 is additional 
incremental projected annual expense.
    (32) VIII. Demonstration Project Costs D. Developmental Costs 
Figure 4--Changed to reflect additional incremental training costs for 
FY98 of $30K and revised FY98 total.
    (33) IX. Required Waivers to Law and Regulation--Changed waiver 
language to make it consistent with the plan.
    (34) Appendix D Performance Management Forms--Revised the personnel 
management forms to reflect changes made in the text of the plan and to 
provide clarifying instructions.

    Dated: February 26, 1998.

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

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems with the Present System
    C. Changes Required/Expected Benefits
    D. Participating Organizations
    E. Participating Employees and Union Representation
    F. Project Design
    G. Experimentation and Revision
III. Personnel System Changes
    A. Broadbanding
    B. Classification
    C. Pay for Performance (PFP)
    D. Hiring and Appointment Authorities
    E. Internal Placements and Pay Setting
    F. Employee Development
    G. Reduction in Force (RIF)
    H. Grievances, Disciplinary Actions, and EEO Matters
IV. Implementation Training
V. Conversion
VI. Project Duration
VII. Evaluation Plan
VIII. Demonstration Project Costs
IX. Required Waivers to Law and Regulation
Appendix A--ARL Employee Duty Locations
Appendix B--Occupational Series by Occupational Family
Appendix C--Demographics and Union Representation
Appendix D--Performance Management Forms
Appendix E--Project Evaluation

I. Executive Summary

    The project was designed by the Army Research Laboratory (ARL) with 
participation 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 laboratory mission, adjust the 
workforce for change, and improve workforce quality. The project 
framework addresses all aspects of the human resources life cycle 
model. There are six major areas of change: (a) enhanced hiring 
flexibilities; (b) broadbanding; (c) automated classification; (d) a 
pay for performance system; (e) modified reduction in force procedures; 
and (f) expanded developmental opportunities.
    ARL managers will exercise cost discipline in the development and 
execution of this project, which will be tied to in-house costs and 
consistent with the Department of the Army (DA) plan to downsize 
laboratories. ARL will manage and control its 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.
    Extensive evaluation of the project will be performed by OPM, OSD, 
and Department of the Army. The Army has

[[Page 10685]]

programmed a decision point 5 years into the project for continuance, 
modification, or rejection of the demonstration initiatives.
    This plan represents a general description of the major 
interventions of the demonstration project. Specific procedures and 
regulations will provide details on how the personnel demonstration 
project will be implemented.

II. Introduction

A. Purpose

    The purpose of the project is to demonstrate that the effectiveness 
of Department of Defense (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 have been under intense 
scrutiny in recent years. The perceived deterioration of quality is 
believed to be due, in substantial part, to the erosion of control 
which line managers have over their human resources. This demonstration 
project, in its entirety, attempts to provide managers, at the lowest 
practical level, the authority, control, and flexibility needed to 
achieve a quality laboratory and hold them accountable for the proper 
exercise of this authority within the framework of an improved 
personnel management system.

B. Problems With the Present System

    The ARL mission is to execute fundamental and applied research to 
provide the Army the key technologies and analytical support necessary 
to assure supremacy in future land warfare. The ARL vision is a 
laboratory preeminent in key areas of science, engineering, and 
analysis relevant to land warfare; a staff widely recognized as 
outstanding; a laboratory seen by Army users as essential to their 
missions; and an intellectual crossroads for the technical community. 
ARL products contribute to the readiness of U.S. forces. To achieve 
this vision, ARL must hire and retain enthusiastic, innovative, highly-
educated scientists and engineers to meet mission needs; also required 
is the ability to hire and retain dynamic, committed technical, 
clerical and administrative support personnel.
    ARL finds the current Federal personnel system to be cumbersome, 
confusing, and unable to provide the flexibility necessary to respond 
to the current mandates of downsizing, restructuring, and possible 
closure while trying to maintain a high level of mission excellence. 
The present system--a patchwork of laws, regulations, and policies--
often inhibits rather than supports the goals of developing, 
recognizing, and retaining the employees needed to realign the 
organization with its changing fiscal and production requirements.
    The current Civil Service General Schedule (GS) system has 15 
grades with 10 levels each and involves lengthy, narrative, individual 
position descriptions, which have to be classified by complex title 5 
classification standards. Because these standards have to meet the 
needs of the entire federal government, they are frequently obsolete 
and often not relevant to the needs of ARL. Distinctions between levels 
are often not meaningful. Currently, standards do not provide for a 
clear progression beyond the full performance level, especially for 
scientific/engineering occupations where career progression through 
technical as well as managerial occupational families is important.
    Performance management systems require additional emphasis on 
continuous, career-long development in a work environment characterized 
by an ever-increasing rate of change. Since past performance and/or 
longevity are the factors on which pay raises are currently assessed, 
there is often no positive correlation between compensation and 
performance contributions nor value to the organization. These limited 
criteria do not take into account the future needs of the organization 
nor other culturally relevant criteria which an organization may wish 
to use as incentives.
    Finally, current rules on training, retraining and otherwise 
developing employee competencies make it difficult to correct skills 
imbalances and to prepare current employees for new lines of work to 
meet changing mission needs.

C. Changes Required/Expected Benefits

    The demonstration project responds to problems in the 
classification system with a broadbanding classification system for GS 
employees; to problems in the current performance management system 
with a pay for performance system; to problems associated with 
downsizing with slightly modified reduction in force processes; and to 
problems of skills imbalances and rapidly changing missions with an 
enhanced developmental opportunities program.

D. Participating Organizations

    The Army Research Laboratory (ARL) Director is located in Adelphi, 
Maryland. ARL employees assigned to the various laboratory directorates 
work at the locations shown in Appendix A.

E. Participating Employees and Union Representation

    In determining the scope of the demonstration project, primary 
considerations were given to the number and diversity of occupations 
within the laboratory and the need for adequate development and testing 
of the Pay for Performance (PFP) System. Additionally, current DoD 
human resource management design goals and priorities for the entire 
civilian workforce were considered. While the intent of this project is 
to provide the Laboratory Director with increased control and 
accountability for the total workforce, the decision was made to 
initially restrict development efforts to General Schedule (GS/GM) 
positions.
    To this end, the project will cover all ARL civilian employees 
under Title 5, United States Code except members of the Senior 
Executive Service (SES), employees classified in the Scientific and 
Professional (ST) pay plan, and Federal Wage System (FWS) employees. A 
decision point has been programmed for the end of two and one half 
years of the demonstration project to expand coverage to include FWS. 
In the event of expansion to FWS employees, full approval of the 
expansion plan will be obtained from the Department of the Army, DoD, 
and OPM. Civilian Intelligence Personnel Management System (CIPMS) 
employees covered by Title 10 are not covered but will follow the same 
performance appraisal and employee development provisions of this plan 
except where they are found to be in conflict with CIPMS. They will not 
be eligible for performance payouts because they are not contributing 
funds to the pay pools.
    Performance awards for CIPMS employees will follow the procedures 
currently in place. Department of the Army and Major Subordinate 
Command centrally-funded interns are covered by the plan except for 
reduction in force (RIF) purposes. They will compete in a separate 
competitive area in the event of RIF. The series to be included in the 
project are identified in Appendix B.
    The American Federation of Government Employees (AFGE), the 
National Federation of Federal Employees (NFFE), the International 
Association of Machinists and Aerospace Workers (IAM/AW), and the 
Fraternal Order of Police (FOP)

[[Page 10686]]

represent many ARL employees. The laboratory continues to fulfill its 
obligation to consult or negotiate with the unions who represent both 
professional and nonprofessional employees in accordance with 5 U.S.C. 
4703(f) and 7117. Union representatives have been separately notified 
about the project. Of the more than 2600 employees assigned to the 
laboratory, approximately 600 are represented by labor unions.

F. Project Design

    In December 1993, the ARL Director decided the laboratory needed a 
personnel system more like the personnel demonstration project then in 
effect at the National Institute for Science and Technology (NIST). A 
preliminary plan patterned after the NIST Personnel Demonstration Plan 
was developed and shared with the Commanding General, Army Materiel 
Command and the Deputy Assistant Secretary of the Army for Research and 
Technology where it received conceptual approval. The ARL Personnel 
Demonstration Project Office was then created and became the focal 
point for subsequent development efforts. In October 1994, the concept 
was briefed to representatives of DoD and other federal agencies. In 
November 1994 an Army Personnel Demonstration Team was formed with ARL 
designated as the lead. The team's charter was to develop the Army's 
Personnel Demonstration Concept Plan. In December 1994, this plan was 
approved by the Secretary of the Army.
    In January 1995, ARL established a management structure designed to 
oversee the development of the demonstration proposal and to 
incorporate the workforce in the design efforts. This was accomplished 
by appointing an Executive Steering Committee, establishing a Staff 
Members Committee and discussing the project with unions. For most of 
1995 various revisions were made to the ARL plan, many of which 
resulted from further DA and OSD staffing and coordination. In the 
Spring of 1996, the plan was ready for joint DoD and OPM review, which 
resulted in additional refinements. During this time, feedback was 
provided to ARL employees, through town hall meetings, electronic mail 
messages and memoranda, union briefings, and peer group review of draft 
implementing documents. The opinions and comments of the workforce have 
had a significant impact in the overall design of the demonstration 
project.

G. 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. ARL will make minor modifications without further notice; 
major changes will be published in the Federal Register pursuant to OPM 
approval.

III. Personnel System Changes

A. Broadbanding

    The ARL demonstration project will use a broadbanding approach to 
compensation and classification. Such an approach overcomes some of the 
problems experienced with the current system. A broadbanding system 
will simplify the classification system by reducing the number of 
distinctions between levels of work which will facilitate delegating 
classification authority and responsibility to line managers.
    The project's broadbanding scheme will replace the current General 
Schedule (GS) grading structure. The broadband levels are designed to 
enhance pay progression and to allow for more competitive recruitment 
of quality candidates at differing rates within the appropriate pay 
band level(s). Competitive promotions will be less frequent and 
movement through the pay bands will be a more seamless process than 
today's procedure. Like the broadbanding systems used at China Lake and 
NIST, advancement within each pay band is based upon performance.
Occupational Families
    Occupations at ARL have been grouped into four occupational 
families 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 ARL and in the 
private sector were also considered. The current occupations and grades 
have been examined, and their characteristics and distribution were 
used to develop the four occupational families described below:
    1. Engineers and Scientists. This path includes all technical 
professional positions, such as engineers, physicists, chemists, 
psychologists, metallurgists, mathematicians, and computer scientists. 
Ordinarily, specific course work or educational degrees are required 
for these occupations. (Pay Plan DB)
    2. E&S Technicians. This path consists of positions that directly 
support the various scientific and engineering activities of the 
laboratory. Employees in these positions are not required to have 
college course work. However, practical, quasi-professional training 
and skills in the various aspects of electronic, electrical, 
mechanical, chemical or computer engineering are generally required. 
(Pay Plan DE)
    3. Administrative. This occupational family contains specialized 
functions in such fields as finance, procurement, personnel, public 
information, computing, supply, library science, and management 
analysis. Special skills in specific administrative fields or special 
degrees are normally required. (Pay Plan DJ)
    4. General Support. This occupational family is composed of 
positions for which minimal formal education is needed, but for which 
special skills, such as office automation, typing, or shorthand may be 
required. Clerical work usually involves the processing and maintenance 
of records. Assistant work requires knowledge of methods and procedures 
within a specific administrative area. Other support functions include 
the work of secretaries, guards, and mail clerks. (Pay Plan DK)
    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 GS grades. A salary overlap, 
similar to the current overlap between GS grades, will be maintained. 
The salary range of each band begins with step 1 of the lowest grade in 
that band and ends with step 10 of the highest grade in the band.
    The specific grouping of GS grades into a particular pay band was 
based on a careful examination of grade levels that have proven 
difficult for managers, employees and classifiers to distinguish; 
current performance levels within occupations; and traditional 
laboratory training and career development practices.

[[Page 10687]]



                                                                                     Figure 1.--Broadbanding                                                                                    
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                                                                                                              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 and Scientists........................                                                                                                                                                
(3)I                                                                                                                                                                                            
(6)II                                                                                                                                                                                           
(1)III                                                                                                                                                                                          
(1)IV                                                  V                                                                                                                                        
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E&S Technicians.................................                                                                                                                                                
(7)I                                                                                                                                                                                            
(2)II                                                                                                                                                                                           
(1)III                                                                                                                                                                                          
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Administrative..................................                                                                                                                                                
(3)I                                                                                                                                                                                            
(5)II                                                                                                                                                                                           
(2)III                                                                                                                                                                                          
(1)IV                                                                                                                                                                                           
                                                                                                                                                                                                
(3)                                                                                                                                                                                             
(5)                                                                                                                                                                                             
(2)(*)                                                                                                                                                                                          
(1)                                                                                                                                                                                             
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General Support.................................                                                                                                                                                
(3)I                                                                                                                                                                                            
(2)II                                                                                                                                                                                           
(2)III                                                                                                                                                                                          
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*Administrative Pay Band III includes two full performance levels because not all work.                                                                                                         

    The pay bands for the occupational families and how they relate to 
the current GS framework are shown in Figure 1. assignments in band III 
will support movement to the top of the band. Positions that typically 
support the higher salaries perform non-supervisory work associated 
with formulating programs and policies with laboratory-wide scope and 
impact. Other positions perform supervision of operating level programs 
in one or more administrative fields. In order to move beyond the 
equivalent of the GS-12 Step 10 salary, duty and work assignments must 
satisfy the highest level of the criteria in the classification 
standard for this pay band.
    Employees will be converted into the occupational family and pay 
band which correspond to their GS/GM series and grade. Each employee is 
assured an initial place in the system without loss of pay. As the 
rates of the General Schedule are increased due to general pay 
increases, the minimum and maximum salaries of the pay band levels will 
also move up. All employees will receive the general pay increases as 
the increases are approved, except for some employees in pay band V. 
Since the maximum rate for payband V is linked to ES-4, employees at or 
near the top of the band may not receive the full general increase if 
it is not authorized for SES employees. In addition, all employees will 
be eligible for future locality pay increases of their geographic area. 
(See Section III.E.4. for special provisions for employees in special 
rate categories.) Employees can receive additional pay increases based 
on their evaluations under the Pay for Performance Management System. 
Since pay progression through the pay bands is based on performance, 
there will be no scheduled Within-Grade Increases (WGIs) or Quality 
Step Increases (QSIs) for employees once the broadbanding system is in 
place.
    There are several advantages to broadbanding. It is simpler, less 
time consuming, and less costly to maintain. In addition, such a system 
is more easily understood by managers and employees, is easily 
delegated to managers, coincides with recognized occupational families, 
and complements the other personnel management aspects of the 
demonstration project.
    The ARL 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 legal definitions of Senior Executive Service (SES) and 
Scientific and Professional (ST) positions do not fully meet the needs 
of ARL. 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.
    ARL currently has several positions, typically division chiefs, 
that have characteristics of both SES and ST classifications. Most 
division chiefs in ARL are responsible for supervising other GS-15 
positions, including branch chiefs, non-supervisory research engineers 
and scientists and, in some cases ST positions. Most division 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. ARL management considers the primary requirement for division 
chiefs to be knowledge of and expertise in the specific scientific and 
technology areas related to the mission of their divisions. 
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 attempts 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 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 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

[[Page 10688]]

abilities. ARL 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 ARL SES members, ST employees and, 
later, those in Pay Band V, and an equal number of individuals of 
equivalent stature from outside the laboratory 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 Department of Defense 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 within DA and 
includes the following: authority to classify, create, or abolish 
positions within the limitations imposed by OPM and DoD; recruit and 
reassign employees in this pay band; set pay and appraise performance 
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.

B. Classification

1. Occupational Series
    The present General Schedule classification system has 434 
occupational series which are divided into 22 occupational families. 
ARL currently has positions in 119 series which fall into 20 families. 
The occupational series, which frequently provide well-recognized 
disciplines with which employees wish to be identified, will be 
maintained. This will facilitate movement of personnel into and out of 
the demonstration project. New series, established by OPM, may be added 
as needed to reflect new occupations in the workforce.
2. Classification Standards
    The present system of OPM classification standards will be used for 
the identification of proper series and occupational titles of 
positions within the demonstration project. Current OPM Position 
Classification Standards will not be used to grade positions in this 
project. However, the grading criteria in those standards will be used 
as a framework to develop new and simplified standards for the purpose 
of occupational family and pay band determinations. The objective is to 
record the essential criteria for each pay band within each 
occupational family by stating the characteristics of the work, the 
responsibilities of the position, and the knowledges, skills, and 
abilities required. ARL will continue its current practice of using 
peer reviews to facilitate the classification process and in some cases 
will expand its use to meet the needs of the laboratory.
3. Classification Authority
    The ARL Director will have delegated classification authority and 
may, in turn, re-delegate this authority to subordinate management 
levels, and ultimately to the lowest level of full supervision in each 
organizational segment. Personnel specialists will provide ongoing 
consultation and guidance to managers and supervisors throughout the 
classification process.
4. Position Descriptions
    Under the project's classification system, a new position 
description will replace the current DA Form 374, Department of the 
Army Job Description. The classification standard for each pay band 
will serve as an important component in the new position description, 
which will also include position-specific information, and provide data 
element information pertinent to the job. Laboratory supervisors will 
follow a computer-assisted process to produce position descriptions. 
The objectives in developing the new descriptions are to: (1) simplify 
the descriptions and the preparation process through automation; (2) 
minimize the amount of writing and time required to create new position 
descriptions; and (3) make the position descriptions more useful and 
accurate tools for other functions of personnel management, such as 
recruitment, reduction in force, performance assessment, and employee 
development. Because there is little writing required in the automated 
system, supervisory writing style and ability as a hidden consideration 
in position classification are eliminated.
5. Specialty Work Codes
    Specialty work codes will be used to further differentiate types of 
work and the skills and knowledges required for particular positions 
within an occupational family and pay band. Each code represents a 
specialization or type of work within the occupation. Supervisors will 
select appropriate specialty work codes to describe the work of each 
employee through the automated classification process.
6. Automated Classification Process
    Writing the position description is accomplished by completion of 
the following steps using an automated system.
    (a) The supervisor enters, by typing free-form, the organizational 
location and the employees name. From the menu, the supervisor selects 
the appropriate occupational series and title, occupational family, and 
pay band corresponding to the level of duties and responsibilities 
desired. The user will then select whether the position is a non-
supervisor, team leader or supervisor.
    (b) The supervisor enters a brief description of the primary 
purpose of the position by typing free-form at the appropriate point. 
From a menu, the supervisor will choose statements pertaining to 
operation of a motor vehicle; any unusual physical and travel 
requirements; required financial disclosure statements; and the 
position's sensitivity. The system will produce standardized statements 
of supervisory or team leader duties and responsibilities. The system 
will also produce a statement pertaining to positive education 
requirements, or their equivalencies, based on the occupational series 
selected.
    (c) From a menu, the supervisor selects up to three specialty work 
codes which are appropriate to the job. The specialty work codes are 
subsets of the disciplines and describe particular skills and 
knowledges related to the kinds of work performed at ARL.

[[Page 10689]]

    (d) The supervisor has the option of providing additional position 
information by typing free-form at an appropriate point at the end of 
the document. This area is to be used when the information addressed by 
the purpose of the position, specialty work codes, and functional 
classification codes are not completely adequate. The information will 
be used primarily to supplement skill and knowledge requirements and to 
refine competitive level decisions.
7. Fair Labor Standards Act (FLSA)
    Fair Labor Standards Act exemption and nonexemption determinations 
will be made consistent with criteria found in 5 CFR (Code of Federal 
Regulations) part 551. All employees are covered by the FLSA unless 
they meet the criteria for exemption. The duties and responsibilities 
outlined in the classification standards for each pay band will be 
compared to the FLSA criteria and the tentative conclusions programmed 
into the automated classification system so that the system will be 
able to generate the FLSA coverage based upon the user's selection of 
occupational family, pay band, and supervisory responsibility.
    As a general rule, the FLSA status can be matched to occupational 
family and pay band. For example, positions classified in Pay Band I of 
any occupational family are typically nonexempt, meaning they are 
covered by the overtime entitlements prescribed by the FLSA. An 
exception to this guideline includes supervisors/managers who meet the 
definitions outlined in the OPM General Schedule Supervisory Guide and 
who spend 80% or more of the work week on supervisory duties. 
Therefore, supervisors/managers in any of the pay bands who meet the 
foregoing criteria are exempt from the FLSA.
    The generic position descriptions will not be the sole basis for 
the FLSA determination. Each position will be evaluated on a case-by-
case basis by comparing the duties and responsibilities assigned, the 
classification standards for each pay band, and the 5 CFR part 551 FLSA 
criteria. The final review of the FLSA status will be made by the 
Civilian Personnel Operations Center (CPOC) based upon the above-
mentioned material and any supplemental information such as that 
contained in established performance objectives.
    The automated classification system will annotate the position 
description with a preliminary FLSA determination in accordance with 
Figure 2 below.

                                                 Figure 2.--FLSA                                                
----------------------------------------------------------------------------------------------------------------
                        Occupational family                             I        II      III       IV       V   
----------------------------------------------------------------------------------------------------------------
E&S................................................................       N        N        E        E        E 
E&S Technicians....................................................       N        N        E                   
Administrative.....................................................       N        N        E        E          
General Support....................................................       N        N        N                   
----------------------------------------------------------------------------------------------------------------

8. Classification Appeals
    An employee may appeal the occupational series, position title, and 
pay band of his or her position at any time. An employee must formally 
raise the area of concern to supervisors in the immediate chain of 
command, either verbally or in writing. If the employee is not 
satisfied with the supervisory response, he or she may then appeal to 
the DoD appellate level. If the 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. Since OPM does not accept classification 
appeals on positions which exceed the equivalent of a GS-15 level, 
appeal decisions involving Pay Band V will be rendered by DoD and will 
be final. 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 may not appeal the accuracy of the position 
description, the demonstration project classification criteria, or the 
pay-setting criteria; the assignment of occupational series to the 
occupational family; 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 
CPOC providing personnel service and will include copies of appropriate 
demonstration project criteria.

C. Pay for Performance

1. Overview
    The purpose of the Pay For Performance (PFP) System is to provide 
an effective, efficient, and flexible method for assessing, 
compensating, and managing the laboratory workforce. It is essential 
for the development of a highly productive workforce and to provide 
management, at the lowest practical level, the authority, control, and 
flexibility needed to achieve a quality laboratory and quality 
products. PFP allows for more employee involvement in the assessment 
process, increases communication between supervisor and employee, 
promotes a clear accountability of performance, facilitates employee 
career progression, and provides an understandable basis for salary 
changes.
    PFP also creates a method to more directly link pay and 
performance. The system combines goal setting, tied to corporate 
objectives, with a letter grading system. The performance evaluations 
made under the demonstration project will ensure that top performers 
receive a performance payout commensurate with their achievements. The 
PFP System uses a four level summary pattern (Pattern E) under 5 CFR 
430.208 (d) where a rating of C is equivalent to fully successful.
    Employees within the laboratory will be placed into pay pools. 
Decisions regarding the amount of the performance payout are based on 
the relationship between performance ratings and present salaries. The 
maximum base pay rate under this demonstration project will be the 
unadjusted base pay rate of GS-15/Step 10, except for employees in Pay 
Band V of the E&S Occupational Family. In this case, the 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 ES-4.
    Cost discipline is assured within each pay pool by limiting the 
total base pay increases to the funds available in the base pay fund in 
the pay pool, based on what would have been available in the General 
Schedule system from within-grade increases, quality step increases and 
within-band promotions. The ARL

[[Page 10690]]

Director may adjust the amount of funds assigned to each pay pool as 
necessary to recognize exemplary performance of individuals or teams/
groups, to ensure equity and to meet unusual circumstances. The ARL 
Director may divert funds from other pay pools for this purpose. No 
changes will be made to locality pay under the demonstration project 
and all employees continue to receive general pay increases.
    The PFP system differs from the current system in that all the 
supervisors in a pay pool will meet to reconcile the scores given to 
each employee in the pay pool, with the purpose being to reach 
consensus on the type of achievements that warrant particular scores. 
After this reconciliation process is completed, final letter grades are 
assigned and payout proceeds according to each employee's final letter 
rating, score, and current salary.
    The PFP System eliminates within-grade increases, quality step 
increases, in band promotions and performance awards, and replaces them 
with pay for performance payouts described above. Other awards such as 
special acts will continue to be awarded. The new system also provides 
the ability to give bonuses to employees who are at the top of the 
range in their pay band. Bonuses differ from pay increases in that they 
are not added to base salary but rather are given as a lump sum 
payment.
    Interns in recognized DA career programs will be appraised semi-
annually until they complete their internships. The second appraisal in 
each annual cycle will be considered the rating of record.
    Procedures will be developed which will provide intern salary 
increases so as to ensure comparability with current pay promotion 
practices.
2. The PFP Assessment Process
    At the beginning of the assessment cycle, the employee and rater 
will collaborate on the development of the employee's performance 
objectives, designation of the performance elements and which of these 
elements are critical, and their associated weights. An objective is 
defined as a statement of specific job responsibilities expected of the 
employee during the rating period. These are to be based on the work 
unit's mission and goals and should be consistent with the employee's 
job description. Performance objectives may be modified and/or changed 
as appropriate during the rating cycle. As a general rule, performance 
objectives should only be changed when circumstances outside the 
employee's control prevent or hamper the accomplishment of the original 
objectives. It is also appropriate to change objectives when mission or 
workload changes occur. Performance objectives will be tailored to each 
individual employee. Use of generic one size fits all objectives will 
be avoided.
    The supervisor and employee will discuss the performance 
objectives, which elements are critical, and what weight each carries 
in an attempt to reach agreement whenever possible. Disagreements will 
be handled through the normal chain of command. Management retains the 
right to establish objectives, identify which elements are critical, 
and their relative weights. Employees retain their current grievance 
rights. Use of Alternative Dispute Resolution is recommended. It is 
encouraged that disagreements be resolved at the beginning of the 
appraisal period.
    How well work objectives are performed will be measured by a series 
of weighted performance elements, at least one of which must be 
identified as critical. A critical performance element is defined as a 
generic attribute of job performance that is of sufficient importance 
that performance below the minimum standard requires remedial action 
and may be the basis for removing the employee from the position. 
Specific information on the interrelationships between objectives and 
elements will be included in the implementing procedures for this plan.
    Eight elements have been developed for evaluating the yearly 
performance of all laboratory personnel covered by this initiative: 
Technical Competence, Cooperation, Communication, Management of Time 
and Resources, Customer Relations, Technology Transition, Management/
Leadership, and Supervision/EEO.
    All employees will be rated against the first five performance 
elements. Element 6 is optional and is intended for those positions 
involving technology transition. Element 7 is optional and is intended 
for non-supervisory team leaders or program managers. Elements 7 and 8 
are required for all supervisory positions. These eight elements are 
described below.
    (1) 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 occupational families, seeks and 
accepts developmental and/or special assignments. Adaptive to 
technological/organizational change. (Weight range: 15 to 50)
    (2) Cooperation. Accepts personal responsibility for assigned 
tasks. Considerate of others views and open to compromise on areas of 
difference. Exercises tact and diplomacy and maintains effective 
relationships, particularly in immediate work environment and teaming 
situations. Readily/willingly gives assistance. Shows appropriate 
respect and courtesy. (Weight Range: 5 to 25)
    (3) Communication. Provides or exchanges oral/written ideas and 
information in a manner that is timely, accurate and easily understood. 
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 25)
    (4) Management of Time and Resources. 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; 
supports organization's resource development and conservation goals. 
(Weight Range: 15 to 50)
    (5) Customer Relations. Demonstrates care for customers through 
respectful, courteous, reliable and conscientious actions. Seeks out, 
develops and/or maintains solid working relationships with customers to 
identify their needs, quantifies those needs, and develops practical 
solutions. Keeps customer informed. Within the scope of job 
responsibility, seeks out and develops new programs and/or reimbursable 
customer work. (Weight Range: 10 to 50)
    (6) Technology Transition. Seeks out and incorporates outside 
technology within internal projects. Implements partnerships for 
transition or transfer of technology to other internal working groups, 
other government agencies, and/or commercial activities. (Weight Range: 
5 to 50)
    (7) 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. 
Exercises leadership skills within the environment to include 
sensitivity to diversity and to assure equity and fairness. Mentors 
junior personnel in career development, technical competence, and 
interpersonal skills. Exercises appropriate responsibility for 
positions assigned. (Weight Range: 5 to 50)
    (8) Supervision/EEO. Works toward recruiting, developing, 
motivating, and

[[Page 10691]]

retaining quality employees; initiates 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 employees. 
(Weight Range: 25 to 50)
    The performance element titled Technical Competence is a mandatory 
critical element for all employees. In addition, all supervisors must 
be evaluated against both Management/Leadership and Supervision/EEO 
elements, Elements 7 and 8 respectively. Element 8, Supervision/EEO, 
will be identified as critical.
    Other elements may be identified as critical as agreed upon between 
the rater and the employee. Generally any performance element that has 
been given a weight of 25 or higher should be identified as critical. 
Some elements weighted less than 25 (e.g., Communication or 
Cooperation) may also be critical; for instance, those that are 
considered so important to a particular job that failure to perform at 
an acceptable level would result in an overall performance evaluation 
of unsatisfactory. Weights on elements must add up to 100.
    Appendix D contains the Performance Objective Worksheet and the 
Performance Appraisal form accompanied by a guidance form entitled, 
Point Ranges and Performance Element Benchmarks.
    Pay pool managers will review objectives, critical element 
designations and weights prior to their implementation to ensure these 
are reasonable and fair and in keeping with expectations for each 
employee. As a general rule, essentially identical positions will have 
the same critical elements and the same weights.
    The rater will provide periodic feedback to the employee on how 
well he/she is performing. If the rater judges that the employee is not 
performing at an acceptable level on one or more elements, the rater 
must alert the employee and document the problem. This feedback will be 
provided any time during the rating cycle especially if there is a 
problem. A mid-point counseling session is required. Deficiencies 
identified will be accompanied by a plan to correct them.
    Employees will provide information on their accomplishments to the 
rater at both the mid-point and end of the rating period, similar to 
the current Army process. Employees may self-rate their performance 
elements and/or they may solicit input from team members, customers, 
peers, supervisors in other units, subordinates and other sources which 
will permit the rater to fully evaluate the contributions during the 
rating period. As a minimum, employees will provide the rater with an 
itemized list of their accomplishments during the rating period.
    At the end of the rating period, the rater will score each of the 
performance elements by assigning a value between 0 and 100 percent of 
the weighted value assigned to each of the elements. The rater arrives 
at this score by referring to the performance element benchmarks found 
on the reverse of the performance appraisal form. The benchmark 
performance standards are written so they describe performance at 100 
percent of the element; 70 percent; 50 percent and the Unsatisfactory 
level of performance. Using these benchmarks, the rater decides where 
on a continuum the performance of the employee fits and assigns a point 
value according to that determination. The chart to the right of the 
performance element benchmarks will be used to assign the specific 
point value. Scores will be summed and a letter rating assigned; i.e., 
85-100=A, 70-84=B, 50-69=C. This rating will become the rating of 
record. A total score of 49 or below will result in an unsatisfactory 
rating. Failure to achieve at least the 50% level of any critical 
element will also result in an overall unsatisfactory rating.
    The letter ratings will be used to determine pay or bonus values 
and to award additional RIF retention years as shown in Figure 3 below.

                Figure 3.--RIF Retention and Compensation               
------------------------------------------------------------------------
                                                                  RIF   
                                                               Retention
              Rating                       Compensation          years  
                                                                 added  
------------------------------------------------------------------------
A.................................  3 or 4 shares............        10 
B.................................  2 or 3 shares............         7 
C.................................  0 or 1 share.............         3 
U.................................  0 shares.................         0 
------------------------------------------------------------------------

    After a rating has been assigned, the rater recommends the number 
of shares that should be granted. This decision is based on an 
evaluation of the employee's current salary and level of performance 
(e.g., high B or low A) in comparison to similarly situated employees 
within the pay pool and overall funding availability. For example, an 
employee who receives a score of 84 and a final rating of B, but whose 
current salary is at the lower end of his/her pay band might receive 
the maximum number of shares (3) permitted for a B rating. In contrast, 
an employee who received a score of 85 which warrants a final rating of 
A, but whose salary is comparable to or above similar positions in the 
pay pool might receive 3 rather than 4 shares. A third example is that 
an employee who receives a score of 84 might receive the maximum number 
of shares based on the fact that it is a very high B or one point away 
from an A. The methods available for determining shares will allow ARL 
managers to adjust basic pay by considering differences in performance 
levels among employees in terms of comparability within ARL and the pay 
pool for similarly situated employees.
    Upon approval of this plan, implementing procedures and regulations 
will provide details on this process to employees and supervisors.
3. Performance Which Fails to Meet Expectations
a. Continuing Performance Evaluation
    Informal employee performance reviews will be a continuous process 
so that corrective action, to include a Performance Improvement Plan 
(PIP), may be taken at any time during the rating cycle. At least one 
review will be documented as a formal progress review. Whenever a 
supervisor recognizes that an employee's performance is at a level that 
could put him/her in danger of receiving an unsatisfactory rating, the 
supervisor will discuss the situation with the employee in an effort to 
identify the possible reasons for the poor performance, and may 
consider initiating the process for performance improvement in c. below 
if circumstances warrant.
b. End of Rating Cycle Performance Evaluation
    Employee performance will be formally reviewed at the end of the 
rating cycle. If an employee's summary rating score is below 50 points, 
or if the employee fails a critical element, the employee will receive 
an unsatisfactory rating. Immediately upon assigning an unsatisfactory 
rating, the supervisor will take steps to correct the problem.
c. Improving Performance
    In recognition that personality conflicts sometimes occur between a 
supervisor and an employee, or that an employee might be better suited 
to another type of work, the supervisor and employee may explore a 
temporary assignment to another unit in the organization. The 
supervisor is under no obligation to explore this option prior to 
taking more formal action.

[[Page 10692]]

    If the temporary assignment is not possible or has not worked out, 
and the employee continues to perform at an unsatisfactory level or has 
received an unsatisfactory rating, written notification will be 
provided of the unsatisfactory performance in the element(s) at issue, 
and an opportunity to improve will be structured in a Performance 
Improvement Plan (PIP). The supervisor will identify the items/actions 
which need to be corrected or improved; will outline required time 
frames for such improvement; and will provide the employee with any 
available assistance, references, training and the like which might 
facilitate needed improvements. Progress will be intensively monitored 
during this PIP period; all counseling sessions will be documented.
    If the PIP results in a score of 50 or above and/or the critical 
element which was failed is now acceptable, no further action is 
necessary. If the PIP does not improve performance to an acceptable 
level, the supervisor may propose to institute a Last Chance Agreement 
(LCA) with the employee. A Last Chance Agreement stipulates that if 
performance does not rise to the required level within a specified time 
frame the employee will be changed to a lower pay band, reduced in 
salary, or released from Federal service. The employee agrees to this 
last chance arrangement with the understanding that there are no 
grievance or appeal rights if the adverse action eventually has to be 
taken. The decision to enter into a last chance agreement is entirely 
voluntary on the part of the employee.
    If the PIP does not improve performance to the acceptable level 
(and the employee elects not to enter into the LCA, if offered), the 
supervisor will take the appropriate follow-on action, such as change 
to lower pay band/occupational family, reduction in pay within the same 
pay band, or removal, as indicated by the circumstances of the 
situation. For the most part, employees with an unsatisfactory rating 
will not be permitted to remain at their current pay band or salary. 
Reductions in salary within the same pay band or changes to a lower pay 
band will be accomplished with a minimum of a 5% decrease in employee 
base pay. If the employee is reduced to a lower pay band, the salary 
will not exceed the highest level in that pay band.
4. Pay Pools
    Pay pool structure is under the authority of the laboratory 
director. A pay pool must be large enough to allow for a range of 
ratings to encompass a reasonable distribution of ratings, typically 
50. A pay pool manager's final yearly pay adjustment decisions may 
still be subject to higher management review. Supervisors will be 
placed in a pay pool separate from their employees.
    The pay pool manager makes final decisions on pay increases and/or 
bonuses to individuals based on rater recommendation, the final score 
and letter rating, the value of the pay pool resources available, and 
the individual's current salary within a given pay band. Pay pool 
managers will not prescribe a distribution of rating levels. A pay pool 
manager may request approval from the Personnel Management Board (PMB) 
(described in VIII.C.) or its designee to grant a pay increase to an 
employee that is higher than the one generated by the compensation 
formula for that employee. Examples of employees who might warrant such 
consideration are those making extraordinary achievements or those 
serving as interns.
    The amount of money available for performance payouts is divided 
into two components, base pay increases and bonuses. The amount of 
money which can be used for base pay increases within a pool is based 
upon the money that would have been available for within-grade 
increases, quality step increases, and grade level promotions that are 
now within the band. In the first year of the project, this amount will 
be set at 2.4% of the total of base salaries in the pay pool. The 
amount of money to be used for bonus payments is separately funded 
within the constraints of the overall awards budget. In the first year 
of the project, this amount will be set at 1.1% of the total of base 
salaries in the pay pool which reflects the funds previously available 
for performance awards. The sum of these two factors is referred to as 
the pay pool percentage factor. The Personnel Management Board will 
annually review the pay pool funding formula and recommend adjustments 
to the Director, to ensure cost discipline over the life of the 
demonstration project.
    Performance pay increases (i.e., base pay increases) will not be 
granted to employees at the top of their pay band or in a pay retention 
status. In these cases, payouts earned as a function of performance 
will be paid as a bonus. In addition, a portion of the projected pay 
increase may be paid as bonus instead of base pay if required to keep 
the base pay portion of the pay pool from exceeding its maximum value 
(initially 2.4%).
    In making the annual performance payouts under the PFP system, it 
will be necessary to determine the amount of that year's pay pool and 
share value. As explained above, the amount of the pay pool is the pay 
pool percentage (initially 3.5 percent) multiplied by the sum of the 
combined base salaries of covered employees. The share value will be 
calculated so that a pay pool manager will not exceed the resources 
that are available in the pay pool. The value of a share cannot be 
exactly determined until the rating and reconciliation process 
described below is complete. The estimated share value is about 1% of 
salary, but inflated ratings (if they occur) will reduce the value of 
the share. (Conversely, lower average ratings will increase the value 
of a share.) The share value is expressed as a percentage of base 
salary. It is computed by dividing the amount of the pay pool by the 
sum of each pay pool member's salary multiplied by his/her earned 
shares, or

Share value = (pay pool value)/(sum of (salary * shares) for each 
member).

    Each individual's performance payout is calculated by multiplying 
the individual's base salary by the total value of his/her earned 
shares expressed as a percentage of base salary, or

Individual performance payout=salary * (earned shares * share value).
In summary, an individual's performance payout is computed as follows:
Individual performance payout = SALi * Ni * SV,

Where: SV = share value = (pay pool value) / SUM (SALk * Nk); k = 1 to 
n
Pay pool value = (pay pool percentage factor) * SUM (SALk), k = 1 to n
n = number of employees in pay pool
i = an individual employee
N = Number of shares earned by an employee based on his/her performance 
rating (0 to 4)
SAL = An individual's base salary and
SUM = The summation of the entities in parentheses over the range 
indicated.

    This formula ensures that a share represents a fixed percentage 
salary increase for all employees in a pay pool.
    After the payout and share value calculations have been completed, 
the pay pool manager must calculate the proportion of payouts to be 
paid as base pay vs bonus. If base pay increases would exceed the 
authorized percentage, shares must be paid out as base pay increases 
only up to the limit, and the remainder paid as a bonus. This base/
bonus proportion will be constant for all uncapped employees. This 
process will preserve the principle that all shares maintain equal 
(percentage) value, and will ensure that all of the

[[Page 10693]]

allocated funds are disbursed as intended.
    Pay pool managers will establish and chair a panel to review 
supervisors preliminary ratings and make any necessary adjustments. The 
panel will comprise all rating supervisors below the pay pool manager. 
The reconciliation process gives raters the opportunity to verify that 
their preliminary evaluations and approach to scoring conform with that 
of other raters within the pay pool and assures that performance 
assessments of employees are comparable and equitable across 
organizational lines. In this step, each employee's preliminary 
performance element scores are compared and through discussion and 
consensus building, final ratings are determined. The reconciliation 
process is aimed at determining the relative worth of employee 
accomplishments.
    The rationale behind reconciliation is that supervisors within a 
pay pool will reach a consensus on the types of achievements that 
warrant particular scores. Each panel will develop operating procedures 
that will provide for fair and equitable conclusions within the 
guidance provided by the Personnel Management Board. If the panel 
cannot reach consensus, the pay pool manager makes final decisions.
    A midpoint principle will be used to determine performance pay 
increases. This principle is that employees must receive a B rating or 
higher in order to cross the midpoint of the pay band range and, once 
the midpoint is crossed, the employee must receive a B or better rating 
in order to receive a base pay increase. This applies to all employees 
in every occupational family and pay band. Any amount of an employee's 
performance payout not paid in the form of a base pay increase because 
of the midpoint principle will be paid as a bonus.
5. 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.
    In an effort to foster and encourage team work among its employees, 
ARL often gives group awards for special acts or significant 
achievement. Under the demonstration project, if such an award is given 
a team may elect to distribute the award among themselves. Thus, a team 
leader or supervisor may allocate a sum of money to a team for 
outstanding completion of a special task, and the team may decide the 
individual distribution of the total dollars among themselves.

D. Hiring and Appointment Authorities

1. Qualifications
    The qualifications required for placement into a position in a pay 
band within an occupational family will be determined using the OPM 
Qualification Standards Handbook for General Schedule Positions. Since 
the pay bands are anchored to the General Schedule grade levels, the 
minimum qualification requirements for a position will be the 
requirements corresponding to the lowest General Schedule grade 
incorporated into that pay band. For example, the minimum eligibility 
requirements for a position in Pay Band II in the Engineers and 
Scientist Occupational Family will be the GS-5 qualification 
requirements for the series.
    Selective factors may be established for a position in accordance 
with the OPM Qualification Standards Handbook when determined to be 
critical to successful job performance. These factors become part of 
the minimum requirements for the position and applicants must meet them 
in order to be eligible. If used, selective factors will be clearly 
stated as part of the qualification requirements in vacancy 
announcements and recruiting bulletins.
2. Competitive Examining
    Current OPM regulations state that appointment registers will list 
the names of eligibles in accordance with their numerical ratings. 
However, preference eligibles with a compensable service-connected 
disability of 10 percent or more shall be entered at the top of the 
register ahead of all others unless the register is for professional 
and scientific positions GS-9 and above.
    ARL professional and scientific positions in the demonstration 
project have been placed into two occupational families, the Engineers 
and Scientists Occupational Family and the Administrative Occupational 
Family. The broadbanding concept adopted by ARL groups scientific 
positions in grades GS-5 through GS-11 into one pay band (DB-II). 
Similarly, GS-5 through GS-10 positions in the Administrative 
Occupational Family (DJ-II) have been grouped into one pay band.
    Because the ARL broadbanding plan places GS-9 and GS-11 scientific 
and professional positions in a band with lower-graded positions, the 
procedures for applying veterans' preference to Scientific and 
Professional positions in grades GS-9 or higher (5 U.S.C. 3313) shall 
only apply to Scientific and Professional positions in bands that 
exclusively include grades GS-12 and above.
3. Revisions to Term Appointments
    The laboratory conducts many research and development projects that 
range from three to six years. The current four-year limitation on term 
appointments imposes a burden on the laboratory by forcing the 
termination of some term employees prior to completion of projects they 
were hired to support. This disrupts the research and development 
process and reduces the laboratory's ability to serve its customers.
    Under the demonstration project, ARL will have the authority to 
hire individuals under modified term appointments. These appointments 
will be used to fill positions for a period of more than one year but 
not more than five years when the need for an employee's services is 
not permanent. The modified term appointments differ from term 
employment as described in 5 CFR part 316 in that they may be made for 
a period not to exceed five, rather than four years. The ARL Director 
is authorized to extend a term appointment one additional year.
    Employees hired under the modified term appointment 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 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 
modified term 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 and are selected under merit promotion 
procedures for the permanent position after having completed two years 
of continuous service. Time served in term positions prior to 
conversion to the modified term appointment is creditable, provided the 
service was continuous. Employees serving under modified term 
appointments under this plan will be

[[Page 10694]]

covered by the plan's pay for performance system.
4. Voluntary Emeritus Corps
    Under the demonstration project, the laboratory director will have 
the authority to offer retired or separated employees voluntary 
positions in the laboratory. Voluntary Emeritus Program assignments are 
not considered employment by the Federal Government (except for 
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 Corps 
will ensure continued quality research while reducing the overall 
salary line by allowing higher paid employees to accept retirement 
incentives with the opportunity to retain a presence in the scientific 
and technical communities. The program will be beneficial during 
manpower reductions as employees accept retirement and return to 
provide a continuing source of corporate knowledge and valuable on-the-
job training or mentoring to less-experienced employees.
    To be accepted into the emeritus corps, a volunteer must be 
recommended by laboratory managers to the directorate director. 
Everyone who applies is not entitled to an emeritus position. The 
directorate 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 volunteer's 
federal retirement pay (whether military or civilian) will not be 
affected while serving in a voluntary capacity. Retired or separated 
federal employees may accept an emeritus position without a break or 
mandatory waiting period.
    Voluntary Emeritus Corps volunteers will not be permitted to 
monitor contracts on behalf of the government. The volunteers may be 
required to submit a financial disclosure form annually and will not be 
permitted to participate on any contracts where a conflict of interest 
exists. The same rules that currently apply to source selection members 
will apply to volunteers.
    An agreement will be established between the volunteer, the 
directorate director, and the Civilian Personnel Operations Center. 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, 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 laboratory (travel, administrative, 
office space, supplies);
    (f) A one page statement of duties and experience;
    (g) A statement providing that 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 
corps;
    (h) A provision allowing either party to void the agreement with 
ten working days written notice; and
    (i) The level of security access required (any security clearance 
required by the position will be managed by the laboratory while the 
volunteer is a member of the emeritus corps).
5. Extended Probationary Period
    A new employee appointed to a nonsupervisory/non-managerial 
position in the Engineers and Scientists occupational family must 
demonstrate adequate contribution during all cycles of a research 
effort for a laboratory manager to render a thorough evaluation. The 
current one year probationary period will be extended to three years 
for all newly hired permanent career-conditional employees appointed to 
positions in that occupational family. The purpose of extending the 
probationary period is to allow supervisors an adequate period of time 
to fully evaluate an employee's contributions and conduct. The three 
year probationary period will apply only to new hires subject to a 
probationary period.
    If a probationary employee's performance is determined to be 
satisfactory at a point prior to the end of the three year probationary 
period, a supervisor has the option of ending the probationary period 
at an earlier date, but not before the employee has completed one year 
of continuous service. If the probationary period for an employee is 
terminated before the end of the three year period, the supervisor will 
develop written rationale for his/her decision and will elevate it at 
least one level for review prior to implementing the action.
    All other existing provisions pertaining to probationary periods 
are retained, including limited notice and appeal rights and crediting 
prior service. Prior Federal civilian service (including NAF service 
and service in temporary or term positions) counts toward completion of 
probation when the service is in the Department of Army, is in the same 
line of work, and contains or is followed by no more than a single 
break in service that does not exceed 30 calendar days.
    In the case of modified-term employees who are converted to 
permanent status, the time served under the term appointment counts 
toward the required probationary period as long as it is in the same 
line of work. If the permanent position is in a different line of work, 
the full three-year probationary requirement applies.
6. Supervisory Probationary Period
    Supervisory probationary periods will be made consistent with 5 CFR 
315.901 except references to grade will be indicated as pay band. New 
supervisors will be required to complete a 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 
nonsupervisory position for reasons solely related to supervisory 
performance, the employee will be returned to a comparable position of 
no lower pay band and pay than the position from which promoted. Pay 
will not exceed the maximum rate of the lower pay band.
    New supervisors who are hired into the E&S occupational family will 
only serve under a single one-year probationary period and are not 
subject to the three-year probationary period described above. The 
reason for this is that the position for which they were hired is 
primarily supervisory in nature and performance can adequately be 
measured in the one year probationary period.

E. Internal Placement and Pay Setting

1. 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. Supervisors may consider promoting employees at any time since 
promotions are not tied to the pay for performance system. Progression 
within a pay band is based upon performance pay increases; as such,

[[Page 10695]]

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 and the local merit 
promotion plan. 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.
    (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) Reclassification to include impact of person in the job 
promotions.
    (g) A promotion resulting from the correction of an initial 
classification error or the issuance of a new classification standard.
    (h) Consideration of a candidate not given proper consideration in 
a competitive promotion action.
    Upon promotion to a higher pay band, an employee will be entitled 
to a 6% increase in base pay or the lowest level in the pay band to 
which promoted, whichever is greater. The maximum amount of pay 
increase upon promotion will not exceed 10 percent or other such amount 
established by the Personnel Management Board. However, on a case-by-
case basis, the Personnel Management Board may recommend approval of 
requests for promotion beyond 10 percent. Highest previous rate also 
may be considered in fixing pay in accordance with the laboratory's pay 
fixing policies.
2. Demotions
    A demotion is a placement into a lower pay band within the same 
occupational family, or placement into a pay band in a different 
occupational family with a lower salary. Demotions may be for cause 
(performance or conduct) or for reasons other than cause (e.g., erosion 
of duties, reclassification of duties to a lower pay band, application 
under competitive announcements or at the employee's request, or 
placement actions resulting from reduction in force procedures). 
Employees demoted for cause are not entitled to pay retention. 
Employees demoted for reasons other than cause may be entitled to pay 
retention in accordance with the laboratory's pay fixing policies.
3. Pay Fixing Policies and Procedures
    The ARL Director will establish pay administration policies which 
conform with basic governmental pay fixing policy; however, the ARL 
policies will be exempt from Army Regulations or local pay fixing 
policies, except where negotiated agreements prevail.
    Highest previous rate (HPR) will be considered in placement actions 
for which authorized under rules similar to the HPR rules in 5 CFR 
531.203(c) and (d). Use of HPR will be at the supervisor's discretion. 
The pay retention provisions of 5 U.S.C. 5363 and 5 CFR 536.101 will 
apply to this plan except where waived or modified as specified in the 
waiver section. Pay retention may also be granted by the ARL Director 
to employees who meet general eligibility requirements, but do not have 
specific entitlement by law, provided not specifically excluded.
    An employee's total monetary compensation paid in a calendar year 
may not exceed the basic pay of level I of the Executive Schedule 
consistent with 5 U.S.C. 5307 and 5 CFR part 530 subpart B.
    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 Scientist occupational family would have 
education, experience, or a combination of the two approaching the 
qualifications of the GS-12 level, which is the lowest General Schedule 
grade incorporated into Pay Band III. Appointments above the minimum of 
the pay band will be approved at the directorate level.
    Directorates may make full use of recruitment, retention, and 
relocation payments as currently provided for by OPM.
    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 ARL. In no case may those adjustments increase the pay 
for the position of record beyond the applicable pay range maximum 
rate.
4. Staffing Supplements
    Employees assigned to occupational series and geographic areas 
covered by special rates will be eligible for a staffing supplement if 
the maximum adjusted rate for the banded GS grades to which assigned is 
a special rate that exceeds the maximum GS locality rate for the banded 
grades. The staffing supplement is added to the base pay, much like 
locality rates are added to base pay. The employee's total pay 
immediately after implementation of the demonstration project will be 
the same as immediately before the demonstration project, but a portion 
of the total will be in the form of a staffing supplement. Adverse 
action and pay retention provisions will not apply to the conversion 
process as there will be no change in total salary. The staffing 
supplement is calculated as described below.
    Upon conversion, the demonstration base rate will be established by 
dividing the employee's old GS adjusted rate (the higher of special 
rate or locality rate) by the staffing factor. The staffing factor will 
be determined by dividing the maximum special rate for the banded 
grades by the GS unadjusted rate corresponding to that special rate 
(step 10 of the GS rate for the same grade as the special rate). The 
employee's demonstration staffing supplement is derived by multiplying 
the demonstration base rate by the staffing factor minus one. So the 
employee's final demonstration special staffing rate equals the 
demonstration base rate plus the special staffing supplement; this 
amount will equal the employee's former GS adjusted rate.
    Simplified, the formula is this:

[[Page 10696]]

[GRAPHIC] [TIFF OMITTED] TN04MR98.008


Staffing Supplement = demonstration base rate x (staffing factor--1)
Salary upon conversion = demonstration base rate + staffing supplement 
(sum will equal existing rate)

Example: In the case of a GS-801-11/03 employee who is receiving a 
special salary rate, the salary before the demonstration project is 
$42,944. The maximum special rate for a GS-801-11 Step 10 is $51,295 
and the corresponding regular rate is $46,523. The staffing factor is 
computed as follows:
[GRAPHIC] [TIFF OMITTED] TN04MR98.009

Then to determine the staffing supplement, multiply the demonstration 
base by the staffing factor minus 1.
[GRAPHIC] [TIFF OMITTED] TN04MR98.010

    The Staffing Supplement of $3,996 is added to the Demonstration 
Base Rate of $38,948 and the total salary is $42,944, which is the 
salary of the employee before conversion to the demonstration project.
    If an employee is in a band where the maximum GS adjusted rate for 
the banded grades is a locality rate, when the employee is converted 
into the demonstration project, the demonstration base rate is derived 
by dividing the employee's former GS adjusted rate (the higher of 
locality rate or special rate) by the applicable locality pay factor 
(for example, in the Washington-Baltimore area, it is currently 
1.0711). The employee's demonstration locality-adjusted rate will equal 
the employee's former GS adjusted rate.
    Any General Schedule or special rate schedule adjustment will 
require recomputation of the staffing supplement. Employees receiving a 
staffing supplement remain entitled to an underlying locality rate, 
which may over time supersede the need for a staffing supplement. If 
OPM discontinues or decreases a special rate schedule, affected 
employees will be entitled to pay retention. Upon geographic movement, 
an employee who receives the special staffing supplement will have the 
supplement recomputed. Any resulting reduction in pay will not be 
considered an adverse action or a basis for pay retention.
    Established salary including the staffing supplement will be 
considered basic pay for the same purposes as a locality rate under 5 
CFR 531.606(b), i.e., for purposes of retirement, life insurance, 
premium pay, severance pay, and advances in pay. It will also be used 
to compute worker's compensation payments and lump-sum payments for 
accrued and accumulated annual leave.
5. Simplified Assignment Process
    Today's environment of downsizing and workforce transition mandates 
that ARL have increased flexibility to assign individuals. Broadbanding 
can be used to address this need. As a result of the assignment to a 
more general position description, the organization will have increased 
flexibility to assign an employee without a basic pay change 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 position 
description.
    Such assignments within the coverage of the generic descriptions 
can be 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. This flexibility allows 
a broader latitude in assignments and further streamlines the 
administrative process and system.
6. Details
    Under this plan employees may be detailed to a position in the same 
band (requiring a different level of expertise and qualifications) or 
lower pay band (or its equivalent in a different occupational family) 
for up to one year. Details may be implemented by submitting one SF 52-
B to cover the one year period. As in the current system, details to 
duties in a higher pay band for more than 180 days will be implemented 
using competitive procedures.

F. Employee Development

1. Expanded Development Opportunities
    The ARL Expanded Developmental Opportunities Program, to include 
sabbaticals, will cover all demonstration project employees. The 
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 of service. The positions of employees on

[[Page 10697]]

expanded developmental opportunities may be backfilled (i.e., with 
temporarily promoted employees or with term employees). However, that 
position or its equivalent must be made available to the employee 
returning from the expanded development opportunity.
a. Sabbaticals
    ARL will have the authority to grant paid sabbaticals to career 
employees to permit them to engage in study or uncompensated work 
experience that will contribute to their development and effectiveness. 
One developmental opportunity for a sabbatical 3-12 months in duration 
may be granted to an employee in any 10-year period. Employees will be 
eligible after completion of seven years of Federal service. Each 
opportunity must result in a product, service, report, or study that 
will benefit the ARL mission as well as increase the employee's 
individual effectiveness. Various learning or developmental experiences 
may be considered, such as advanced academic teaching; study; research; 
self-directed or guided study; and on-the-job work experience with a 
public, private commercial, or private nonprofit organization.
b. Critical Skills Training
    Training is an essential component of an organization that requires 
continuous acquisition of advanced and specialized knowledge. Degree 
training in the academic environment of laboratories is also a critical 
tool for recruiting and retaining employees with or requiring critical 
skills. Constraints under current law and regulation limit degree 
payment to shortage occupations. In addition, current government-wide 
regulations authorize payment for degrees based only on recruitment or 
retention needs. Degree payment is not permitted for non-shortage 
occupations involving critical skills.
    ARL is expanding the authority to provide degree or certificate 
payment for purposes of meeting critical skill requirements, to ensure 
continuous acquisition of advanced specialized knowledge essential to 
the organization, and to recruit and retain personnel critical to the 
present and future requirements of the organization. Degree or 
certificate payment may not be authorized where it would result in a 
tax liability for the employee without the employee's express and 
written consent. Any variance from this policy must be rigorously 
determined and documented. In addition, this proposal will be 
implemented consistent with 5 U.S.C. 4107(b)(2) and 4108.
2. Employee Development Panels
    Each directorate (or equivalent organizational unit) will create an 
Employee Development Panel which will be chaired by the directorate 
director. The purpose of the panel is to review, evaluate, and make 
decisions on applications for any expanded developmental opportunities 
described in this plan or in related Human Resources Development Plans. 
Because opportunities for training and development will be limited by 
budgetary considerations, the panel must determine which training is 
most important to the successful accomplishment of the mission, both 
present and future.
    The directorate director will oversee panel meetings, ensuring that 
all panel member comments and recommendations receive equal 
consideration in the selection process and that decisions are made 
based on majority vote. The directorate director will provide written 
feedback to each person who has applied, including reasons for 
nonselection when that is the panel's decision. Panels will elicit 
feedback from mentors and mentees and will put these before the panel 
for consideration. Applicants must show a direct relationship of their 
training request to the ARL mission and will outline what return on 
investment will be realized if the training is approved. Supervisors 
will be asked to provide their recommendations to the panel and will 
include a statement concerning the applicant's potential and his/her 
ability to apply the knowledges gained. Once selected, the employee 
must sign a service obligation agreement which provides for serving in 
the Army Research Laboratory three times the length of the training 
period. If he/she voluntarily leaves the ARL before the service 
obligation is completed the employee is liable for repayment. The ARL 
Director has the authority to waive this agreement.
3. Appraisals for Employees on Expanded Development Opportunities 
Training
    Expanded development opportunities generally fall into two general 
categories: classroom and developmental (on-the-job training). 
Developmental assignments should be treated as any other temporary 
assignment that continues for 120 days or more. A performance plan is 
established and the incumbent receives a performance rating upon 
completion. Assignments that involve classroom work are covered by one 
of two options. The first is to render a rating as soon as the employee 
returns to the position and completes 120 days under a performance 
plan. The second is to render a rating for the classroom performance. 
Procedures for this option will follow those currently in place for 
Department of Army's Long Term Training (LTT) Program. Employees 
availing themselves of expanded development opportunities are eligible 
to be considered for pay for performance increases as appropriate.
4. Employee Feedback to Supervisors
    Procedures will be developed by which employees can provide 
feedback to supervisors on supervisory/managerial skill. This feedback 
is designed to assist supervisors in determining their developmental 
needs with regard to their supervisory skills.

G. Reduction In Force (RIF)

    When an employee in the ARL 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 slight 
modifications pertaining to competitive areas, broadbanding, assignment 
rights, and calculation of adjusted service computation date.
    A separate competitive area will be established for each 
occupational family; within each occupational family, separate 
competitive areas will be established by duty location. Within each 
competitive area, competitive levels will be established consisting of 
all positions in the same occupational series 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.
    An employee may displace another employee by bump or retreat to one 
band below the employee's existing band. A preference eligible with a 
compensable service-connected disability of 30% or more may retreat to 
positions two bands (or equivalent to five grades) below his/her 
current band.
    Reductions in force are accomplished using the existing procedures, 
the retention factors of tenure, veterans preference, and length of 
service as adjusted by performance ratings, in that order. However, the 
additional RIF service credit for performance based on

[[Page 10698]]

the last three ratings of record during the preceding four years will 
be applied as follows: Rating A adds 10 years, Rating B adds 7 years, 
Rating C adds 3 years, and Rating U (or an overall rating of 
unsatisfactory) adds no credit for retention. The additional years of 
service credit are added, not averaged. Ratings given under non-
demonstration systems will be converted to the demonstration rating 
scheme and provided the equivalent rating credit.
    In some cases, an employee may not have three ratings of record. In 
these situations, service credit to provide three values will be given 
on the basis of modal ratings or averaged years of credit associated 
with actual performance ratings under the provisions of 5 CFR 351.504, 
with years credited as above. If, however, an employee has ratings from 
another system but not three demonstration project ratings, the last 
three actual ratings will be translated into demonstration project 
ratings. Ratings older than four years will not be used.
    An employee who has received a written decision to demote him/her 
to a lower pay band competes in RIF from the position to which he/she 
will be/has been demoted. Employees who have been demoted for 
unacceptable performance or conduct, 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 the same additional retention 
service credit granted for a level 3 rating of record.
    An employee who has received an improved rating following a PIP 
will have the improved rating considered as the current rating of 
record, provided that notification of such improvement is approved and 
received prior to the cutoff for receipt of personnel actions 
associated with implementation of RIF mechanics.
    An employee with a current rating of record of U has assignment 
rights only to a position held by another employee who has a U rating. 
An employee who has been given a written decision of removal will be 
placed at the bottom of the retention register for their competitive 
level.
    Modified term appointment 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.

H. Grievances, Disciplinary Actions and EEO Matters

    Except where specifically waived or modified in this plan, adverse 
actions procedures under 5 CFR 752 remain unchanged. The demonstration 
project will enhance the use of Alternative Dispute Resolution (ADR) 
for all conflict resolution to include grievances, disciplinary actions 
and EEO matters.

IV. Implementation Training

    An extensive training program is planned for every employee in the 
demonstration project and associated support personnel. Training will 
be tailored to fit the requirements of every employee included and will 
fully address employee concerns to ensure everyone has a comprehensive 
understanding of the program. In addition, leadership training will be 
provided to all managers and supervisors as the new system places more 
responsibility and decision-making authority on their shoulders.
    Training requirements will vary from an overview of the new system 
to a more detailed package for laboratory managers on the new 
classification system; to very specific instructions for both civilian 
and military supervisors, managers, and others who provide personnel 
and payroll support; to an employee handbook to be provided to each 
covered ARL employee. Training will begin within the 90 days just prior 
to implementation.

V. Conversion

A. Conversion to the Demonstration Project

    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 
modified term appointment if all requirements in III.D.3., Revisions to 
Term Appointments, have been satisfied. Position announcements, etc. 
will not be required for these term appointments. An automatic 
conversion from current GS/GM grade and pay into the 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. Special conversion rules apply to 
special rate employees as described in III.E.4., Staffing Supplements. 
Employees who enter the demonstration project later by lateral 
reassignment or transfer will be subject to parallel pay conversion 
rules. If conversion into the demonstration project is accompanied by a 
geographic move, the employee's GS pay entitlements in the new 
geographic area must be determined before performing the pay 
conversion.
    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, pay will be determined as described in III.E.3., Pay Fixing 
Policies and Procedures. 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.

B. 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 procedure 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 rates will become the employee's actual GS grade and rates 
after leaving the demonstration project (before any other action). For 
transfers, promotions, and other actions the converted GS grade and 
rates 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 rates were actually 
in effect immediately before the employee left the demonstration 
project.
1. 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 these grades according to the 
following rules:

[[Page 10699]]

    a. The employee's adjusted rate of basic pay under the 
demonstration project (including any locality payment or staffing 
supplement) is compared with step 4 rates 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.
2. Pay-Setting Provisions
    An employee's pay within the converted GS grade is set by 
converting the employee's demonstration project rates of pay to GS 
rates 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 or staffing supplement) is converted to 
a GS-adjusted rate on the highest applicable 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 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. 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. ARL will develop a procedure to ensure that employees 
entering Pay Band V understand that if they leave the demonstration 
project and their adjusted project 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 paragraph b.
    f. Employees with Pay Retention: 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. ARL 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.
3. 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).

VI. Project Duration

    Public Law 103-337 removed any mandatory expiration date for this 
demonstration project. The project evaluation plan adequately addresses 
how each intervention will be comprehensively evaluated for at least 
the first 5 years of the demonstration project. 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 project will 
be reexamined for either: (a) permanent implementation, (b) change and 
another 3-5 year test period, or (c) expiration.

VII. Evaluation Plan

    Chapter 47 (Title 5 U.S.C.) requires that an evaluation system be 
implemented to measure the effectiveness of the proposed personnel 
management interventions. An evaluation plan for the entire laboratory 
demonstration program covering 24 DoD laboratories was developed by a 
joint OPM/DoD Evaluation Committee. A comprehensive evaluation plan was 
submitted to the Office of Defense Research & Engineering in 1995 and 
subsequently approved (Proposed Plan for Evaluation of the Department 
of Defense S&T Laboratory Demonstration Program, Office of Merit 
Systems Oversight & Effectiveness, June 1995). The overall evaluation 
effort will be coordinated and conducted by OPM's Personnel Resources 
and Development Center (PRDC). The primary focus of the evaluation is 
to determine whether the waivers granted result in a more effective 
personnel system than the current as well as an assessment of the costs 
associated with the new system.
    The present personnel system with its many rigid rules and 
regulations is generally perceived as an impediment to mission 
accomplishment. The demonstration project is intended to remove some of 
those barriers and therefore, is expected to contribute to improved 
organizational performance. While it is not possible to prove a direct

[[Page 10700]]

causal link between intermediate and ultimate outcomes (improved 
personnel system performance and improved organizational 
effectiveness), such a linkage is hypothesized and data will be 
collected and tracked for both types of outcome variables.
    An intervention impact model 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 appropriate. Activity 
specific measures may also be developed to accommodate specific needs 
or interests which are locally unique. Appendix E represents an 
overview of the Evaluation Model. More detailed information about the 
evaluation model is available upon request.
    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., Human Resources Management regionalization, 
downsizing, 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 laboratory effectiveness.

VIII. Demonstration Project Costs

A. Step Buy-Ins

    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 they have completed up until the effective date 
of implementation. As under the current system, supervisors will be 
able to withhold these partial step increases if the employee's 
performance falls below fully successful.
    Rules governing Within-Grade Increases (WGI) under the current Army 
performance plan will continue in effect until the implementation date. 
Adjustments to the employees base salary for WGI equity will be 
computed effective the date of implementation to coincide with the 
beginning of the first formal PFP assessment cycle. WGI equity will be 
acknowledged by increasing base salaries by a prorated share based upon 
the number of weeks an employee has completed toward the next higher 
step. Payment will equal the value of the employee's next WGI times the 
proportion of the waiting period completed (weeks completed in waiting 
period/weeks in the waiting period) at the time of conversion. 
Employees at step 10 or receiving retained rates on the date of 
implementation will not be eligible for WGI equity adjustments since 
they are already at or above the top of the step scale. Employees 
serving on retained grade, will receive WGI equity adjustments provided 
they are not at step 10 or receiving a retained rate.

B. Cost Discipline

    An objective of the demonstration project is to ensure in-house 
budget discipline. A baseline will be established at the start of the 
project and salary expenditures will be tracked yearly. Implementation 
costs, including the step buy-in costs detailed above, will not be 
included in the cost discipline evaluations.
    The Personnel Management Board will annually track personnel cost 
changes and recommend adjustments if required to achieve the objective 
of cost discipline.

C. Personnel Management Board

    ARL will create a Personnel Management Board to oversee and monitor 
the fair and equitable implementation of the demonstration project to 
include establishment of internal controls and accountability.
    The board will consist of senior leadership of ARL appointed by the 
Director who will be voting members. Non-voting members will include 
the Program Manager for the ARL Personnel Demonstration Project, Equal 
Opportunity Officer, Chief Counsel, a representative of the human 
resources community, union representative, and others as appointed by 
the Director for proper management and oversight of the project. The 
board will be responsible for duties such as:
    (a) Determining the composition of the PFP pay pools in accordance 
with the established guidelines;
    (b) Providing guidance to pay pool managers;
    (c) Overseeing disputes in pay pool issues;
    (d) Overseeing the civilian pay budget;
    (e) Monitoring award pool distribution by organization;
    (f) Reviewing hiring and promotion salaries, to include approving 
promotions with a pay increase greater than 10%;
    (g) Conducting classification review and oversight; monitoring and 
adjusting classification practices and deciding broad classification 
issues;
    (h) Approving major changes in position structure;
    (i) Addressing issues associated with multiple pay systems during 
the demonstration project;
    (j) Assessing the need for changes to demonstration project 
procedures and policies; and
    (k) Ensuring in-house budget discipline.

D. Developmental Costs

    Costs associated with the development of the demonstration project 
system include software automation, training, and project evaluation. 
All funding will be provided through the Army Science and Technology 
budget. The additional incremental projected annual expenses for each 
area is summarized in Figure 4 below. Project evaluation costs will 
continue for at least the first 5 years and may continue beyond.

[[Page 10701]]



                                                        Figure 4.--Projected Developmental Costs                                                        
                                                                   [Then Year Dollars]                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          FY96                FY97                FY98                FY99                FY00                FY01      
--------------------------------------------------------------------------------------------------------------------------------------------------------
Training.........................  10K                 20K                 30K                 ..................  ..................  .................
Project Evaluation...............  17K                 32.5K               32.5K               32.5K               32.5K               32.5K            
Automation.......................  ..................  100K                ..................  ..................  ..................  .................
Data Systems.....................  69K                 ..................  ..................  ..................  ..................  .................
                                  ----------------------------------------------------------------------------------------------------------------------
Totals...........................  96K                 152.5K              62.5K               32.5K               32.5K               32.5K            
--------------------------------------------------------------------------------------------------------------------------------------------------------

IX. Required Waivers to Law and Regulation

A. Waivers to Title 5 United States Code

    Chapter 31, section 3111: Amended to allow for a Voluntary Emeritus 
Corps 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. This waiver applies to the 
extent necessary to waive the time limits for details.
    Chapter 41, section 4107 (a) (1), (2), (b) (1), (3): Restriction on 
Degree Training.
    Chapter 43, section 4301 (3): Definition of unacceptable 
performance.
    Chapter 43, section 4302-4303: This waiver applies to the extent 
that the term ``grade level'' is replaced with ``pay band.''
    Chapter 51, sections 5101-5112, Classification.
    Chapter 53, sections 5301; 5302 (1), (8) and (9); 5303, and 5304: 
Pay comparability system. (This waiver applies only to the extent 
necessary to allow (1) demonstration project employees, except 
employees in band V of the engineers and scientists occupational 
family, to be treated as General Schedule employees, (2) basic rates of 
pay under the demonstration project to be treated as scheduled rates of 
basic pay, and (3) employees in 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 rates.
    Chapter 53, sections 5331-5336: General Schedule pay rates.
    Chapter 53, sections 5361, 5363-5366: Pay Retention to the extent 
necessary to (1) replace ``grade'' with ``band''; (2) allow 
demonstration project employees to be treated as General Schedule 
employees; (3) 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, and (4) ensure that 
for employees of Pay Band V of the E&S Occupational Family, 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 retained rate).
    Chapter 53, section 5362: Grade Retention.
    Chapter 55, section 5542 (a)(1)-(2): Overtime rates; computation. 
This waiver applies only to the extent necessary to provide that the 
GS-10 minimum special rate (if any) for the special rate category to 
which a project employee belongs is deemed to be the ``applicable 
special rate'' in applying the pay cap provisions in 5 U.S.C. 5542.
    Chapter 55, section 5545: Night, standby, irregular, and 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 band V of the 
engineers and scientists occupational family.)
    Chapter 55, section 5547 (a)-(b): Limitation on premium pay. This 
waiver applies only to the extent necessary to provide that the GS-15 
maximum special rate (if any) for the special rate category to which a 
project employee belongs is deemed to be the ``applicable special 
rate'' in applying the pay cap provisions in 5 U.S.C. 5547.
    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 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 
United States 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 75, section 7512(3): Adverse actions (This provision is 
waived only to the extent necessary to replace ``grade'' with ``pay 
band.'')
    Chapter 75, section 7512 (4): Adverse actions (This waiver applies 
only to the extent necessary to provide 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.)

B. Waivers to Title 5. Code of Federal Regulations

    Part 300, sections 300.601 through 300.605: Time in grade 
restrictions. Time in grade restrictions are eliminated in the 
demonstration project.
    Part 308, sections 308.101 through 308.103: Volunteer Service. 
Amended to allow for a Voluntary Emeritus Corps in addition to student 
volunteers.
    Part 315, sections 315.801 and 315.802: Probationary period. (This 
waiver applies only to the extent necessary to extend probationary 
periods from one year to a maximum of three years for newly-hired 
permanent career-conditional employees in the Engineer and Scientist 
Occupational Family).
    Part 315, section 315.901: Statutory requirements (this waiver 
applies only to the extent necessary to replace ``grade'' with ``pay 
band.''
    Part 316, section 316.301: (Term Appointments for more than 4 
years)
    Part 316, section 316.303: (Converting Terms to Status)
    Part 316, section 316.305: Eligibility for within grade increases.
    Part 335, section 335.103: Covering the length of details and 
temporary promotions.
    Part 351, section 351.402(b): Competitive area.
    Part 351, section 351.403: Competitive Level. (This waiver applies 
only to the extent necessary to replace ``grade'' with ``pay band.'')
    Part 351, section 351.504: as it relates to years of credit and to 
the extent that an employee's additional retention

[[Page 10702]]

service credit shall (a) be based on a presumed fully successful (level 
3) when the employee has been demoted or reassigned because of 
unacceptable performance or conduct, and as of the date of issuance of 
reduction-in-force notices has not received a rating for performance in 
the position to which demoted or reassigned; and (b) be the improved 
rating when acceptable performance is demonstrated following an 
opportunity to improve as provided in part 432 of this chapter; 351.701 
to the extent that employee bump and retreat rights will be limited to 
one pay band except in the case of 30% preference eligible, and to 
include employees with an unsatisfactory current performance rating of 
record.
    Part 410, section 410.308 (a), (b) (1-2), (b) (4-5), (c)-(g): 
Training to obtain an academic degree.
    Part 410, section 410.309: Agreements to Continue in Service--that 
portion that pertains to the authority of the head of the agency to 
determine continued service requirements, to waive repayment of such 
requirements, and to the extent that the service obligation is to ARL.
    Part 430, section 430.203: Rating of Record--to the extent that the 
definition shall also include ratings for interns that are based on 
less than the whole appraisal period and improved ratings following an 
opportunity to demonstrate acceptable performance as provided for in 
the waiver of 351.504.
    Part 430, section 430.208 (b) (1) and (2): Rating Performance.
    Part 432, section 432.102: to the extent that the term ``grade 
level'' is replaced with ``pay band.''
    Part 511, subpart A: General Provisions, and subpart B: Coverage of 
the General Schedule.
    Part 511, section 511.601: Classification Appeals modified to the 
extent that white collar positions established under the project plan, 
although specifically excluded from Title 5, are covered by the 
classification appeal process outlined in this section, as amended 
below.
    Part 511, section 511.603(a): Right to appeal--substitute band for 
grade.
    Part 511, section 511.607(b): Non-Appealable Issues--add to the 
list of issues which are neither appealable nor reviewable, the 
assignment of series under the project plan to appropriate career 
paths.
    Part 530, subpart C: Special salary rates.
    Part 531, subparts B, D, and E: Determining The 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, except employees in band V of the engineers and 
scientists occupational family, 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 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: to the extent necessary to (1) 
replace ``grade'' with ``pay band''; (2) 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; and (3) ensure that for employees of Pay Band V of the E&S 
Occupational Family, 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 retained 
rate).
    Part 550, section 550.105-106: Biweekly and annual maximum earnings 
limitations. This waiver applies only to the extent necessary to 
provide that the GS-15 maximum special rate (if any) for the special 
rate category to which a project employee belongs is deemed to be the 
``applicable special rate'' in applying the pay cap provisions in 5 
U.S.C. 5547.
    Part 550, section 550.113(a): Computation of overtime pay.This 
waiver applies only to the extent necessary to provide that the GS-10 
minimum special rate (if any) for the special rate category to which a 
project employee belongs is deemed to be the ``applicable special 
rate'' in applying the pay cap provisions in 5 U.S.C. 5542.
    Part 550, section 550.703: Severance Pay (This provision is waived 
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, section 550.902: Hazardous duty differential, definition 
of ``employee'' (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 band V of the 
engineers and scientists occupational family.)
    Part 575, subparts A, B, C, and D: Recruitment Bonuses, 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 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-Nonforeign Areas (This waiver applies only to the extent 
necessary to allow (1) demonstration project employees to be treated as 
employees under the General Schedule and (2) employees in band V of the 
engineers and scientists occupational family to be treated as ST 
employees for the purposes of these provisions.)
    Part 752, section 752.401 (a)(3): Adverse actions (This provision 
is waived only to the extent necessary to replace ``grade'' with ``pay 
band.'')
    Part 752, section 752.401 (a)(4): Adverse actions (This provision 
applies only to the extent necessary to provide 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.--ARL Employee Duty Locations (as of 17 Jun 96)       
               [Totals include SES, ST and FWS Employees]               
------------------------------------------------------------------------
                                                                  ARL   
                        Duty location                          employees
                                                                 total  
------------------------------------------------------------------------
Seoul, Korea.................................................         1 
Fort Rucker, AL..............................................         3 
Redstone Arsenal, AL.........................................         4 
Fort Huachuca, AZ............................................         4 
Newark, DE...................................................         1 
Wilmington, DE...............................................        58 
Hurlbert Field, FL...........................................         1 
MacDill AFB, FL..............................................         1 
Orlando, FL..................................................         4 
Atlanta, GA..................................................        14 
Fort Benning, GA.............................................         4 
Fort Gordon, GA..............................................         2 
Tripler Army Hospital, HI....................................         1 
Scott Air Force Base, IL.....................................         1 
Fort Knox, KY................................................         2 
APG, MD......................................................       929 
Adelphi, MD..................................................       873 
Baltimore, MD (JHU)..........................................         9 
                                                                     97 
Gaithersburg, MD.............................................         3 
LaPlata, MD (Blossom Point)..................................         4 
Watertown, MA................................................        26 
Warren, MI...................................................         5 
St. Louis, MO................................................         3 
Fort Monmouth, NJ............................................       190 
Picatinny, NJ................................................         6 
White Sands Missile Range, NM................................       272 
Fort Bragg, NC...............................................         1 
Akron, OH....................................................         1 

[[Page 10703]]

                                                                        
Cleveland, OH................................................        52 
Fairview Park, OH............................................         1 
Fort Sill, OK................................................         8 
Austin, TX...................................................         1 
Fort Bliss, TX...............................................         1 
Fort Hood, TX................................................         9 
Alexandria, VA...............................................         1 
Arlington, VA................................................         1 
Fort Belvoir, VA.............................................        81 
Newport News, VA.............................................        50 
Vint Hill Farms Station, VA..................................         1 
Woodbridge, VA...............................................         2 
                                                                     98 
Fort Lewis, WA...............................................         1 
                                                              ----------
    Total....................................................      2631 
------------------------------------------------------------------------

Appendix B--Occupational Series by Occupational Family

I. Engineers and Scientists

0180  Psychologist
0401  General Biological Science
0413  Physiology
0471  Agronomy
0690  Industrial Hygiene
0801  General Engineering
0803  Safety Engineering
0806  Materials Engineering
0810  Civil Engineering
0819  Environmental Engineering
0830  Mechanical Engineering
0840  Nuclear Engineering
0850  Electrical Engineering
0854  Computer Engineering
0855  Electronics Engineering
0861  Aerospace Engineering
0892  Ceramic Engineering
0893  Chemical Engineering
0894  Welding Engineering
0896  Industrial Engineering
0899  Engineering & Architecture Student Trainee
1301  General Physical Science
1306  Health Physics
1310  Physics
1320  Chemistry
1321  Metallurgy
1340  Meteorology
1386  Photographic Technology
1399  Physical Science Student Trainee
1515  Operations Research
1520  Mathematics
1529  Mathematical Statistician
1550  Computer Science
1599  Mathematics & Statistics Student Trainee

II. E&S Technician

0181  Psychology Aid & Technician
0802  Engineering Technician
0818  Engineering Drafting
0856  Electronics Technician
1152  Production Control
1311  Physical Science Technician
1341  Meteorological Technician
1601  General Facilities & Equipment
1670  Equipment Specialist

III. Administrative

0018  Safety & Occupational Health Management
0028  Environmental Protection Specialist
0080  Security Administration
0101  Social Science
0170  History
0201  Personnel Management
0205  Military Personnel Management
0212  Personnel Staffing
0221  Position Classification
0230  Employee Relations
0235  Employee Development
0260  Equal Employment Opportunity
0301  Miscellaneous Administration & Program
0334  Computer Specialist
0340  Program Management
0341  Administrative Officer
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
0950  Paralegal Specialist
1001  General Arts & Information
1020  Illustrating
1035  Public Affairs
1060  Photography
1071  Audio Visual Production
1082  Writing & Editing
1083  Technical Writing & Editing
1084  Visual Information
1101  General Business & Industry
1102  Contracting
1170  Realty
1222  Patent Attorney
1410  Librarian
1412  Technical Information Services
1640  Facilities Management
1654  Printing Management
1811  Criminal Investigating
1910  Quality Assurance
2001  General Supply
2003  Supply Program Management
2010  Inventory Management
2101  Transportation Specialist
2130  Traffic Management

IV. General Support

0081  Fire Protection & Prevention
0083  Police
0085  Security Guard
0086  Security Clerical & Assistance
0303  Miscellaneous Clerk & Assistant
0304  Information Receptionist
0305  Mail & File
0318  Secretary
0322  Clerk Typist
0326  Office Automation Clerical & Assistant
0332  Computer Operation
0335  Computer Clerk & Assistant
0342  Support Services Administration
0344  Management Clerical & Assistant
0361  Equal Opportunity Assistant
0392  General Telecommunications
0503  Financial Clerical & Assistance
0525  Accounting Technician
0561  Budget Clerical & Assistant
0986  Legal Clerk & Technician
1087  Editorial Assistance
1105  Purchasing
1106  Procurement Clerical & Assistance
1411  Library Technician
1702  Education & Training Technician
2005  Supply Clerical & Technician
2102  Transportation Clerk & Assistant

           Appendix C.--Demographics and Union Representation           
                          [As of 17 June 1996]                          
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Scientists & Engineers.........................................      56%
E&S Technicians................................................       9%
Administrative.................................................      18%
General Support................................................      12%
Excepted Service...............................................       5%
Occupational Series............................................    119  
Duty Locations.................................................     41  
Veterans.......................................................      23%
------------------------------------------------------------------------

    The following unions have been notified about the project:

Adelphi, Maryland--AFGE Local 2, Fraternal Order of Police
Aberdeen Proving Ground, Maryland--AFGE Local 3176, IAM/AW Local 2424
Fort Monmouth, New Jersey--NFFE Local 476
White Sands Missile Range, New Mexico--NFFE Local 2049
Cleveland, Ohio--AFGE Local 2182

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