[Federal Register Volume 64, Number 35 (Tuesday, February 23, 1999)]
[Notices]
[Pages 8964-9027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4265]



[[Page 8963]]

_______________________________________________________________________

Part III





Office of Personnel Management





_______________________________________________________________________



Proposed Laboratory Personnel Management Demonstration Project; 
Department of the Navy, U.S. Naval Research Laboratory, Washington, DC; 
Notice

  Federal Register / Vol. 64, No. 35 / Tuesday, February 23, 1999 / 
Notices  

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OFFICE OF PERSONNEL MANAGEMENT


Proposed Laboratory Personnel Management Demonstration Project; 
Department of the Navy (DoN), U.S. Naval Research Laboratory (NRL), 
Washington, DC

(Authority: 5 U.S.C. 4703)
AGENCY: Office of Personnel Management.

ACTION: Notice of intent to implement demonstration project.

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SUMMARY: Title VI of the Civil Service Reform Act, 5 U.S.C. 4703, 
authorized the Office of Personnel Management (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.
    Section 342 of the National Defense Authorization Act for fiscal 
year 1995 (Pub. L. 103-337, October 5, 1994) permits the Department of 
Defense (DoD), with the approval of the OPM, to carry out personnel 
demonstration projects at DoD laboratories designated as Science and 
Technology (S&T) Demonstration Project Reinvention Laboratories. The 
legislation requires that most requirements of 5 U.S.C. 4703 shall 
apply to the Demonstration Project. Section 4703 requires OPM to 
publish the proposed project plan in the Federal Register. This notice 
meets that requirement.

DATES: Comment date: Written comments will be considered if received no 
later than April 9, 1999. Hearing date: A public hearing will be held 
by OPM on the proposed project plan on March 25, 1999 at the Best 
Western, Oxon Hill, MD at 12:30 p.m., until testimony is completed.

ADDRESSES: Comment address: Send written comments to Judy White, U.S. 
Office of Personnel Management, 1900 E Street, NW, Room 7460, 
Washington, DC 20415-6000.

FOR FURTHER INFORMATION CONTACT: (1) on proposed demonstration project: 
Ms. Betty A. Duffield, Director, Strategic Workforce Planning, Code 
1001.2, 4555 Overlook Avenue, SW, Washington, DC 20375-5320, 202-767-
3421; (2) on proposed demonstration project and public hearings: Judy 
White, U.S. Office of Personnel Management, 1900 E Street, NW, Room 
7460, Washington, DC 20415-6000, 202-606-1526.

SUPPLEMENTARY INFORMATION: The DoD has submitted a proposed 
demonstration project entitled ``Naval Research Laboratory Personnel 
Management Demonstration Project'' for consideration under Chapter 47 
of 5 U.S.C.
    The purpose of this project is to demonstrate a flexible and 
responsive personnel system that will enhance the Laboratory's ability 
to attract, retain, and motivate a high-quality workforce. To this end, 
the proposed project involves:
    (1) Streamlined hiring processes,
    (2) Broadbanding,
    (3) Simplified position classification,
    (4) A Contribution-based Compensation System (CCS),
    (5) Extended probationary period for new employees, and
    (6) Modified reduction-in-force (RIF) procedures.
    A public hearing will be held by OPM on March 25, 1999 at the Best 
Western, Oxon Hill, MD at 12:30 p.m. during which interested persons or 
organizations may present their written or oral views concerning the 
proposed Demonstration Project. So that OPM may regulate the course of 
the hearing and provide time for all who wish to present comments, 
parties who want to testify at the hearing are asked to contact one of 
the persons listed under FOR FURTHER INFORMATION CONTACT: for a 
specific scheduled time. Priority will be given to scheduled parties; 
others will be heard in the remaining available time. Each speaker's 
presentation will be limited to 5 minutes. In other respects, the 
hearing will be informal. The hearing record will be left open until 
April 9, 1999 to allow additional written data, views and arguments 
from the parties participating in the hearing.

    Dated: February 12, 1999.

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

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems with the Current System
    C. Waivers Required
    D. Expected Benefits
    E. Participating Organizations and Employees
    F. Project Design
III. Accessions and Internal Placement
    A. Hiring Authority
    1. Background
    2. Delegated Examining
    B. Legal Authority
    C. Determining Employee and Applicant Qualifications
    D. Noncitizen Hiring
    E. Expanded Detail Authority
    F. Extended Probationary Period
    G. Definitions
    1. Basic Pay
    2. Maintained Pay
    3. Promotion
    4. Reassignment
    5. Change to Lower Career Level
    6. Pay Adjustment
    7. Detail
    8. Highest Previous Rate
    9. Approving Manager
    H. Pay Setting Determinations Outside the CCS
    1. External New Hires
    2. Internal Actions
    a. Promotion
    b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to 
Lower Career Level (except RIF)
    (1) Examples of Voluntary Change to a Lower Career Level
    (2) Example of Pay Adjustment (Voluntary Change to Lower Pay) or 
Change to a Lower Career Level
    c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to 
Lower Career Level Due to Adverse or Performance-based Action
    d. Involuntary Change to Lower Career Level or Reassignment to a 
Career Track with a Lower Salary Range, Other than Adverse or 
Performance-based
    e. RIF Action (including employees who are offered and accept a 
vacancy at a lower career level or in a different career track)
    f. Upward Mobility or Other Formal Training Program Selection
    g. Return to Limited or Light Duty from a Disability as a Result 
of Occupational Injury to a Position in a Lower Career Level or to a 
Career Track with Lower Basic Pay Potential than Held Prior to the 
Injury
    h. Reassignment
    i. Student Educational Employment Program
    j. Hazard Pay or Pay for Duty Involving Physical Hardship
    I. Priority Placement Program (PPP)
    J. Expanded Temporary Promotions
IV. Sustainment
    A. Position Classification
    1. Career Tracks and Career Levels
    a. Target Career Level
    b. Occupational Series and Position Titling
    c. Classification Standards
    d. Fair Labor Standards Act (FLSA)
    (1) Guidelines for FLSA Determinations
    (2) Nonsupervisory and Leader Positions
    (3) Supervisory Positions
    2. Requirements Document (RD)
    3. Delegation of Classification Authority
    a. Delegation Authority
    b. Position Classification Accountability
    B. Integrated Pay Schedule (IPS)
    1. Annual Pay Action
    2. Overtime Pay
    3. Classification Appeals
    4. Advanced Research Scientists and Engineers (ARSAE)
    5. Distinguished Contributions Allowance (DCA)
    a. Eligibility
    b. Nomination
    c. Reduction or Termination of a DCA
    d. Lump-Sum DCA Payments
    e. DCA Budget Allocation
    f. Concurrent Monetary Payments

[[Page 8965]]

    C. CCS
    1. General
    2. CCS Process
    3. Pay Pool Annual Planning
    a. Element Weights and Applicability
    b. Supplemental Criteria
    4. Annual CCS Appraisal Process
    5. Exceptions
    6. Normal Pay Range (NPR)--Basic Pay Versus Contribution
    7. Compensation
    a. General Increases
    b. Merit Increases
    c. Locality Increases
    d. Contribution Awards
    8. Career Movement Based on CCS
    a. Advancements in Level Which May be Approved by the Pay Pool 
Manager
    b. Advancements in Level Which Must be Approved by the Director 
of Research (DOR)
    c. Advancement to Level V of the Science and Engineering (S&E) 
Professional Career Track
    d. Regression to Lower Level
    9. CCS Grievance Procedures
V. Separations
    A. Performance-based Reduction-in-pay or Removal Actions
    B. RIF
    1. RIF Authority
    2. RIF Definitions
    a. Competitive Area
    b. Competitive Level
    c. SCD
    (1) CCS Process Results Credit
    (2) Credit From Other Rating Systems
    (3) RIF Cutoff Date
    3. Displacement Rights
    a. Displacement
    b. Retention Standing
    c. Vacant Positions
    d. Ineligible for Displacement Rights
    e. Change to Lower Level Due to an Adverse or Performance-based 
Action
    3. Notice Period
    4. RIF Appeals
    5. Separation Incentives
    6. Severance Pay
    7. Outplacement Assistance
VI. Demonstration Project Transition
    A. Initial Conversion or Movement to the Demonstration Project
    1. Placement into Career Tracks and Career Levels
    2. Conversion of Retained Grade and Pay Employees
    3. WGI Buy-in
    4. Conversion of Special Salary Rate Employees
    B. CCS Startup
    C. Training
    1. Types of Training
    a. NRL Employees
    b. Supervisors and Managers
    c. Support Personnel
    D. New Hires into the Demonstration Project
    E. Conversion or Movement from Demonstration Project
    1. Grade Determination
    2. Pay Setting
    3. ARSAE
    4. Determining Date of Last Equivalent Increase
VII. Demonstration Project Duration
A. General
B. 5-year Reexamination
VIII. Demonstration Project Evaluation Plan
A. Overview
B. Evaluation Models
C. Evaluation
IX. Demonstration Project Costs
A. Transition
B. Cost Containment and Controls
C. Implementation Costs
D. Method of Data Collection
X. Automation Support
A. General
B. Defense Civilian Personnel Data System (DCPDS)
C. Core Document (COREDOC)
D. RIF Support System (RIFSS)
E. CCS Data System (CCSDS)
Appendix A: Required Waivers to Laws and Regulations
Appendix B: Definitions of Career Tracks and Career Levels
Appendix C: Table of Occupational Series within Career Tracks
Appendix D: Classification and CCS Elements
Appendix E: Computation of the IPS and the NPR
Appendix F: RD Sample
Appendix G: OPM Intervention Impact Model
Appendix H: NRL Internal Evaluation

I. Executive Summary

    Over the last 30 years, many studies of the DoD laboratories have 
been conducted on laboratory quality and personnel. Virtually all of 
these studies have recommended improvements in personnel policies, 
organization, and management. In order to respond to the findings of 
these studies, this proposed personnel demonstration project 
encompasses streamlined hiring processes, simplified position 
classification, the CCS, and modified RIF procedures.
    The demonstration project described herein was designed by the NRL, 
with the participation of and review by the DoN, the DoD, and the OPM. 
The purpose of the demonstration project is to develop and implement a 
personnel management system that will enable NRL to obtain, maintain, 
and retain the highest quality workforce possible to accomplish its 
mission in support of national defense. There are four primary 
objectives of the demonstration project:
    (1) Provide NRL increased authority to manage human resources,
    (2) Enable NRL to hire and retain the best qualified employees,
    (3) Enable NRL to compensate its employees equitably at a rate that 
is more competitive with the labor market, and
    (4) Provide a direct link between levels of individual contribution 
and the compensation received.
    Initially, the demonstration project will cover all NRL employees 
except Senior Executive Service (SES) members, scientific and 
professional (ST) employees (above GS-15), guards, and trade and craft 
employees. The guards and trade and craft employees may be included at 
a later time, after more experience is gained in the operation of the 
CCS. The project will be reviewed and evaluated throughout its duration 
by OPM, DoD, DoN, and NRL. In addition to evaluation topics, such as 
goal attainment and employee and management acceptance, the project 
will be assessed for cost containment. After 5 years, the project will 
be evaluated to determine if it is to be made permanent, modified, or 
terminated. Areas not specifically addressed will use provisions that 
currently exist in 5 United States Code (U.S.C.) and 5 Code of Federal 
Regulations (CFR).

II. Introduction

A. Purpose

    The goal of this personnel demonstration project is to develop and 
implement a human resources management system that will enable NRL to 
obtain, maintain, and retain, into the 21st century, the highest 
quality workforce possible to accomplish its mission in support of 
national defense. NRL's mission is to conduct a broadly based 
multidisciplinary program of scientific research and advanced 
technological development directed toward new and improved materials, 
equipment, techniques, systems, and related operational procedures for 
the DoN. The human resources management system must enable NRL to 
attract and retain the best scientists, engineers, and support 
personnel available in the labor market.
    The demonstration project has the following four primary 
objectives:
    a. Provide NRL management with increased authority to manage human 
resources consistent with its operation under the Navy Working Capital 
Fund (NWCF) as an industrially-funded activity;
    b. Provide a recruitment process, within the context of merit 
principles, that will enable NRL to hire the best qualified employees 
at a reasonable cost and for competitive compensation;
    c. Provide a compensation system that will enable NRL to compensate 
its employees equitably at a rate that is commensurate with their 
levels of responsibility and contribution, and is competitive with 
those found in the labor market; and
    d. Provide a direct link between levels of individual contribution 
and the compensation received.

[[Page 8966]]

B. Problems With the Current System

    The demonstration project addresses a set of issues regarding human 
resources in the Federal laboratory system. These problems have been 
extensively documented in a long series of reports by blue-ribbon 
panels. These include the following: the Packard Report,* the Grace 
Commission Report,** the Fowler Report,*** and other high-level 
analyses of the state of Federal research capabilities. In all of these 
reports, there is a common theme . . . that Federal laboratories need 
more efficient, cost effective, and timely processes and methods to 
acquire and retain a highly creative, productive, educated, and trained 
workforce.
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    * White House Science Council, ``Report of the White House 
Science Council, Federal Laboratory Review Panel,'' (Packard 
Report), May 1983.
    ** Task Force on Research and Development (R&D), ``President's 
Private Sector Survey on Cost Control, Task Force Report on R&D,'' 
(Grace Commission Report), 8 December 1983.
    *** Defense Science Board, ``Report of the Defense Science Board 
1987 Summer Study on Technology Base Management,'' (Fowler Report), 
December 1987.
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    The NRL must be able to compete with the private sector for the 
best talent and be able to make job offers in a timely manner with the 
attendant compensation that attracts high quality employees. Once 
hired, NRL must have the means to motivate and reward employees for 
their innovative contributions to ensure that the creative process is 
continually renewed. Compensation levels must be directly linked to the 
levels of individual contributions. High contributors must be rewarded 
both to encourage their continued contributions and to ensure their 
retention at NRL. Similarly, lower contributing individuals should 
receive less compensation, or, in some cases, be encouraged to seek 
other employment.

C. Waivers Required

    NRL proposes changes in the following broad areas to address its 
problems in human resources management: accessions and internal 
placements, sustainment, and separations. Appendix A lists the laws, 
rules and regulations requiring waivers to enable NRL to implement the 
proposed system.

D. Expected Benefits

    The demonstration project is expected to result in:
    (1) Maintaining the quality of the NRL workforce in the scientific 
and engineering disciplines as well as administrative specialist and 
professional and support professions;
    (2) More timely processing of personnel actions;
    (3) Increased retention of high-level contributors and wider 
distribution of salaries; and
    (4) Increased satisfaction with human resources management 
processes by employees and managers.

E. Participating Organizations and Employees

    Initially, the demonstration project would cover all NRL employees 
except SES members, ST employees, guards, and trade and craft 
employees. The guards and trade and craft employees may be included at 
a later time, after more experience is gained in the operation of the 
CCS. Figure 1 identifies the employees by group for major geographic 
locations. NRL sites with less than 10 employees each are identified as 
``Other'' in Figure 1.

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    A union representative elected from the following bargaining units 
participated on the Staffing Design Team and was instrumental in the 
development of the accession and internal placement interventions 
proposed in this plan:

Federal Firefighters Association--Firefighters, Chesapeake Beach, MD 
(as of 6/23/98 this function was transferred to another activity)
Washington Area Metal Trades Council--Trades and Crafts Employees, 
Washington, DC
International Association of Machinists and Aerospace Workers--Guards, 
Washington, DC

F. Project Design

    In response to the authority granted by Congress to develop a 
demonstration project, NRL's Director of Research (DOR) set up five 
design teams to develop the project plan. Each team was led by a senior 
NRL manager from outside the Human Resources Office (HRO), and was 
responsible for developing project proposals in one of the five primary 
functional areas of the project. Each team was comprised of two human 
resources advisors, an Equal Employment Opportunity (EEO) advisor, 
several midlevel supervisors or managers, an NRL Administrative Council 
representative, and several employee representatives (including 
bargaining unit representatives when appropriate).

III. Accessions and Internal Placements

A. Hiring Authority

1. Background
    Private industry and academia are the principal recruiting sources 
for scientists and engineers at NRL. It is extremely difficult to make 
timely offers of employment to hard-to-find scientists and engineers. 
Even when a candidate is identified, he or she often finds another job 
opportunity before the lengthy recruitment process can be completed.
2. Delegated Examining
    a. Competitive service positions within the NRL Demonstration 
Project will be filled through Merit Staffing or under Delegated 
Examining.
    b. The ``Rule of Three'' will be eliminated. When there are no more 
than 15 qualified applicants and no preference eligibles, all eligible 
applicants are immediately referred to the selecting official without 
rating and ranking. Rating and ranking will be required only when the 
number of qualified candidates exceeds 15 or there is a mix of 
preference and nonpreference applicants. Statutes and regulations 
covering veterans' preference will be observed in the selection process 
and when rating and ranking are required. If the candidates are rated 
and ranked, a random number selection method using the application 
control number will be used to determine which applicants will be 
referred when scores are tied after the rating process. Veterans will 
be referred ahead of non-veterans with the same score.

B. Legal Authority

    For actions taken under the auspices of the NRL Demonstration 
Project, the legal authority, Public Law 103-337, will be used. For all 
other actions, NRL will continue to use the nature of action codes and 
legal authority codes prescribed by OPM, DoD, or DoN.

C. Determining Employee and Applicant Qualifications

    OPM's Qualification Standards Operating Manual for General Schedule 
(GS) Positions will be used to determine an employee's or candidate's 
basic eligibility. Employees and candidates must meet the qualification 
requirements which are equivalent to those described in the OPM 
Operating Manual at the level identified in Figure 2.

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BILLING CODE 6325-01-C

    Special DoN or DoD requirements not covered by the OPM 
Qualification Standards Operating Manual for GS Positions, such as 
Defense Acquisition Workforce Improvement Act (DAWIA) qualification 
requirements for acquisition positions and physical performance 
requirements for sea duty, work on board aircraft, etc., must be met.

D. Noncitizen Hiring

    Where Executive Orders or other regulations limit hiring 
noncitizens, NRL will have the authority to approve the hiring of 
noncitizens into competitive service positions when qualified U.S. 
citizens are not available. Under the demonstration project, as with 
the current system, a noncitizen may be appointed only if it has been 
determined there are no qualified U.S. citizens. In order to make this 
determination, the position will be advertised extensively throughout 
the nation using paid advertisements in major newspapers or scientific 
journals, etc., as well as the ``normal'' recruiting methods. If a 
noncitizen is the only qualified candidate for the position, the 
candidate may be appointed. The selection is subject to approval by the 
NRL approving manager. The demonstration project constitutes a 
delegated examining agreement from OPM for the purposes of 5 CFR 
213.3102(bb).

E. Expanded Detail Authority

    Under the demonstration project, NRL's approving manager would have 
the authority:
    (1) To effect details up to 1 year to demonstration project 
positions without the current 120-day renewal requirement; and
    (2) To effect details to a higher level position in the 
demonstration project up to 1 year without competition. Prior service 
during the preceding 12 months under noncompetitive details to higher 
level positions and noncompetitive time-limited promotions count toward 
the 1-year total.
    The Commanding Officer, NRL would approve details to demonstration 
project positions in excess of 1 year without the 120-day renewal 
requirement.

F. Extended Probationary Period

    All current laws and regulations for the current probationary 
period are retained except that nonstatus candidates hired under the 
demonstration project in occupations where the nature of the work 
requires the manager more than one year to assess the employee's job 
performance will serve a 3-year probationary period. Employees with 
veterans' preference will maintain their rights under current law and 
regulation.

[[Page 8969]]

G. Definitions

1. Basic Pay
    The total amount of pay received at the rate fixed through CCS 
adjustment for the position held by an employee including any merit 
increase but before any deductions and exclusive of additional pay of 
any other kind.
2. Maintained Pay
    An employee may be entitled to maintain his or her rate of basic 
pay if that rate exceeds the maximum rate of basic pay for his or her 
career level as a result of certain personnel actions (as described in 
this plan). An employee's initial maintained pay rate is equal to the 
lesser of (1) the basic pay held by the employee at the time an action 
is taken which entitles the employee to maintain his or her pay or (2) 
150 percent of the maximum rate of basic pay of the career level to 
which assigned. The employee is entitled to maintained pay for 2 years 
or until the employee's basic pay is equal to or more than the 
employee's maintained pay, whichever occurs first. Exceptions to the 2-
year limit include employees on grade and pay retention 
``grandfathered'' in upon initial conversion into the demonstration 
project, former special rate employees receiving maintained pay as a 
result of conversion into the project, and employees placed through the 
priority placement programs. Employees will receive half of the across-
the-board GS percentage increase in basic pay and the full locality pay 
increase while on maintained pay. Upon termination of maintained pay, 
the employee's basic pay will be adjusted according to the CCS 
appraisal process. If the employee's basic pay exceeds the maximum 
basic pay of his or her career level upon expiration of the 2-year 
period, the employee's pay will not be reduced; the employee will be in 
the overcompensated range of basic pay category for CCS pay increase 
purposes, see Figure 10.
    Maintained pay shall cease to apply to an employee who:
    (1) Has a break in service of 1 workday or more; or
    (2) Is demoted for personal cause or at the employee's request.
    The employee's maintained rate of pay is basic pay for purposes of 
locality pay (locality pay is basic pay for purposes of retirement, 
life insurance, premium pay, severance pay, advances in pay, workers' 
compensation, and lump-sum payments for annual leave but not for 
computing promotion increases). Employees promoted while on maintained 
pay may have their basic pay (excluding locality pay) set up to 20 
percent greater than the maximum basic pay for their current career 
level or retain their ``maintained pay,'' whichever is greater.
3. Promotion
    The movement of an employee to a higher career level within the 
same career track or to a different career track and career level in 
which the new career level has a higher maximum basic salary rate than 
the career level from which the employee is leaving.
4. Reassignment
    The movement of an employee from one position to another position 
within the same career level in the same career track or to a position 
in another career track and career level in which the new career level 
has the same maximum basic salary rate as the career level from which 
the employee is leaving.
5. Change to Lower Career Level
    The movement of an employee to a lower career level within the same 
career track or to a different career track and career level in which 
the new career level has a lower maximum basic salary range than the 
career level from which the employee is leaving.
6. Pay Adjustment
    Any increase or decrease in an employee's rate of basic pay where 
there is no change in the employee's position.
7. Detail
    The temporary assignment of an employee to a different position for 
a specified period when the employee is expected to return to his or 
her regular duties at the end of the assignment. (An employee who is on 
detail is considered for pay and strength purposes to be permanently 
occupying his or her regular position.)
8. Highest Previous Rate
    NRL will establish maximum payable rate rules that parallel the 
rules in 5 CFR 531.202 and 531.203(c) and (d).
9. Approving Manager
    The manager who has authority to approve the Request for Personnel 
Action (RPA), SF-52.

H. Pay Setting Determinations Outside the CCS

1. External New Hires
    a. This includes reinstatements. Initial basic pay for new 
appointees into the demonstration project may be set at any point 
within the basic pay range for the career track, occupation, and career 
level to which appointed that is consistent with the special 
qualifications of the individual and the unique requirements of the 
position. These special qualifications may be consideration of 
education, training, experience, scarcity of qualified applicants, 
labor market considerations, programmatic urgency, or any combination 
thereof which is pertinent to the position to which appointed. Highest 
previous rate may be used to set the pay of new appointees into the 
demonstration project. (The approving manager authorizes the basic 
pay.) A recruitment or relocation bonus may be paid using the same 
provisions available for GS employees under 5 U.S.C. 5753. Employees 
placed through the DoD Priority Placement Program (PPP), the DoN 
Reemployment Priority List (RPL), or the Federal Interagency Career 
Transition Assistance Plan are entitled to the last earned rate if they 
have been separated.
    b. Transfers from within DoD and other Federal agencies will have 
their pay set using pay setting policy for internal actions based on 
the type of pay action.
2. Internal Actions
    a. Promotion. When an employee is promoted, the basic pay after 
promotion may be up to 20 percent greater than the employee's current 
basic pay. However, if the minimum rate of the new career level is more 
than 20 percent greater than the employee's current basic pay, then the 
minimum rate of the new career level is the new basic pay. The 
employee's basic pay may not exceed the basic pay range of the new 
career level. Highest previous rate may be applied, if appropriate. 
(The approving manager authorizes the basic pay.) Note: Most target 
career level promotions will be accomplished through the CCS appraisal 
and pay adjustment process (see section IV.C.8).
    b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to 
Lower Career Level (except RIF). When an employee accepts a voluntary 
change to lower pay or lower career level, basic pay may be set at any 
point within the career level to which appointed, except that the new 
basic pay will not exceed the employee's current basic pay or the 
maximum basic pay of the career level to which assigned, whichever is 
lower. Highest previous rate may be applied, if appropriate. (The 
approving manager authorizes the basic pay.)
    (1) Examples of Voluntary Change to a Lower Career Level. An 
employee in an Administrative Specialist and Professional Career Track 
position may decide he or she would prefer a Career Level II position 
in the Administrative Support Career Track because it offers a

[[Page 8970]]

different work schedule or duty station. An employee in Level IV of the 
Administrative Specialist and Professional Career Track who has a 
family member with a serious medical problem and wants to be relieved 
of supervisory responsibilities may request a change to Career Level 
III.
    (2) Example of Pay Adjustment (Voluntary Change to Lower Pay) or 
Change to a Lower Career Level. An employee may accept a change to 
lower pay or to a lower career level through a settlement agreement. A 
Research Physicist who is in Level III and is being paid near the top 
of Level III, is rated unacceptable in the critical element Research 
and Development (R&D) Business Management. In settlement of a proposal 
to remove this employee for unacceptable performance, an agreement is 
reached which reduces the employee's pay to a rate near the beginning 
of Level III.
    c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to 
Lower Career Level Due to Adverse or Performance-based Action. When an 
employee is changed to a lower career level, or receives a change to 
lower pay due to an adverse or performance-based action, the employee's 
basic pay will be reduced by at least 6 percent, but will be set at a 
rate within the rate range for the career level to which assigned. (The 
approving manager authorizes the basic pay.) Such employees will be 
afforded appeal rights as provided by 5 U.S.C. 4303 or 7512.
    d. Involuntary Change to Lower Career Level or Reassignment to a 
Career Track with a Lower Salary Range, Other than Adverse or 
Performance-based. If the change is not a result of an adverse or 
performance-based action, the basic pay will be preserved to the extent 
possible within the basic pay range of the new career level. If the pay 
cannot be set within the rate range of the new career level, it will be 
set at the maximum rate of the new career level and the employee's pay 
will be reduced. If the change is a result of a position 
reclassification resulting in the employee being assigned to a lower 
career level or reassigned to a different career track with a lower 
maximum basic salary range, the employee is entitled to maintained pay.
    e. RIF Action (including employees who are offered and accept a 
vacancy at a lower career level or in a different career track). The 
employee is entitled to maintained pay.
    f. Upward Mobility or Other Formal Training Program Selection. The 
employee is entitled to maintained pay.
    g. Return to Limited or Light Duty from a Disability as a Result of 
Occupational Injury to a Position in a Lower Career Level or to a 
Career Track with Lower Basic Pay Potential than Held Prior to the 
Injury. The employee is entitled indefinitely to the basic pay held 
prior to the injury and will receive full general and locality pay 
increases. If upon reemployment, an employee was not given the higher 
basic pay (basic pay received at the time of the injury), any 
retirement annuity or severance pay computation would be based on his 
or her lower basic pay (salary based on placement in a lower career 
level). Even though the Department of Labor (DOL) would make up the 
difference between the lower basic pay and the higher basic pay earned 
at the time of injury, the DOL portion is not considered in the 
retirement or severance pay computation.
    h. Reassignment. The basic pay normally remains the same. Highest 
previous rate may be applied, if appropriate. (The approving manager 
authorizes the basic pay.)
    i. Student Educational Employment Program. Initial basic pay for 
new appointees may be set at any point within the basic pay range for 
the career track, occupation, and career level to which appointed. 
Basic pay may be increased upon return to duty (RTD) or conversion to 
temporary appointment, in consideration of the student's additional 
education and experience at the time of the action. Students who work 
under a parallel work study program may have their basic pay increased 
in consideration of additional education and/or experience. Basic pay 
for students may be increased based on their CCS appraisal. (The 
approving manager authorizes the basic pay.)
    j. Hazard Pay or Pay for Duty Involving Physical Hardship. 
Employees under the demonstration project will be paid hazardous duty 
pay under the provisions of 5 CFR part 550, subpart I.

I. Priority Placement Program (PPP)

    Current PPP procedures apply to new hires and internal actions.

J. Expanded Temporary Promotions

    Current regulations require that temporary promotions for more than 
120 days to a higher level position than previously held must be made 
competitively. Under the demonstration project, NRL would be able to 
effect temporary promotions of not more than 1 year without competition 
to positions within the demonstration project. Prior service during the 
preceding 12 months under noncompetitive time-limited promotions and 
noncompetitive details to higher level positions count toward the 1-
year total.

IV. Sustainment

A. Position Classification

    The position classification changes are intended to streamline and 
simplify the process of identifying and categorizing the work done at 
NRL. NRL will establish an Integrated Pay Scale (IPS) for all 
demonstration project positions in covered occupations. The IPS will 
replace the current GS and extend the pay scale to the equivalent of 
the ES-4 level of the ``Rates of Basic Pay for the Members of the 
Senior Executive Service (SES).''
1. Career Tracks and Career Levels
    Within the IPS, occupations with similar characteristics will be 
grouped together into four career tracks. Each career track consists of 
a number of career levels, representing the phases of career 
progression that are typical for the respective career track. The 
career levels within each career track are shown in Figure 3, along 
with their GS equivalents. The equivalents are based on the levels of 
responsibility as defined in 5 U.S.C. 5104, and not on current basic 
pay schedules. Appendix B provides definitions for each of the career 
tracks and the career levels within them.
    The career tracks and career levels were developed based upon 
administrative, organizational, and position management considerations 
at NRL. They are designed to enhance pay equity and enable a more 
seamless career progression to the target career level for an 
individual position or category of positions. This combination of 
career tracks and career levels allows for competitive recruitment of 
quality candidates at differing rates of compensation within the 
appropriate career track, occupation, and career level. It will also 
facilitate movement and placement based upon contribution, in 
conjunction with the CCS described in paragraph IV.C. Other benefits of 
this arrangement include a dual career track for S&E employees and 
greater competitiveness with academia and private industry for 
recruitment. Appendix C identifies the occupational series currently 
within each of the four career tracks.

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BILLING CODE 6325-01-C
    a. Target Career Level. Each position will have a designated target 
career level under the demonstration project. This target career level 
will be identified as the career level to which an incumbent may be 
advanced without further competition within a career track. These 
target career levels will be based upon present career ladders and the 
results of a pending position management study. Target career levels 
may vary based upon occupation or career track. Employees' basic pay 
will be capped at the target career level until other appropriate 
conditions (competition, availability of a high-grade billet, position 
management approval, increase in or acquisition of higher level duties, 
approval of an accretion of duties promotion, etc.) have been met, and 
the employee has been promoted into the next higher level.
    b. Occupational Series and Position Titling. Presently, NRL 
positions are identified by occupational groups and series of classes 
in accordance with OPM position classification standards. Under the 
demonstration project, NRL will continue to use occupational series 
designators consistent with those currently authorized by OPM to 
identify positions. This will facilitate related personnel management 
requirements, such as movement into and out of the demonstration 
project. Other occupational series may be added or deleted as needed to 
support the demonstration project. Interdisciplinary positions will be 
accommodated within the system based upon the qualifications of the 
individual hired.
    Titling practices consistent with those established by OPM 
classification standards will be used to determine the official title. 
Such practice will facilitate other personnel management requirements, 
such as the following: movement into and out of the demonstration 
project, reduction in force, external reporting requirements, and 
recruitment. CCS career level descriptors and Requirements Document 
(RD) (see paragraph IV.A.2) information will be used for specific 
career track, career level, and titling determinations.
    c. Classification Standards. Under the proposed demonstration 
project, the number of classification standards would be reduced from 
over 70 to 4. (See Figure 2.) Each standard would align with one of the 
four career tracks and would cover all positions within that career 
track. Each career track has two or three elements that are considered 
in both classifying a position and in judging an individual's 
contributions for pay setting purposes. Each element has generic 
descriptors for every career level. These descriptors explain the type 
of work, degree of responsibility and scope of contributions that need 
to be ultimately accomplished to reach the highest basic pay potential 
within each career level. (See Appendix D.) To classify a position, a 
manager would select the career level which is most indicative overall 
of the type of duties to be performed and the contributions

[[Page 8972]]

needed. For example: A supervisor needs a secretarial position for a 
branch. In reading the elements and descriptors for the Administrative 
Support Career Track, the supervisor determines that the Level II 
descriptors illustrate the type of work and contributions needed. 
Therefore, the position would be classified as a Secretary, Level II.
    d. Fair Labor Standards Act (FLSA). Demonstration project positions 
will be covered under the FLSA and 5 CFR part 551. Determination of 
their status (exempt or nonexempt) will be made based on the criteria 
contained in 5 CFR Part 551. The status of each new position under the 
demonstration project will be determined using computer assisted 
analysis as part of an automated process for preparing the RD. Those 
positions for which the computer is unable to make the final FLSA 
determination will be ``flagged'' for referral to a human resources 
specialist for determination.
    (1) Guidelines for FLSA Determinations.
    a. Supervisory Information: provided through an automated system in 
a checklist format; results of this checklist have an impact on FLSA 
determination.
    b. FLSA Information: provided through an automated system in a 
checklist format; results of this checklist in conjunction with the 
supervisory information provide a basis for the FLSA determination.
    c. If required, the section entitled ``Purpose of Position'' will 
be used to assist in FLSA determination.
    d. RD's requiring additional review before being finalized will be 
forwarded to a human resources specialist to review the FLSA 
determination.
    (2) Nonsupervisory and Leader Positions. Figure 4 shows the exempt 
or nonexempt status applicable to nonsupervisory and leader positions 
in the indicated career track and career level. In those cases where 
``Review'' is indicated, the FLSA status must be determined based on 
the specific duties and responsibilities of the subject position.
    (3) Supervisory Positions. FLSA determination for supervisory 
positions must be made based on the duties and responsibilities of the 
particular position involved. As a rule, if a position requires 
supervision of employees who are exempt under FLSA, the supervisory 
position is likely to be exempt also.

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BILLING CODE 6325-01-C
2. RD
    An RD will replace the Optional Form 8 and position description 
used under the current classification system. The RD will be prepared 
by managers using a menu-driven, automated system. The automated system 
will enable managers to classify and establish many positions without 
intervention by a human resources specialist. The abbreviated RD will 
combine the position information, staffing requirements, and 
contribution expectations into a 1- or 2-page document. Appendix F 
provides a sample RD for an Electronics Engineer, Level II.
3. Delegation of Classification Authority
    Classification authority will be delegated to managers as a means 
of increasing managerial effectiveness and expediting the 
classification function. This will be accomplished as follows:

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[[Page 8974]]

    a. Delegated Authority.
    1. The NRL Commanding Officer (CO) will delegate classification 
authority to the management levels shown in Figure 5, i.e., DOR, 
Associate Directors of Research (ADORS), division superintendents or 
equivalent levels, and the HRO Director (the HRO Director may further 
delegate to selected HRO specialists).
    2. The classification approval must be at least one level above the 
first-level supervisor of the position.
    3. First-line supervisors at any level will provide classification 
recommendations.
    4. HRO support will be available for guidance and recommendations 
concerning the classification process. (Any dispute over the proper 
classification between a manager and the HRO will be resolved by the 
DOR.)
    b. Position Classification Accountability. Those to whom authority 
is delegated are accountable to the DOR. The DOR is accountable to the 
CO. Those with delegated authority are expected to comply with 
demonstration project guidelines on classification and position 
management, observe the principle of equal pay for equal work, and 
ensure that RD's are current. First-line supervisors will develop 
positions using the automated system. All positions must be approved 
through the proper chain of command.

B. IPS

    Under the demonstration project, an IPS will be established which 
will cover all demonstration project positions at NRL. This IPS will 
extend from the basic pay for GS-1, step 1 (from the GS without 
locality pay) to the basic pay for ES-4 (from ``Rates of Basic Pay for 
Members of the Senior Executive Service (SES)'').
1. Annual Pay Action
    NRL will eliminate separate pay actions for within-grade increases, 
general and locality pay increases, performance awards, quality step 
increases, and most career promotions, and replace them with a single 
annual pay action (including either permanent or bonus pay or both) 
linked to the CCS. This will eliminate the paperwork and processing 
associated with multiple pay actions which average 3 per employee per 
year.
2. Overtime Pay
    Overtime will be paid in accordance with 5 CFR part 550, subpart A. 
All nonexempt employees will be paid overtime based upon their ``hourly 
regular rate of pay,'' as defined in existing regulation (5 CFR part 
551).
3. Classification Appeals
    An employee may appeal the occupational series, title, career 
track, or career level 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 an employee is not 
satisfied with the supervisory response, he or she may then appeal to 
the DoD appellate level. If an employee is not satisfied with the DoD 
response, he or she may then appeal to the OPM 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 
Career Level V for Advanced Research Scientists and Engineers (ARSAE) 
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 5 CFR subpart F, sections 511.603, 511.604, 
and 511.605 apply.
    An employee may not appeal the accuracy of the RD, the 
demonstration project classification criteria, or the pay-setting 
criteria; the propriety of a basic pay schedule; the assignment of 
occupational series to the occupational family; 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 is based upon the demonstration project classification 
criteria. Case files will be forwarded for adjudication through the HRO 
and will include copies of appropriate demonstration project criteria.
4. Advanced Research Scientists and Engineers (ARSAE)
    The NRL demonstration project includes a Career Level V for the 
Science and Engineering (S&E) Professional Career Track. Career Level V 
is created for ARSAE's.
    Current legal definitions of SES and ST positions do not fully meet 
the needs of NRL. The SES designation is appropriate for executive 
level managerial positions whose classification exceeds the GS-15 grade 
level. The primary knowledge and abilities of SES positions relate to 
supervisory and managerial responsibilities. Positions classified as 
STs 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.
    NRL currently has positions (typically branch head, principal 
investigator or team leaders) that have characteristics of both SES and 
ST classifications. Most branch heads in NRL are responsible for 
supervising other GS-15 positions, including non-supervisory research 
engineers and scientists and, in some cases, ST positions. Most branch 
heads are classified at the GS-15 level, although their technical 
expertise warrants classification beyond GS-15. Because of their 
management responsibilities, these individuals are excluded from the ST 
system. Because of management considerations, they cannot be placed in 
the SES. Management considers the primary requirement for branch heads 
to have knowledge of and expertise in the specific scientific and 
technology areas related to the mission of their branches. 
Historically, the incumbents of these positions have been recognized 
within the community as scientific and engineering leaders who possess 
primarily scientific or engineering credentials and are considered 
experts in their field. However, they must also possess strong 
managerial and supervisory ability. Therefore, although some of these 
employees have scientific credentials that might compare favorably with 
ST criteria, classification of these positions as ST is not an option 
because the managerial and supervisory responsibilities inherent in the 
positions cannot be ignored.
    Current GS-15 branch heads will convert into the demonstration 
project at Career Level IV. After conversion they will be reviewed 
against established criteria to determine if they should be 
reclassified to Career Level V. Other positions possibly meeting 
criteria for classification to Career Level V will be reviewed on a 
case-by-case basis. The salary range is a minimum of 120 percent 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 Career Level V will be 
competitively filled to ensure that selectees are preeminent 
researchers and technical leaders in the specialty fields who also 
possess substantial managerial and supervisory abilities.
    DoD will test Career Level V for a 5-year period. ARSAE positions 
established in Career Level V will be subject to limitations imposed by 
OPM and DoD. Career Level V will be established only in an S&T 
Reinvention Laboratory which employs scientists,

[[Page 8975]]

engineers, or both. ARSAE incumbents of Career Level V positions will 
work primarily in their professional capacity on basic or applied 
research and secondarily perform managerial or supervisory duties. The 
number of Career Level V, or equivalent, positions within the DoD will 
not exceed 40. These 40 positions will be allocated by Assistant 
Secretary of Defense (Force Management Policy) and administered by the 
respective services. The number of ARSAE Career Level V positions will 
be reviewed periodically to determine appropriate position 
requirements. Career Level V position allocations will be managed 
separately from SES, ST, and Senior Level (SL) positions. An evaluation 
of the Career Level V concept will be performed during the fifth year 
of the demonstration project.
    Specific details regarding the control and management of all Level 
V assets will be included in the demonstration project's operating 
procedures. Level V is expected to afford NRL the ability to more 
effectively and efficiently exercise managerial control at the local 
level, while adhering to merit staffing, affirmative action, and equal 
employment opportunity principles.
5. Distinguished Contributions Allowance (DCA)
    The DCA is a temporary monetary allowance up to 25 percent of basic 
pay (which, when added to an employee's rate of basic pay, may not 
exceed the rate of basic pay for ES-4) paid on either a bi-weekly basis 
(concurrent with normal pay days) or as a lump sum following completion 
of a designated contribution period(s), or combination of these, at the 
discretion of NRL. It is not basic pay for any purpose, i.e., 
retirement, life insurance, severance pay, promotion, or any other 
payment or benefit calculated as a percentage of basic pay. The DCA 
will be available to certain employees at the top of their target 
career levels, whose present contributions are worthy of scores found 
at a higher career level, whose level of contribution is expected to 
continue at the higher career level for at least 1 year, and current 
market conditions require additional compensation.
    Assignment of the DCA rather than a change to a higher career level 
will generally be appropriate for such employees under the following 
circumstances: (1) When it is not certain that the higher level 
contributions will continue indefinitely (e.g., a special project 
expected to be of 1- up to 5-year duration), or (2) when employees have 
reached the maximum rate of the target career level for the position 
and when no further promotion or compensation opportunities are 
available or externally imposed limits (such as high-grade 
restrictions) make changes to higher career levels unavailable, and (3) 
current market conditions compensate similar contributions at a greater 
rate in like positions in private industry and academia and there is a 
history of significant recruitment and retention difficulties 
associated with such positions.
    a. Eligibility.
    (1) Employees in Levels III and IV of the S&E Professional Career 
Track and those in Levels III, IV, and V of the Administrative 
Specialist and Professional Career Track are eligible for the DCA if 
they have reached the top CCS score for their target career level with 
a recommendation for a higher Overall Contribution Score (OCS) for 
their contributions, they have reached the maximum rate of basic pay 
available for their target career level, the higher level contributions 
are not expected to last indefinitely, and market conditions require 
greater compensation for these contributions.
    (2) Employees may receive a DCA for up to 3 years. The DCA 
authorization will be reviewed and reauthorized as necessary, but at 
least annually at the time of the CCS appraisal through nomination by 
the pay pool manager and approval by the DOR. Employees in the S&E 
Professional Career Track may receive an extension of up to 2 
additional years (for a total of 5 years). The DCA extension 
authorization will be reviewed and reauthorized as necessary, but at 
least on an annual basis at the time of the CCS appraisal through 
nomination by the pay pool manager and approval by the DOR.
    (3) Monetary payment may be up to 25 percent of basic pay.
    (4) Nominees would be required to sign a memorandum of 
understanding or a statement indicating they understand that the DCA is 
a temporary allowance; it is not a part of basic pay for any purpose; 
it would be subject to review at any time, but at least on an annual 
basis, and the reduction or termination of the DCA is not appealable or 
grievable.
    b. Nomination. In connection with the annual CCS appraisal process, 
pay pool managers may nominate eligible employees who meet the criteria 
for the DCA. Packages containing the recommended amount and method of 
payment of the DCA and a justification for the allowance will be 
forwarded through the supervisory chain to the DOR. Details regarding 
this process will be addressed in standard operating procedures. These 
details will include time frames for nomination and consideration, 
payout scheme, justification content and format, budget authority, 
guidelines for selecting employees for the allowance and for 
determining the appropriate amount, and documentation required by the 
employee acknowledging he or she understands the criteria and temporary 
nature of the DCA.
    c. Reduction of Termination of a DCA.
    (1) A DCA may be reduced or terminated at any time the NRL deems 
appropriate (e.g., when the special project upon which the DCA was 
based ends; if performance or contributions decrease significantly; or 
if labor market conditions change, etc.). The reduction or termination 
of a DCA is not appealable or grievable.
    (2) If an employee voluntarily separates from NRL before the 
expiration of the DCA, an employee may be denied DCA payment. Authority 
to establish conditions and/or penalties will be spelled out in the 
written authorization of an individual's DCA.
    d. Lump-Sum DCA Payments.
    (1) When NRL chooses to pay part or all of an employee's DCA as a 
lump sum payable at the end of a designated period, the employee will 
accrue entitlement to a growing lump-sum balance each pay period. The 
percentage rate established for the lump-sum DCA will be multiplied by 
the employee's biweekly amount of basic pay to determine the lump sum 
accrual for any pay period. This lump-sum percentage rate is included 
in applying the 25-percent limitation.
    (2) If an employee covered under a lump-sum DCA authorization 
separates, or the DCA is terminated (see paragraph c), before the end 
of that designated period, the employee may be entitled to payment of 
the accrued and unpaid balance under the conditions established by NRL. 
NRL may establish conditions governing lump-sum payments (including 
penalties in cases such as voluntary separation or separation for 
personal cause) in general plan policies or in the individual 
employee's DCA authorization.
    e. DCA Budget Allocation. The DOR may establish a total DCA budget 
allocation that is never greater than 10 percent of the basic salaries 
of the employees currently at the cap in the S&E Professional Career 
Track, Career Levels III and IV, and the Administrative Specialist and 
Professional Career Track, Career Levels III, IV, and V.
    f. Concurrent Monetary Payments. Employees eligible for a DCA may 
be authorized to receive a DCA and a retention allowance at the same 
time, up to a combined total of 25 percent of

[[Page 8976]]

basic pay. A merit increase which raises an employee's pay to the top 
rate for his or her target career level (thus making the employee 
eligible for the DCA) may be granted concurrent with the DCA. Receipt 
of the DCA does not preclude an employee from being granted any award 
(including a contribution award) for which he or she is otherwise 
eligible.

C. Contribution-Based Compensation System (CCS)

1. General
    The purpose of the CCS is to provide an effective means for 
evaluating and compensating the NRL workforce. It provides management, 
at the lowest practical level, the authority, control, and flexibility 
needed to develop a highly competent, motivated, and productive 
workforce. CCS will promote increased fairness and consistency in the 
appraisal process, facilitate natural career progression for employees, 
and provide an understandable basis for career progression by linking 
contribution to basic pay determinations.
    CCS combines performance appraisal and job classification into one 
annual process. At the end of each CCS appraisal period, basic pay 
adjustment decisions are made based on each employee's actual 
contribution to the organization's mission during the period.
    A separate function of the process includes comparison of 
performance in critical elements to acceptable standards to identify 
unacceptable performance that may warrant corrective action in 
accordance with 5 CFR part 432. Supervisory officials determine scores 
to reflect each employee's contribution, considering both how well and 
at what level the employee is performing. Often the two considerations 
are inseparable. For example, an employee whose written documents need 
to be returned for rework more often than those of his or her peers 
also likely requires a closer level of oversight, an important factor 
when considering level of pay.
    The performance planning and rating portions of the demonstration 
project's appraisal process constitute a performance appraisal program 
which complies with 5 CFR part 430 and the DoD Performance Management 
System, except where waivers have been approved. Performance-related 
actions initiated prior to implementation of the demonstration project 
(under DoN performance management regulations) shall continue to be 
processed in accordance with the provisions of the appropriate system.
2. CCS Process
    CCS measures employee contributions by breaking down the jobs in 
each career track using a common set of ``elements.'' The elements for 
each career track shown in Figure 6 and described in detail in Appendix 
D have been initially identified for evaluating the contributions of 
NRL personnel covered by this initiative. They are designed to capture 
the highest level of the primary content of the jobs in each career 
level of each career track. Within specific parameters, elements may be 
weighted or even determined to be not applicable for certain categories 
of positions. All elements applicable to the position are critical as 
defined by 5 CFR part 430.

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BILLING CODE 6325-01-C
    For each element, ``Discriminators'' and ``Descriptors'' are 
provided to assist in distinguishing low to high contributions. The 
discriminators (2-4 for each element) break down aspects of work to be 
measured within the element. The descriptors (one for each level for 
each discriminator) define the expected level of contribution at the 
top of the related career level for that element.
    Scores currently range between 0 and 89; specific relationships 
between scores and career levels are different for each career track. 
(See Figure 7.) Basic pay adjustments are based on a comparison of the 
employee's level of contribution to the normal pay range for that 
contribution and the employee's present rate of basic pay.

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[[Page 8978]]

    Supervisors and pay pool panels determine an employee's 
contribution level for each element. A contribution score, available to 
that level, is assigned accordingly. For example, a scientist whose 
contribution in the Technical Problem Solving element for S&E 
Professionals is determined to be at Level II may be assigned a score 
of 18 to 47. Eighteen reflects the lowest level of responsibility, 
exercise of independent judgment, and scope of contribution; and 47 
reflects the highest. For Level III contributions, a value of 44 to 66 
may be assigned. Each higher career level equates to a higher range of 
values up to a total of 89 points for S&E professionals. The maximum 
score of (currently) 89 provides the potential for basic pay of 
$118,000 plus locality pay up to a cap of $125,900. Each element is 
judged separately and level of work may vary for different elements. 
The scores for each element are then averaged to determine the Overall 
Contribution Score (OCS).
    The CCS process will be carried out within a pay pool that 
typically consists of all employees in an NRL division. Pay pools 
should have a minimum size of about 35 employees; the largest pay pool 
may have about 300 employees. To facilitate equity and consistency, 
element weights and applicability and CCS score adjustments are 
determined by a pay pool panel, rather than by individual supervisors. 
Basic pay adjustments, contribution awards, and DCA's may be 
recommended by the pay pool panel or by individual supervisors. Pay 
pool panels will consist of supervisory officials or other individuals 
who are familiar with the organization's work and the contributions of 
its employees. In most cases division heads (mostly SES members) 
function as pay pool managers, with final authority to decide weights, 
scores, basic pay adjustments, and awards.
3. Pay Pool Annual Planning
    Prior to the beginning of each annual appraisal period, the pay 
pool manager and panel will review pay pool-wide expectations in the 
areas described below.
    a. Element Weights and Applicability. As written, all elements are 
weighted equally. If pay pool panels and managers decide that some 
elements are more important than others or that some do not apply at 
all to the effective accomplishment of the organization's mission, they 
may establish element weights including a weight of zero which renders 
the element not applicable. Element weights are not intended for 
application to individual employees. Instead, they may be established 
only for subcategories of positions, not to exceed a maximum of five 
subcategories in each career track. Subcategories for S&E Professionals 
might be: Bench Level S&E, Supervisor, Program Manager, and Support 
S&E. Subcategories should include a minimum of five positions, when 
possible. Weights must be consistent within the subcategory.
    b. Supplemental Criteria. The CCS level descriptors are designed to 
be general so that they may be applied to all employees in the career 
track. Supervisors and pay pool panels may establish supplemental 
criteria to further inform employees of expected contributions. This 
may include (but is not limited to) examples of contributions which 
reflect work at each level for each element, taskings, objectives, and/
or standards.
    4. Annual CCS Appraisal Process (See Figure 8)

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[[Page 8980]]

    The NRL appraisal period will be 1 year, with a minimum appraisal 
period of 90 days. At the beginning of the appraisal period, or upon an 
employee's arrival at NRL or into a new position, the following 
information will be communicated to employees so that they are informed 
of the basis on which their performance and contributions will be 
assessed: their career track and career level; applicable elements, 
descriptors and discriminators; element weights; any established 
supplemental criteria; OCS's which correspond to each employee's NPR 
(see section IV.C.6); and basic acceptable performance standards. The 
CCS Summary Form (Appendix D) will be used to facilitate and document 
this communication. All employees will be provided this information; 
however, employees in some situations may not receive CCS scores. These 
situations are described in section IV.C.5, Exceptions. The 
communication of information described by this paragraph constitutes 
performance planning as required by 5 CFR 430.206(b).
    Supervisor and employee discussion of organizational objectives, 
specific work assignments, and individual performance expectations (as 
needed), should be conducted on an ongoing basis. Either the supervisor 
or the employee may request a formal review during the appraisal 
period; otherwise, a documented review is required only at the end of 
the appraisal period.
    At the end of the appraisal period, employees will provide input 
describing their contributions by preparing a Yearly Accomplishment 
Report (YAR). Standard operating procedures will provide guidance for 
paypools and employees on the content and format of YARs, and on other 
types of information about employee contributions which should be 
developed and considered by supervisors. This will include procedures 
for capturing contribution information regarding employees who serve on 
details, who change positions during the appraisal period, who are new 
to NRL, and other such circumstances.
    Supervisors will review the employee's YAR and other available 
information about the employee's contributions during the appraisal 
period and determine an initial CCS score for each element. In 
addition, supervisors will determine whether the employee's performance 
was acceptable or unacceptable in each element when compared against 
the basic acceptable performance standards. The rating of the elements 
(all that are applicable are designated critical as defined by 5 CFR 
part 430) will serve as the basis for assignment of a summary level of 
Acceptable or Unacceptable. If any element is rated unacceptable, the 
summary level will be Unacceptable; otherwise the summary level will be 
Acceptable. Unacceptable ratings must be reviewed and approved by a 
higher level than the first-level supervisor.
    If an employee changes positions during the last 90 days of the 
appraisal period, the losing supervisor will conduct a performance 
rating (i.e., rate each element Acceptable or Unacceptable and 
determine the summary level) at the time the employee moves to the new 
position. This will serve as the employee's rating of record. For 
employees who report to NRL during the last 90 days of the appraisal 
period, any close-out rating of Acceptable (or its equivalent) or 
better from another Government agency will serve as the employee's 
rating of record (the employee will be rated Acceptable). The 
determination of CCS scores and application of related pay adjustments 
for such employees is set forth in section IV.C.5, ``Exceptions''.
    The pay pool panel will meet to compare scores, make appropriate 
adjustments, and determine the final OCS for each employee. Final 
approval of CCS scores and element and summary ratings will rest with 
the pay pool manager (unless higher level approval is requested or 
deemed necessary). Supervisors will communicate the element scores, 
ratings and OCS summary level to each employee, and discuss the results 
and plans for continuing growth. Employees rated Unacceptable will be 
provided assistance to improve their performance (see paragraph V.A).
    The CCS process will be facilitated by an automated system, the 
CCSDS. During the appraisal process, all scores and supervisory 
comments will be entered into the CCSDS. The CCSDS will provide 
supervisors, pay pool panel members, and pay pool managers with 
background information (e.g., YARS, employees' prior year scores and 
current basic pay) and spreadsheets to assist them in comparing 
contributions and determining scores. Records of employee appraisals 
will be maintained in the CCSDS, and the system will be able to produce 
a hard copy document for each employee which reflects his or her final 
approved score.
5. Exceptions
    All employees who have worked 90 days or more by the end of the 
appraisal period will receive a performance rating of record. However, 
in certain situations NRL does not consider the actual determination of 
CCS scores to be necessary. In other situations, it may not be feasible 
to determine a meaningful CCS score. Therefore, the determination of 
CCS scores will not be required for the following types of employees:
    a. Employees on intermittent work schedules;
    b. Those on temporary appointments of 1 year or less;
    c. Those who work less than 6 months in an appraisal period (e.g., 
on extended absence due to illness);
    d. Those on long-term training for all or much of the appraisal 
period;
    e. Employees who have reported to NRL or to a new position during 
the 90 days prior to the end of the appraisal period; and
    f. Student Educational Employment Program employees.
    If supervisors believe that the nature of such an employee's 
contributions provide a meaningful basis to determine a CCS score, they 
may appraise employees in the categories listed above, provided that 
the employee has worked at least 90 days in an NRL position during the 
appraisal period.
    Those employees mentioned above who are not appraised under CCS 
will not be eligible for merit increases or contribution awards. (This 
will affect the calculation of service credit for RIF (see section 
V.C.). All employees listed above will be given full general and 
locality increases (as described in sections IV.C.7.a, ``General 
Increases,'' and IV.C.7.c, ``Locality Increases''). All employees are 
eligible for awards under NRL's Incentive Awards Program, such as ``On-
the-Spot'' and Special Act Awards, as appropriate.
6. Normal Pay Range (NPR)--Basic Pay Versus Contribution
    The NRL CCS assumes a relationship between the assessed 
contribution of the employee and a normal range of pay. For all 
possible contribution scores available to employees, the NPR spans a 
basic pay range of 12 percent. Employees who are compensated below the 
NPR for their assessed score are considered ``undercompensated,'' while 
employees compensated above the NPR are considered ``overcompensated.''
    The lower boundary of the NPR is initially established by fixing 
the basic pay equivalent to GS-1, step 1 of the General Schedule 
(without locality pay), with a CCS score of zero. The upper boundary is 
fixed at the basic pay equivalent to GS-15, step 10 of the General 
Schedule (without locality pay), with a CCS score of 80. The distance 
between these upper and lower boundaries for a given overall 
contribution score is 12 percent of basic pay for all available CCS 
scores. Using

[[Page 8981]]

these constraints, the interval between scores is approximately 2.37 
percent through the entire range of pay. The lines were extended using 
the same interval so that the upper boundary of the normal range of 
basic pay accommodates the basic pay for SES Level IV. This currently 
occurs at a contribution score near 90. (The actual end point will vary 
depending on any pay adjustment factors, e.g., general increase.) The 
formula used to derive the NPR may be adjusted in future years of the 
demonstration project. See Appendix E for further details regarding the 
formulation of the NPR.
    Each year the boundaries for the NPR plus the minimum and maximum 
rate of basic pay for each career level (except the maximum rate for 
Level V of the S&E Professional Career Track) will be adjusted by the 
amount of the across-the-board GS percentage increase granted to the 
Federal workforce.

BILLING CODE 6325-01-P
[GRAPHIC] [TIFF OMITTED] TN23FE99.008


BILLING CODE 6325-01-C

    At the end of each annual appraisal period, employees' contribution 
scores will be determined by the CCS process described above, then 
their CCS scores and current rates of basic pay will be plotted as a 
point on a graph along with the NPR. The position of the point relative 
to the NPR gives a relative measure of the degree of over- or 
undercompensation of the employee, as shown in Figure 9. Points which 
fall below the NPR indicate undercompensation; points which fall above 
the NPR indicate overcompensation.
7. Compensation
    Presently, employee pay is established, adjusted, and/or augmented 
in a variety of ways, including general pay increases, locality pay 
increases, special rate adjustments, within-grade increases (WGI's), 
quality step increases (QSI's), performance awards, and promotions. 
Multiple pay changes in any given year (averaging 3 per employee) are 
costly to process and do not consider comprehensively the employee's 
contributions to the organization. Under the demonstration project, NRL 
will distribute the budget authority from the sources listed above into 
4 pay categories: (1) General increase, (2) locality increase, (3) 
merit increase, and (4) contribution awards. From these pay categories, 
a single annual pay action would be authorized based primarily on 
employees' contributions. Competitive promotions will still be 
processed under a separate pay action; most career promotions will be 
processed under the CCS.
    In general, the goal of CCS is to pay in a manner consistent with 
employee contribution or, in other words, migrate employees' basic pay 
closer to the NPR. One result may be a wider distribution of pay among 
employees for a given level of duties.
    After the CCS appraisal process has been completed and the 
employees' standing relative to the NPR has been determined, the pay 
pool manager, in consultation with the pay pool panel or other pay pool 
supervisory and staff officials, will determine the appropriate basic 
pay change and contribution award, if appropriate, for each employee. 
Standard operating procedures will provide guidance to assist pay pool 
managers in making pay determinations. In most cases, the pay pool 
manager will approve basic pay changes and awards. In some cases, 
however, approval of a higher level official will be required. Figure 
10 summarizes the eligibility criteria and applicable limits for each 
pay category.

BILLING CODE 6325-01-P

[[Page 8982]]

[GRAPHIC] [TIFF OMITTED] TN23FE99.009



BILLING CODE 6325-01-C

    The Contribution-based Compensation System Data System (CCSDS) will 
calculate each employee's OCS and his or her standing in relation to 
the NPR. The system will provide a framework to assist pay pool 
officials in selecting and implementing a payout scheme. It will alert 
management to certain formal limits in granting pay increases; e.g., an 
employee may not receive a permanent increase above the maximum rate of 
basic pay for his or her career level until a corresponding level 
change has been effected. Once basic pay and award decisions have been 
finalized and approved, the CCSDS will prepare the data file for 
processing the pay actions, and maintain a consolidated record of CCS 
pay actions for all NRL demonstration project employees.
    a. General Increases. General increase budget authority will be 
available to pay pools as a straight percentage of employee salaries, 
as derived under law. Pay pool panels or managers may reduce or deny 
general pay increases for employees whose contributions are in the 
overcompensated category. (See Figure 10.) Such reduction or denial may 
not place an employee in the undercompensated category. An employee 
receiving maintained pay (except one receiving maintained pay for an 
occupational injury who receives a full general pay increase) will 
receive half of the across-the-board GS percentage increase in basic 
pay until the employee's basic pay is within the basic pay range 
assigned for their current position or for 2 years, whichever is less. 
NRL employees on pay retention at the time of demonstration project 
implementation or as a result of placement through the DoN RPL, DoD PPP 
or the Federal Interagency Career Transition Assistance Plan will 
receive half of the across-the-board GS percentage increase until the 
employee's maintained pay is exceeded by the maximum rate for the 
employee's career level or the maintained pay is ended due to a 
promotion. General increase authority not expended is available to 
either the merit increase or contribution award pay categories or both.
    b. Merit Increases. Merit increases will be calculated after the 
determination of employees' general increases. Merit increases may be 
granted to employees whose contribution places them in the ``normal'' 
or ``undercompensated'' categories. (See Figure 10.) In general, the 
higher the range in which the employee is contributing compared to his 
or her basic pay, the higher the merit increase should be. However, the 
following limitations apply: a merit increase may not place any 
employee's basic pay (1) in the ``overcompensated'' category (as 
established by the NPR for the upcoming year, which has been adjusted 
by the amount of the new general increase); (2) in excess of SES Level 
IV; (3) in excess of the maximum rate of basic pay for the individual's 
career level (unless the employee is being concurrently advanced to the 
higher career level); or (4) above any outside-imposed dollar limit 
(e.g., high-grade ceiling). Merit increases for employees in the NPR 
will be limited to 6 percent of basic pay, not to exceed the upper 
limit of the NPR for the employee's score. In addition, merit increases 
for employees in the undercompensated range may not exceed 6 percent 
above the lower rail of the NPR, or 20 percent of basic pay without DOR 
approval.
    The NRL merit increase category will include what is now WGI's, 
QSI's, and career ladder promotions. This category will be set each 
year near 2.4 percent of total NRL basic pay rates (including the 
general increase rate approved for the coming year). This is close to 
the average of NRL's expenditures for step increases and promotions 
over the last 3 years. This percentage has been used by other 
demonstration projects in the past. The 2.4 percent figure will be 
adjusted as necessary to facilitate cost containment over the life of 
the demonstration project.
    The amount of budget authority available to each pay pool will be 
determined annually by the DOR. Because statistical variations will 
occur in year-to-year personnel growth, any unexpended merit increase 
authorities may be carried over for use in the next cycle or 
transferred to the Contribution Awards Category. Any unexpended merit 
increase authority must be used no later than the payout for the next 
rating cycle.
    c. Locality Increases. All employees will be entitled to the 
locality pay

[[Page 8983]]

increase authorized by law for their official duty station. In 
addition, the locality-adjusted pay of any employee may not exceed the 
rate for level IV of the Executive Schedule, except that, for employees 
in Career Level V of the S&E Professional Career Track, the locality-
adjusted pay cap is level III of the Executive Schedule ($125,900 from 
``Rates of Pay for the Executive Schedule,'' effective since January 
1998).
    d. Contribution Awards. Authority to pay contribution awards (lump-
sum payments recognizing significant contributions) will be initially 
available to pay pools as a straight 1.5 percent of employees' basic 
pay (similar to the amount currently available for performance awards). 
The percentage rate may be adjusted in future years of the 
demonstration project. In addition, unexpended general increase and 
merit increase budget authorities may be used to augment the award 
category. Contribution awards may be granted to those employees whose 
contributions place them in the ``normal'' or ``undercompensated'' 
category, and to employees in the ``overcompensated'' category who are 
on maintained pay. Standard operating procedures will provide guidance 
to pay pool managers in establishing and applying criteria to determine 
significant contributions which warrant awards. An award exceeding 
$10,000 requires DOR approval. (See Figure 10.) Any unexpended 
contribution award authority must be used at the payout for the next 
rating cycle. Pay pools may also grant time-off as a contribution 
award, in lieu of or in addition to cash.
8. Career Movement Based on CCS
    Movement through the career levels will be determined by 
contribution and basic pay at the time of the annual CCS appraisal 
process.
    The NRL demonstration project is an integrated system that links 
level of work to be accomplished (as defined by a career track and 
career level) with individual achievement of that work (as defined by 
an OCS) to establish the rate of appropriate compensation (as defined 
by the career track pay schedule), and to determine progression through 
the career track. This section addresses only changes in level which 
relate directly to the CCS determination.
    When an employee's OCS falls within 3 scores of the top score 
available to his or her current career level, supervisors should 
consider whether it is appropriate to advance the employee to the next 
higher level (refer to IV.A.1.a for other criteria). If progression to 
the next higher level is deemed warranted, supporting documentation 
would be included with the CCS appraisal and forwarded through the 
appropriate channels for approval. If advancement is not considered 
appropriate at this time, the employee would remain in his or her 
current career level. Future basic pay raises would be capped by the 
top of the employee's current career level unless the employee 
progresses to the next higher career level through a CCS-related 
promotion, an accretion of duties promotion, or a competitive 
promotion.
    a. Advancements in Level Which May be Approved by the Pay Pool 
Manager. Advancements to all levels except Levels IV and V of the S&E 
Professional and the Administrative Specialist and Professional Career 
Tracks may be approved by the pay pool manager (this may be changed in 
future years of the demonstration project if there are changes in the 
way high-grade positions are defined).
    b. Advancements in Level Which Must be Approved by the DOR Level. 
Advancement to (1) levels outside target career levels or established 
position management criteria; (2) Levels IV and V of the S&E 
Professional Career Track; and (3) Levels IV and V of the 
Administrative Specialist and Professional Career Track require 
approval by the DOR or his or her designee. These levels include 
(presently) all of NRL's high-grade billets. Details regarding the 
process for nomination and consideration, format, selection criteria, 
and other aspects of this process will be addressed in the standard 
operating procedures. In the event that unanticipated high-grade 
turnover results in vacancies prior to the end of the appraisal period, 
NRL may carry out this process at other times of the year.
    c. Advancement to Level V of the S&E Professional Career Track. 
Vacancies in the billets allotted to NRL in this level will be filled 
as described in section IV.B.4.
    d. Regression to Lower Level. (See Figure 9, ``Employee A''.) If an 
employee is contributing less than expected for the level at which he 
or she is being paid, the individual may regress into a lower career 
level through reduction or denial of general increases and 
ineligibility for merit increases. (This is possible because the NPR 
plus the minimum and maximum pay rates for each career level will be 
adjusted upwards each year by the across-the-board GS percentage 
increase in basic pay.) If the employee's basic pay regresses to a 
point below the pay overlap area between his or her level and the next 
lower level, it will no longer be appropriate to designate him or her 
as being in the higher level. Therefore, the employee will be formally 
changed to the lower level. The employee will be informed of this 
change in writing, but procedural and appeal rights provided by 5 
U.S.C. 4303 and 7512 (and related OPM regulations) will not apply 
(except in the case of employees who have veterans' preference). NRL is 
providing for waivers of the statute and regulations for such actions. 
Further, because a change to lower level under such circumstances is 
not discretionary, the change may not be grieved under NRL's 
administrative grievance procedures.
9. CCS Grievance Procedures
    An employee may grieve the appraisal received under CCS using 
procedures specifically designed for CCS appraisals. Under these 
procedures, the employee's grievance will first be considered by the 
pay pool panel, who will recommend a decision to the pay pool manager. 
If the employee is not satisfied with the pay pool manager's decision, 
he or she may file a second-step grievance with the next higher level 
management official. This official will render a final NRL decision on 
the grievance.
    The following are not grievable: pay actions resulting from CCS 
(receipt, non-receipt or amount of general increase, merit increase, 
DCA or contribution award); reductions in level without reduction in 
pay due to regression (see section IV.C.8.d); any action for which 
another appeal or complaint process exists.

V. Separations

A. Performance-based Reduction in Pay or Removal Actions

    This section applies to reduction in pay or removal of 
demonstration project employees based solely on unacceptable 
performance. Adverse action procedures under 5 CFR part 752 remain 
unchanged.
    When a supervisor determines during or at the end of the appraisal 
period that the employee is not completing work assignments 
satisfactorily, the supervisor must make a determination as to whether 
the employee is performing unacceptably in one or more of the critical 
elements. All CCS elements applicable to the employee's position are 
critical as defined by 5 CFR part 430.
    Unacceptable performance determinations must be made by comparing 
the employee's performance to the acceptable performance standards 
established for elements.
    At any time during or at the end of the appraisal period that an 
employee's

[[Page 8984]]

performance is determined to be unacceptable in one or more critical 
elements, the employee will be provided assistance in improving his or 
her performance. This will normally include clarifying (or further 
clarifying) the meaning of terms used in the acceptable performance 
standards (e.g., ``timely'' ``thorough research'' and ``overall high 
quality'') as they relate to the employee's specific responsibilities 
and assignments. An employee whose performance is unacceptable after he 
or she has been given a reasonable opportunity to improve may be 
removed or reduced in grade or level, in accordance with the provisions 
of 5 U.S.C. 4303 and related OPM regulations. Employees may also be 
removed or reduced in grade or level based on unacceptable performance 
under the provisions of 5 U.S.C. 7512. All procedural and appeal rights 
set forth in the applicable statute and related OPM regulations will be 
afforded to demonstration project employees removed or reduced in grade 
or level for unacceptable performance.

B. RIF

1. RIF Authority
    Under the demonstration project, NRL would be delegated authority 
to approve RIF as defined in Secretary of the Navy Instruction 12351.5E 
and the use of separation pay incentives.
2. RIF Definitions
    a. Competitive Area. A separate competitive area will be 
established by geographic location for all personnel included in the 
demonstration project.
    b. Competitive Level. Positions in the same occupational career 
level, which are similar enough in duties and qualifications that 
employees can perform the duties and responsibilities including the 
selective placement factor, if any, of any other position in the 
competitive level upon assignment to it, without any loss of 
productivity beyond what is normally expected.
    c. Service Computation Date (SCD). The employee's basic Federal SCD 
would be adjusted for CCS results credit.
    (1) CCS Process Results Credit.
    a. An employee's basic Federal SCD may be credited with up to 20 
years credit based on the results of the CCS process. The CCS RIF 
Assessment Category would be used to determine the number of RIF years 
credited. The CCS RIF Assessment Category is the combination of the 
employee's standing under the CCS relative to the NPR and any merit 
increase, DCA, or contribution award. Figure 11 shows the RIF years 
available for each CCS RIF Assessment Category.

------------------------------------------------------------------------
                                                              RIF years
                    Assessment category                       available
------------------------------------------------------------------------
0=Employees within the overcompensated range without any               0
 portion of a general increase.............................
1=Employees receiving maintained pay or any portion of a              12
 general increase but no merit increase or contribution
 award.....................................................
2=Employees receiving a merit increase or contribution                16
 award.....................................................
3=Employees receiving both a merit increase and                       20
 contribution award or with capped salary and receiving a
 contribution award and/or a DCA...........................
Final RIF Credit: Average of the three most recent CCS Process Results
 received during the 4-year period prior to the cutoff date
------------------------------------------------------------------------

Figure 11--CCS RIF Assessment Categories

    b. If an employee has fewer than three CCS process results, the 
value (RIF years available) of the actual number of process results on 
record will be divided by the number of actual process results on 
record. In cases where an employee has no actual CCS process results, 
the employee will be given the additional RIF CCS process results 
credit for the most common, or ``modal'' NRL demonstration project CCS 
RIF Assessment Category for the most recent CCS appraisal period.
    (2) Credit from Other Rating Systems. Employees who have been rated 
under different patterns of summary rating levels will receive RIF 
appraisal credit as follows:
    --If there are any ratings to be credited for the RIF given under a 
rating system which includes one or more levels above fully successful 
(Level 3), employees will receive credit as follows: 12 years for Level 
3, 16 years for Level 4, 20 years for Level 5; or
    --If an employee comes from a system with no levels above Fully 
Successful (Level 3), they will receive credit based on the 
demonstration project's modal CCS RIF assessment category.
    (3) RIF Cutoff Date. To provide adequate time to properly determine 
employee retention standing, the cutoff date for use of new CCS process 
results is set at 30 days prior to the date of issuance of RIF notices.
3. Displacement Rights
    (a) Displacement Process. Once the position to be abolished has 
been identified, the incumbent of that position may displace another 
employee within the incumbent's current career track and career level 
when the incumbent has a higher retention standing and is fully 
qualified for the position occupied by an employee with a lower 
standing. If there are no displacement rights within the incumbent's 
current career track and career level, the incumbent may exercise his 
or her displacement rights to any position previously held in the next 
lower career level, regardless of career track, when the position is 
held by an employee with a lower retention standing. In the case of all 
preference eligibles, they may displace up to the equivalent of 3 
grades or intervals below the highest equivalent grade of their current 
career level in the same or a different career track regardless of 
whether they previously held the position provided they are fully 
qualified for the position and the position is occupied by an employee 
with a lower retention standing. Preference eligibles with a 
compensable service connected disability of 30 percent or more may 
displace an additional 2 GS grades or intervals (total of 5 grades) 
below the highest equivalent grade of their current career level 
provided they have previously held the position and the position is 
occupied by an employee in the same subgroup with a later RIF service 
computation date.
    (b) Retention Standing. Retention standing is based on tenure, 
veterans' preference, length of service, and contribution.
    (c) Vacant Positions. Assignment may be made to any available 
vacant position including those with promotion potential in the 
competitive area.
    (d) Ineligible for Displacement Rights. Employees who have been 
notified in writing that their performance is considered to be 
unacceptable or whose most recent CCS rating puts them in Assessment 
Category O would not be entitled to displacement rights under RIF 
procedures.
    (e) Change to Lower Level due to an Adverse or Performance-based 
Action. An employee who has received a written decision to change him 
or her to a lower level due to adverse or performance based action will 
compete from the position to which he or she will be or has been 
demoted.
3. Notice Period
    The notice period and procedures in 5 CFR subpart H, section 
351.801 will be followed.
4. RIF Appeals
    Under the demonstration project, employees affected by a RIF 
action,

[[Page 8985]]

other than a reassignment, maintain their right to appeal to the Merit 
Systems Protection Board if they feel the reason for the RIF is not 
valid or if they think the process or procedures were not properly 
applied.
5. Separation Incentives
    NRL will have delegated authority to approve separation incentives 
and will use the current calculation methodology of a lump sum payment 
equal to an employee's severance pay calculation or $25,000, whichever 
is less.
6. Severance Pay
    Employees will be covered by the severance pay rules in 5 CFR part 
550, subpart G, except that NRL will establish rules for determining a 
``reasonable offer'' that parallel Title 5 rules.
7. Outplacement Assistance
    All outplacement assistance currently available would be continued 
under the demonstration project.

VI. Demonstration Project Transition

A. Initial Conversion or Movement to the Demonstration Project

1. Placement into Career Tracks and Career Levels
    Conversion or movement of GS employees into the demonstration 
project will be into the career track and career level which 
corresponds to the employee's current GS grade and basic pay. If 
conversion into the demonstration project is accompanied by a 
simultaneous change in the geographic location of the employee's duty 
station, the employee's overall GS pay entitlements (including locality 
rate) in the new area will be determined before converting the 
employee's pay to the demonstration project pay system. Employees will 
be assured of placement within the new system without loss in pay. Once 
under the demonstration project, employee progression through the 
career tracks and career levels up to their target career level is 
dependent upon contribution score, not upon previous methods (e.g., 
WGI's, QSI's, or career promotions as previously defined).
2. Conversion of Retained Grade and Pay Employees
    NRL's workforce will be grouped into career tracks and associated 
pay levels with designated pay ranges rather than the traditional grade 
and step. Therefore, grade and pay retention will be eliminated. NRL 
will grant ``maintained pay'' (as defined in section III.G.2, 
``Maintained Pay''), which is related to the current meaning of 
``retained pay'' but does not provide for indefinite retention of pay 
except in certain situations. Employees currently on grade or pay 
retention will be immediately placed on maintained pay at their current 
rate of basic pay if this rate exceeds the maximum rate for their 
career level and ``grandfathered'' in the appropriate career level. 
Employees will receive half of the across-the-board GS percentage 
increase in basic pay and the full locality pay increase until their 
basic pay is within the appropriate basic pay range for their current 
position without time limitation.
3. WGI Buy-in
    The participation of all covered NRL employees in the demonstration 
project is mandatory. However, acceptance of the system by NRL 
employees is essential to the success of the demonstration project. 
Therefore, on the date that employees are converted to the project pay 
plan, they will be given a permanent increase in pay equal to the 
earned (time spent in step) portion of their next WGI based on the 
value of the WGI at the time of conversion so that they will not feel 
they are losing a pay entitlement accrued under the GS system.
4. Conversion of Special Salary Rate Employees
    Employees who are in positions covered by a special salary rate 
prior to the demonstration project will no longer be considered a 
special salary rate employee under the demonstration project. These 
employees will, therefore, be eligible for full locality pay. The 
adjusted salaries of these employees will not change. Rather, the 
employees will receive a new basic rate of pay computed by dividing 
their basic adjusted pay (higher of special salary rate or locality 
rate) by the locality pay factor for their area. A full locality 
adjustment will then be added to the new basic pay rate. Adverse action 
will not apply to the conversion process as there will be no change in 
total salary. However, if an employee's new basic pay rate after 
conversion to the demonstration project pay schedule exceeds the 
maximum basic pay authorized for the career level, then the employee 
will be granted maintained pay under paragraph III.G.2 until the 
employee's salary is within the range of the career level.
    For example, an Electronics Engineer, GS-855-9, step 5, is paid 
$44,715 per annum in accordance with special GS salary rates as of 
January 1999 for Table Number: 0422. The employee is located in the 
locality area of Washington-Baltimore, DC-MD-VA-WV. Under the 
demonstration project, the computation of the engineer's new basic rate 
of pay with a full locality adjustment and WGI buy-in is computed as 
follows:
    a. Basic adjusted pay divided by locality pay factor=new basic rate 
of pay.
    b. New basic rate of pay multiplied by the full locality adjustment 
for current area=full locality adjustment amount for special rate 
employees.
    c. New basic rate of pay + WGI buy-in amount X locality pay factor 
= demo special rate for conversion.
    EXAMPLE:
    a. $44,715 (basic adjusted pay) divided by 1.0787 (locality pay 
factor) = $41,453 (new basic rate of pay).
    b. $41,453 (new basic rate of pay) X 1.0787 (full locality 
adjustment factor for current area) = $3,262 (full locality adjustment 
amount).
    c. $41,453 (new basic rate of pay) + $500 (example WGI buy-in 
amount) = $41,953 (new conversion basic rate of pay) X 1.0787 (locality 
pay factor) = $45,254 (demo special rate for conversion).

B. CCS Startup

    CCS elements, descriptors, discriminators and standards have been 
established as the appraisal criteria for the 1998-1999 cycle which 
began June 1, 1998. Except for its compensation components, CCS is 
consistent with DoN's two-level appraisal program, which was effected 
in 1998. The CCS process will be used to appraise employees at the end 
of the 1998-1999 cycle on September 30, 1999. The first CCS payout is 
expected to occur at the beginning of the first full pay period in 
January 2000.

C. Training

    An extensive training program is planned for everyone in the 
demonstration project including the supervisors, managers, and 
administrative staff. Training will be tailored to fit the requirements 
of every employee included in the demonstration project and will fully 
address employee concerns to ensure everyone has a comprehensive 
understanding of the program and to emphasize the benefits to 
employees. In addition, leadership training will be provided to all 
managers and supervisors as the new system places more responsibility 
and decision making authority on them.
    NRL training personnel will provide local coordination and 
facilities, supplemented by contractor support as needed. The training 
will be completed

[[Page 8986]]

prior to the anticipated project implementation date.
1. Types of Training
    Training packages will be developed to encompass all aspects of the 
project and validated prior to training the workforce. Specifically, 
training packages will be developed for the following groups of 
employees:
    a. NRL Employees. All NRL demonstration project employees will be 
provided an overview of the demonstration project and employee 
processes and responsibilities.
    b. Supervisors and Managers. All supervisors and managers under the 
demonstration project will be provided training in supervisory and 
managerial processes and responsibilities under the demonstration 
project.
    c. Support Personnel. Administrative support personnel, HRO 
personnel, financial management personnel, and Management Information 
Systems Staff will be provided training on administrative processes and 
responsibilities under the demonstration project.

D. New Hires Into the Demonstration Project

    The following steps will be followed to place employees (new hires) 
entering the system:
    a. The career track and career level will be determined based upon 
the employee's education and experience in relation to the duties and 
responsibilities of the position in which he or she is being placed, 
consistent with OPM qualification standards.
    b. Basic pay will be set based upon available labor market 
considerations relative to special qualifications requirements, 
scarcity of qualified candidates, programmatic urgency, and education 
and experience of the new candidate.
    c. Employees placed through the DoN RPL, the DoD PPP, or the 
Federal Interagency Career Transition Assistance Plan who are eligible 
for maintained pay will receive one half of the across-the-board GS 
percentage increase in basic pay and the full locality pay increase 
until the employee's basic pay is within the basic pay range of the 
career track and career level to which assigned. Employees are eligible 
for maintained pay as long as there is no break in service and if the 
employee's rate of pay exceeds the maximum rate of his or her career 
level.

E. Conversion or Movement From Demonstration Project

    In the event the demonstration project is terminated or employees 
leave the demonstration project through promotion, change to lower 
grade, reassignment or transfer, conversion back to the GS system may 
be necessary. The converted GS grade and GS rate of pay must be 
determined before movement or conversion out of the demonstration 
project and any accompanying geographic movement, promotion, or other 
simultaneous action. An employee will not be converted at a level which 
is lower than the GS grade held immediately prior to entering the Demo 
project, unless, since that time, the employee has undergone a 
reduction in career level. The converted GS grade and rate will become 
the employee's actual GS grade and rate after leaving the demonstration 
project and will be used to determine the pay action and GS pay 
administration rules for employees who leave the project to accept a 
position in the traditional Civil Service system. The following 
procedures will be used to convert the employee's demonstration project 
career level to a GS equivalent grade and the employee's demonstration 
project rate of pay to the GS equivalent rate of pay.
1. Grade Determination
    Employees will be converted to a GS grade based on a comparison of 
the employee's current adjusted rate of basic pay to the highest GS 
applicable rate range considering only those grade levels that are 
included in the employee's current career level. The highest GS 
applicable rate range includes GS basic rates, locality rates, and 
special salary rates. Once a grade range is determined, the following 
procedures will be used to determine the GS grade:
    a. Identify the highest GS grade within the current career level 
that accommodates the employee's adjusted rate of basic pay (including 
any locality payment).
    b. If the employee's adjusted rate of basic pay equals or exceeds 
the applicable step 4 rate of the identified highest GS grade, the 
employee is converted to that grade.
    c. If the employee's adjusted rate of basic pay is lower than the 
applicable step 4 of the highest grade, the employee is converted to 
the next lower grade.
    d. If under the above-described ``step 4'' rule, the employee's 
adjusted project rate exceeds the maximum rate of the grade assigned 
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 the 
next higher applicable grade.
    e. For two-grade interval occupations, conversion should not be 
made to an intervening (even) grade level below GS-11.
    f. Employees in Level IV of the Administrative Specialist and 
Professional Career Track will convert to the GS-13 level.
2. Pay Setting
    Pay conversion will be done before any geographic movement or other 
pay-related action that coincides with the employee's movement or 
conversion out of the demonstration project. The employee's pay within 
the converted GS grade is set by converting the employee's 
demonstration project rate of pay to a GS rate of pay as follows:
    a. The employee's demonstration project adjusted rate of pay 
(including locality) is converted to a rate on the highest applicable 
adjusted rate range for the converted GS grade. For example, if the 
highest applicable GS rate range for the employee is a special salary 
rate range, the applicable special rate salary table is used to convert 
the employee's pay.
    b. When converting an employee's pay, if the rate of pay falls 
between two steps of the conversion grade, the rate must be set at the 
higher step.
    c. Employees whose basic pay exceeds the maximum basic pay of the 
highest GS grade for their career level will be converted to the 
highest grade in their career level. NRL will coordinate with OPM to 
prescribe a procedure for determining the GS-equivalent pay rate for 
employees whose rate of pay exceeds the maximum rate of basic pay for 
their converted grade.
3. ARSAE
    Employees in Career Level V of the S&E Professional Career Track 
will convert to the GS-15 grade level. NRL will develop a procedure to 
ensure that S&E employees entering Career Level V understand that if 
they leave the demonstration project and their adjusted pay exceeds the 
GS-15, step 10 rate, there is no entitlement to retained pay. Their GS-
equivalent rate will be deemed to be the rate for GS-15, step 10. For 
those Career Level V employees paid below the adjusted GS-15, step 10 
rate, the post-conversion rates will be set using the converted rates 
in applying the highest previous rate rule.
4. Determining Date of Last Equivalent Increase
    The last equivalent increase will be the date the employee received 
a CCS pay increase, was eligible to receive a CCS pay increase, or 
received a promotion, whichever occurred last.

[[Page 8987]]

VII. Demonstration Project Duration

A. General

    Section 342 of the National Defense Authorization Act for fiscal 
year 1995 (Public Law 103-337) does not require a mandatory expiration 
date for this demonstration project. The project evaluation plan 
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 another 
announcement in the Federal Register and would be made if formal 
evaluation data warrant a change.

B. 5-Year Reexamination

    At the 5-year point, the entire demonstration will be reexamined 
for either: (a) permanent implementation, (b) modification and another 
test period, or (c) termination of the project.

VIII. Demonstration Project Evaluation Plan

A. Overview

    Chapter 47 of 5 U.S.C. requires that an evaluation be performed to 
measure the effectiveness of the proposed project, and its impact on 
improving public management. A comprehensive evaluation plan for the 
entire laboratory demonstration program, originally covering 24 DoD 
laboratories, was developed by a joint OPM/DoD Evaluation Committee in 
1995. This plan was submitted to the Office of Defense Research & 
Engineering and was subsequently approved (see Proposed Plan for 
Evaluation of the Department of Defense S&T Laboratory Demonstration 
Program, Office of Merit Systems Oversight and Effectiveness, June 
1995). The primary focus of the evaluation is to determine whether the 
waivers granted result in a more effective personnel system and 
improvements in ultimate outcomes (i.e., laboratory effectiveness, 
mission accomplishment, and customer satisfaction). In March 1996, the 
Director of Defense Research & Engineering (DDR&E), who is responsible 
for laboratory management, entered into an agreement with OPM's 
Personnel Resources and Development Center (PRDC) to conduct the 
external evaluation of the project from FY1996 to FY2001.

B. Evaluation Models

    Figure 12 shows a general model for the evaluation of the 
demonstration program. It includes measurements for both intermediate 
and ultimate outcomes. The intermediate outcomes are defined as the 
results of specific personnel system changes and the associated waivers 
of law and regulation expected to improve human resource (HR) 
management. The ultimate outcomes (mentioned above) are improved 
laboratory performance, mission accomplishment, and customer 
satisfaction. While it is not possible to establish a direct causal 
link between changes in the HR management system and organizational 
effectiveness, it is hypothesized that the new HR system will 
contribute to improved organizational effectiveness. The evaluators 
will attempt to use measures of results determined by the laboratories 
to assess ultimate outcomes. Consideration of the context, the degree 
of implementation, and support of implementation are important in the 
interpretation of results. Contextual considerations include the 
effects of potential intervening variables, for example, downsizing, 
changes in mission, and the state of the economy in general. Degree of 
implementation is defined as the extent to which proposed changes are 
given a fair trial, the degree to which they are used, and the extent 
to which they conform to the concepts behind the changes. Support for 
implementation includes the training and automated support systems and 
can also be affected by the individual characteristics of those who are 
implementing the program. The degree to which the project is 
implemented and operated will be tracked to ensure the evaluation 
results reflect the project as it was intended. Data will be collected 
to measure changes in both intermediate and ultimate outcomes, as well 
as any unintended outcomes that can occur as a result of any 
organizational change. In addition, the evaluation will track the 
impact of the project and its interventions on veterans and other EEO 
groups, the Merit Systems Principles, and the Prohibited Personnel 
Practices. Additional measures will be added to the model in the event 
that changes or modifications are made to the demonstration plan.
    An intervention impact model will be used to measure the 
effectiveness of the various personnel system changes or interventions 
implemented at NRL (see the example in Appendix G). The intervention 
impact model specifies each personnel system change as an intervention, 
expected effects of each intervention, corresponding measures, and data 
sources for obtaining the measures. While this intervention impact 
model makes an attempt to predict and measure outcomes of specific 
interventions, causal attributions about the full impact of specific 
interventions will not always be possible. Many of the initiatives are 
expected to interact with each other and contribute to the same 
outcomes. Furthermore, the impact of changes in the HR system may be 
mitigated by contextual variables (e.g., the job market, legislation, 
and internal support systems) as well as the individual characteristics 
of those who are implementing the systems.

C. Evaluation

    A modified quasi-experimental design will be used for the 
evaluation of the S&T Laboratory Demonstration Program. Because most of 
the eligible laboratories are participating, a 5 U.S.C. comparison 
group will be constructed from the Civilian Personnel Data File (CPDF). 
This comparison group will consist of workforce data from 
Governmentwide research organizations in civilian Federal agencies with 
missions and job series matching those in the DoD laboratories. This 
comparison group will be used primarily in the analysis of broadbanding 
costs and turnover rates.
    The original ``China Lake'' project will serve as a second 
comparison group which can be used as a benchmark representing a stable 
broadbanding system. The two original Navy demonstration laboratories 
(Naval Air Warfare Center--Weapons Division in China Lake, CA and Naval 
Command Control and Ocean Surveillance Center in San Diego, CA) will 
participate in the employee survey and will also provide workforce 
data.
    Since some of the interventions are used in a few laboratories and 
not others, there will be additional comparison groups for specific 
interventions. The staggered implementation of the demonstration 
program across laboratories will also allow for time series analyses 
using multiple baselines. NRL is expected to implement its 
demonstration proposal in 1999 and will have several years of pre-
demonstration baseline data.

D. Method of Data Collection

    Data from a variety of sources will be used in the evaluation. 
Information from existing management information systems and from 
personnel office records will be supplemented with perceptual data to 
assess variables related to effectiveness. Multiple methods provide 
more than one perspective on how the interventions are 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.

[[Page 8988]]

    Both quantitative and qualitative data will be used when evaluating 
outcomes. The following data will be collected: (1) workforce data; (2) 
personnel office and other data on quality and timeliness; (3) employee 
attitude surveys; (4) a survey of HR officers on results orientation; 
(5) research ratings for scientists and engineers to be used in 
turnover analyses; (6) structured interviews and focus group data; (7) 
local site historian logs and implementation information; and (8) core 
results measures of laboratory performance.
    The evaluation effort will consist of two phases, formative and 
summative evaluation, covering at least 5 years to permit inter- and 
intra-organizational estimates of effectiveness. The formative 
evaluation phase will include baseline data collection and analysis, 
implementation evaluation, and interim assessments. The formal reports 
and interim assessments will provide information on the accuracy of 
project operation, and current information on impact of the project on 
veterans and EEO groups, Merit System Principles, and Prohibited 
Personnel Practices. The summative evaluation will focus on an overall 
assessment of project outcomes after 5 years. This will provide 
information on how well the HR system changes achieved the desired 
goals, which interventions were most effective, and whether the results 
are generalizable to other Federal installations.
    The external evaluation will be supplemented by an internal 
evaluation conducted by NRL (see Appendix H) to meet individual 
laboratory needs. Periodic reports and annual summaries will be 
prepared to document the findings. The summative evaluation will focus 
on an overall assessment of project outcomes after 5 years.

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IX. Demonstration Project Costs

A. Transition

    There will be no grades or steps in the broadband classification 
system as there are under the GS. NRL will provide GS employees with a 
permanent pay change that is equivalent to the proportion of the WGI 
earned at the time of implementation. For example, the employee 1 year 
past the last WGI in a 3-year waiting period would receive a permanent 
pay change equivalent to one third of the current value of the WGI. 
Employees at step 10 or receiving a retained rate will not be eligible 
for the prorated WGI. This permanent pay increase will occur at the 
time the demonstration project is implemented. Supervisors will be able 
to withhold these prorated WGI's if the employee's performance is below 
the ``fully successful'' level at the time of implementation.
    The first official annual appraisal cycle under the CCS will be the 
1998-1999 appraisal cycle, with the payout occurring the first full pay 
period in January 2000. Future CCS pay adjustments will be effective 
the beginning of the first full pay period in January each year.

B. Cost Containment and Controls

    It is required that the demonstration project be ``relatively cost 
neutral.'' This is defined to mean that the NRL demonstration project 
will not increase the average personnel costs above what would have 
been expected under the previous 5 U.S.C. based system. Since NRL 
operates under the NWCF which requires cost efficiency so that NRL's 
technical programs can be marketed competitively, internal controls are 
in effect to ensure that costs are controlled.

[[Page 8989]]

    NRL's Research Advisory Committee (RAC), comprising the CO, the 
DOR, the Chief Staff Officer, and the ADOR's will oversee the 
administration of the demonstration project. Because the RAC is the 
same management team that critically reviews the technical programs and 
the cost to operate NRL, the costs associated with this system will 
come under the same critical review. NRL is an innovative organization 
shaped by its mission and operating environment, and it exists in a 
highly dynamic and challenging climate. To be a vigorous and creative 
performer in such an environment, NRL must possess high quality 
personnel, challenging programs, and sound management practices. 
Broadbanding and CCS are designed to encourage the creative performer 
and to provide appropriate compensation. It does not automatically 
provide increases for those who are already being paid commensurate 
with their contribution level.
    NRL has established pay pool managers at the division level or 
equivalent. The CCS design includes a pay pool review panel responsible 
for evaluating the contribution scores for their pay pool and making 
adjustments, as required. The CCSDS will be designed to provide 
assistance to the pay pool manager in selecting the appropriate basic 
pay increase for an individual, based on that individual's contribution 
score. The CCSDS will contain controls on the amount of permanent and 
nonpermanent money available to the pay pool.

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BILLING CODE 6325-01-C

    Costs associated with implementing the demonstration project are 
shown in Figure 13. These include automation of systems such as the 
CCSDS, training, and project evaluation. The automation and training 
costs are startup costs. Transition costs are one-time costs. Costs for 
project evaluation will be ongoing for at least 5 years.

X. Automation Support

A. General

    One of the major goals of the demonstration project is to 
streamline the personnel processes to increase cost effectiveness. 
Automation must play an integral role in achieving that goal. Without 
the necessary automation to support the interventions proposed for the 
demonstration project, optimal cost benefit cannot be realized. In 
addition, adequate information to support decision making must be 
available to managers if line management is to assume greater authority 
and responsibility for human resources management.
    Automation to support the demonstration project is required at two 
distinct levels. At the DoN and DoD level, automation support [in the 
form of changes to the DCPDS] is required to facilitate processing and 
reporting of demonstration project personnel actions. At the NRL level, 
automation support (in the form of local processing applications) is 
required to facilitate management processes and decisionmaking.

B. Defense Civilian Personnel Data System (DCPDS)

    Since DCPDS is a legacy system, efforts have been made to minimize 
changes to the system, and, therefore, the resources required to make 
the necessary changes. The following is a compendium of the proposed 
DCPDS modifications. The detailed specifications for required changes 
to DCPDS are provided in the System Change Request (SCR), Form 804.

C. Core Document (COREDOC)

    The COREDOC application is a DoD system which will require 
modification to accommodate the interventions in this demonstration 
project. Specifically, there will be an RD that will replace the 
position description in the basic application; career tracks and career 
levels will replace GS grades; and a CCS Assessment Form that will 
replace performance elements.

D. RIF Support System (RIFSS)

    The RIFSS is an automated tool used by human resources specialists 
to support RIF processing. Under the demonstration project, RIF rules 
will be modified to increase the credit for contributions and limit the 
rounds of competition. The AutoRIF application, developed by DoD, could 
be used if it were modified to accommodate these process changes. 
Detailed functional requirements for RIFSS are being established as 
Appendix J.

E. CCSDS

    This automated system is required as an internal control and as a 
mechanism to equate contribution scores to appropriate rates of basic 
pay. This system will allow pay pool managers to develop a spreadsheet 
that will assist them in determining an appropriate merit increase or 
contribution award or both based on the overall contribution score for 
each individual. It will also be used as an internal control to ensure 
that the permanent and nonpermanent money allotted to each pay pool is 
not exceeded. It will further allow pay pool managers to visualize the 
effects of giving large basic pay increases or awards to high 
contributors, and the effects of withholding either the general or 
merit increase or both of those who are low contributors, or in the 
overcompensated range.

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[[Page 8998]]

Appendix B: Definitions of Career Tracks and Career Levels

Career Track: S&E Professional

    Includes professional positions in S&E occupations such as 
physics, electronics engineering, chemistry, and student positions 
associated with these professions.
    Level I: This includes student trainees. The education and 
employment must be part of a formal student employment program. 
Specific, clear, and detailed instructions and supervision are given 
to complement education. The level of education and experience 
completed is a major consideration in establishing the level of on-
the-job training and work assignments.
    Level II: This is the entry or developmental stage, preparing 
S&E's for the full and independent performance of their work. 
Performs supporting work in science or engineering requiring 
professional training but little experience. Conducts activities 
with objectives and priorities identified by supervisor or team 
leader; assistance given on new or unusual projects; completed work 
reviewed for technical soundness.
    Level III: This is the advanced developmental, or typically, 
target career level, of this career track. Conceives and defines 
solutions to technical problems of moderate complexity; plans, 
analyzes, interprets, and reports findings of projects; guides 
technical and programmatic work of team members in comparable or 
junior grades; completed work and reports are reviewed to evaluate 
overall results.
    Level IV: S&E's at this level are authorities within their 
professional areas or key program administrators. Conducts or 
directs technical activities or assists higher levels on challenging 
and innovative projects or technical program development with only 
general guidance on policy, resources and planning; develops 
solutions to complex problems requiring various disciplines; 
responsible for fulfilling program objectives.
    Level V: ARSAE at this level are renowned experts in their 
fields. Independently defines and leads most challenging technical 
programs consistent with general guidance and/or independently 
directs overall R&D program managerial and/or supervisory aspects; 
conceives and develops elegant solutions to very difficult problems 
requiring highly specialized areas of technical expertise; 
recognized within DoD and other agencies for broad technical area 
expertise and has established professional reputation in technical 
community nationally and internationally. The primary requirement 
for Level V positions is the knowledge of and expertise in specific 
scientific and technology areas related to the mission of their 
organization. However, the ability to manage and/or supervise R&D 
operations or programs is also considered a necessity. May direct 
the work of an organizational unit; may be held accountable for the 
success of one or more specific programs or projects; monitors 
progress toward organizational goals and periodically evaluates and 
makes appropriate adjustments to such goals; supervises the work of 
employees; or otherwise exercises important policy-making, policy-
determining, or other managerial functions.

Career Track: S&E Technical

    Includes nonprofessional positions which support S&E activities 
through application of various skills in areas such as the 
following: engineering, computer, physical, chemical, biological, 
mathematical sciences; and student trainees.
    Level I: This includes trainees who develop technical support 
knowledge gained through actual work experience. Performs repetitive 
tasks using knowledge of standardized procedures and operations. 
Receives specific, clear and detailed instruction and supervision. 
Completed work is reviewed for technical soundness.
    Level II: Technicians at this entry level require a practical 
knowledge of standard procedures in a technical field. Skill in 
applying knowledge of basic principles, concepts and methodology of 
occupational and technical methods is required. Carries out 
prescribed procedures and relies heavily on precedent methods. Work 
is reviewed for technical adequacy and accuracy, and adherence to 
instructions.
    Level III: This is the advanced developmental level of this 
career track, requiring extensive training or experience. Work 
requires some adapting of existing precedents or techniques. 
Receives outline of objectives desired and description of operating 
characteristics and theory involved. Completed assignments are 
reviewed for compliance with instructions, adequacy, judgment, and 
satisfaction of requirements.
    Level IV: Technicians at this level are considered to have 
professional level knowledge of a specific field and may serve as a 
member of a research team. Receives general guidance on overall 
objectives and resources. Conceives, recommends, and tests new 
techniques or methods. Completed work is reviewed for overall 
soundness and compliance with overall project objectives; results 
are usually accepted as authoritative.
    Level V: Technicians at this level are experts within their 
technical area, or are key program administrators. Develop solutions 
to complex problems; responsible for fulfilling program objectives; 
and receive general guidance on policy, resources and planning. 
(This is a temporary career level, established for demonstration 
project transition purposes only. No new positions will be 
classified at this level.)

Career Track: Administrative Specialist and Professional

    Professional and specialist positions in areas such as the 
following: safety and health, personnel, finance, budget, 
procurement, librarianship, legal, business, facilities management 
and student positions associated with these professions.
    Level I: Includes student trainees. The education and employment 
must be part of a formal student employment program. Specific, 
clear, and detailed instructions and supervision are given to 
complement education. The level of education and experience 
completed is a major consideration in establishing the level of on-
the-job training and work assignments.
    Level II: This is the developmental stage preparing 
Administrative Specialists and Professionals for the full and 
independent performance of their work. Specific, clear and detailed 
instruction and supervision are given upon entry; recurring 
assignments are carried out independently. Situations not covered by 
instructions are referred to supervisor. Finished work is reviewed 
to ensure accuracy.
    Level III: This is the advanced developmental, or typically, 
target level, of this career track. Employee plans and carries out 
assignments independently, resolving conflicts that arise, 
coordinates work with others and interprets policy on own 
initiative. Completed work is reviewed for feasibility, 
compatibility with other work or effectiveness in meeting 
requirements or expected results.
    Level IV: At this level, Administrative Specialists and 
Professionals are authorities within their professional areas or key 
program administrators or supervisors. They conduct or direct 
activities in an administrative and professional area with only 
general guidance on policy, resources and planning; develop 
solutions to complex problems requiring various disciplines; and are 
responsible for fulfilling program objectives.
    Level V: Administrative Specialists and Professionals at this 
level are experts within their broad administrative area or 
professional field who serve as leaders, heads of branches or 
divisions, or key program administrators. Receives general guidance 
on policy, resources and planning having an affect on public 
policies or programs; responsible for fulfilling program objectives. 
Results are authoritative and affect administrative programs or the 
well-being of substantial numbers of people.

Career Track: Administrative Support

    Includes clerical, secretarial and assistant work in 
nonscientific and engineering occupations.
    Level I: This includes student trainees as well as advanced 
entry level which requires a fundamental knowledge of a clerical or 
administrative field. Developmental assignments may be given which 
lead to duties at a higher group level. Performs repetitive tasks, 
specific, clear and detailed instruction and supervision; with more 
experience utilizes knowledge of standardized procedures and 
operations, assistance is given on new or unusual projects. 
Completed work is reviewed for technical soundness.
    Level II: This level requires a knowledge of standardized rules, 
procedures or operations requiring considerable training. General 
guidance is received on overall objectives and resources. Completed 
assignments may be reviewed for overall soundness or meeting 
expected results.
    Level III: This is the senior level which requires knowledge of 
extensive procedures and operations requiring extensive training. 
Receives general guidance on overall resources and objectives. 
Skilled in applying knowledge of basic principles, concepts, and 
methodology of profession or administrative occupation and technical 
methods. Results are accepted as authoritative and are normally 
accepted without significant change.

[[Page 8999]]

Appendix C: Table of Occupational Series Within Career Tracks

    Note: As new series are needed or current ones are discontinued, 
this table will be updated.

    S&E Professional--Includes all scientist and engineer work.

0101--Social Science Series
0180--Psychology Series
0401--General Biological Science Series
0403--Microbiology Series
0801--General Engineering Series
0804--Fire Protection Engineering Series
0806--Materials Engineering Series
0808--Architecture Series
0810--Civil Engineering Series
0819--Environmental Engineering Series
0830--Mechanical Engineering Series
0840--Nuclear Engineering Series
0850--Electrical Engineering Series
0854--Computer Engineering Series
0855--Electronics Engineering Series
0861--Aerospace Engineering Series
0892--Ceramic Engineering Series
0893--Chemical Engineering Series
0899--Engineering and Architecture Student Trainee Series
1301--General Physical Science Series
1306--Health Physics Series
1310--Physics Series
1313--Geophysics Series
1320--Chemistry Series
1321--Metallurgy Series
1330--Astronomy and Space Science Series
1340--Meteorology Series
1350--Geology Series
1360--Oceanography Series
1370--Cartography Series
1399--Physical Science Student Trainee Series
1515--Operations Research Series
1520--Mathematics Series
1550--Computer Science Series
1599--Mathematics and Statistics Student Trainee Series

    S&E Technical--Includes S&E technical support work typically 
requiring specialized training in the particular discipline.

0802--Engineering Technician Series
0809--Construction Control Series
0818--Engineering Drafting Series
0856--Electronics Technician Series
0895--Industrial Engineering Technician Series
1152--Production Control Series
1311--Physical Science Technician Series
1371--Cartographic Technician Series
1521--Mathematics Technician Series

    Administrative Specialist and Professional--Includes analyst, 
specialist, and professional work in nonscientific and engineering 
occupations.

0018--Safety and Occupational Health Management Series
0028--Environmental Protection Specialist Series
0080--Security Administration Series
0170--History Series
0201--Personnel Management Series
0212--Personnel Staffing Series
0221--Position Classification Series
0230--Employee Relations Series
0233--Labor Relations Series
0235--Employee Development Series
0260--Equal Employment Opportunity Series
0299--Personnel Management Student Trainee Series
0301--Miscellaneous Administration and Program Series
0334--Computer Specialist Series
0340--Program Management Series
0341--Administrative Officer Series
0342--Support Services Administration Series
0343--Management and Program Analysis Series
0391--Telecommunications Processing Series
0505--Financial Management Series
0510--Accounting Series
0560--Budget Analyst Series
0690--Industrial Hygiene Series
0904--Law Clerk Series
0905--General Attorney Series
0950--Paralegal Specialist Series
1001--General Arts and Information Series
1020--Illustrating Series
1035--Public Affairs Series
1060--Photography Series
1071--Audiovisual Production Series
1082--Writing and Editing Series
1083--Technical Writer and Editing Series
1084--Visual Information Series
1101--General Business and Industry Series
1102--Contracting Series
1104--Property Disposal Series
1176--Building Management Series
1199--Business and Industry Student Trainee Series
122--Patent Attorney Series
1410--Librarian Series
1412--Technical Information Series
1420--Archivist Series
1601--General Facilities and Equipment Series
1640--Facility Management Series
1670--Equipment Specialist Series
1801--General Inspection, Investigation, and Compliance Series
1910--Quality Assurance Series
2001--General Supply Series
2003--Supply Program Management Series
2030--Distribution Facilities and Storage Management Series
2130--Traffic Management Series

    Administrative Support--Includes clerical, secretarial and 
assistant work in nonscientific and engineering occupations.

0019--Safety Technician Series
0086--Security Clerical and Assistance Series
0181--Psychology Aid and Technician Series
0203--Personnel Clerical and Assistance Series
0302--Messenger Series
0303--Miscellaneous Clerk and Assistance Series
0305--Mail and File Series
0312--Clerk-Stenographer and Reporter Series
0318--Secretary Series
0322--Clerk/Typist Series
0326--Office Automation Clerical and Assistance Series
0332--Computer Operation Series
0335--Computer Clerk and Assistant Series
0344--Management and Program Clerical and Assistance Series
0351--Printing Clerical Series
0361--Equal Opportunity Assistance Series
0390--Telecommunications Processing Series
0394--Communications Clerical Series
0399--Administration and Office Support Student Trainee Series
0503--Financial Clerical and Assistance Series
0525--Accounting Technician Series
0540--Voucher Examining Series
0544--Civilian Pay Series
0561--Budget Clerical and Assistance Series
0986--Legal Clerical and Assistance Series
1001--General Arts and Information Series
1087--Editorial Assistance Series
1105--Purchasing Series
1106--Procurement Clerical and Technician Series
1107--Property Disposal Clerical and Technician Series
1411--LIbrary Technician Series
2005--Supply Clerical and Technician Series
2102--Transportation Clerk and Assistant Series
2131--Freight Rate Series

Appendix D: Classification and CCS Elements

Part I. S&E Professionals
Part II. Administrative Specialist and Professional
Part III. Administrative Support
Part IV. S&E Technical
    The CCS Summary Forms shown in this appendix are draft forms 
intended to provide an understanding of what the forms will cover. 
Under the demonstration project the forms will be generated by the 
CCSDS. They may be

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changed during the project to require additional information, to make 
them easier to use, or for other reasons.
    The contents of the CCS elements, descriptors, discriminators and 
basic acceptable standards may similarly be changed during the life of 
the demonstration project.

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Appendix E: Computation of the IPS and the NPR

    The NRL demonstration project will use an IPS which links basic pay 
to contribution scores determined by the CCS process. The area where 
basic pay and level of contribution are assumed to be properly related 
is called the NPR. An employee whose CCS score and rate of basic pay 
plot within the NPR is considered to be contributing at a level 
consistent with pay. Employees whose pay plots below the NPR for their 
assessed score are considered ``undercompensated,'' while employees 
whose score and pay plot above the NPR are considered 
``overcompensated.''
    The purpose of this scoring and pay structure is to spread the full 
range of basic pay provided by the GS, between GS-1, step 1 and GS-15, 
step 10, into 80 intervals (scores and pay above those points are 
related using the same parameters). Each interval is a fixed percentage 
of the pay associated with the previous point.
    For each possible contribution score available to employees, the 
NPR spans a basic pay range of 12 percent. The lower boundary (or 
``rail'') is established by fixing the basic pay equivalent to GS-1, 
step 1, with a CCS score of zero. The upper boundary is fixed at the 
basic pay equivalent to GS-15, step 10, with a CCS score of 80. The 
distance between these upper and lower rails for a given overall 
contribution score is then computed to ensure the range of 12 percent 
of basic pay for each available CCS score.
    The middle rail of the NPR is computed as 6 percent above the lower 
rail. This point is used in connection with certain limits established 
for pay increases (see section IV.C.7).
    From the above considerations, five variables, or inputs, were 
identified. They are as follows:
    1. Variable A: GS-1, step 1 (lowest salary).
    2. Variable B: GS-15, step 10 (highest salary).
    3. Variable C: Current C-values.
    4. Variable M: 6 percent (middle rail computation above the low 
rail).
    5. Variable H: 12 percent (high rail computation above low rail).
    Other variables are as follows:
    1. Variable N: Number of C-value steps at GS-15, step 10.
    2. Variable P (step increase): Salary value for each C-value equal 
to 1 + percentage increase.
    From these variables, the following formula definitions were 
developed:

Low rail = A*(PC)
    Mid rail = (1+M)*A*(PC)
    High rail = (1+H)*A*(PC)
    Where P = (B/(A*(1+H)))(1/N)

    As an example, a result of the above computation, using the 1999 GS 
Salary Table, P (step increase) equals 1.023663611. Attachment (1) is a 
complete list of CCS career level scores and basic pay ranges. 
Attachment (2) contains graphic representations of these tables for 
each career track.
    Once the C-values (0-80) are determined, the CCS career levels and 
scores are extended at the same percentage increments as were computed 
for the step increase above. These C-values are extended to encompass 
the equivalent of ES-4 effective January 1999. In the example, SES 
Level ES-4 is equal to basic pay of $118,000 and is encompassed by the 
C-value 89 ($107,119 to $119,974).

Attachment to Appendix E: 1999 Inputs

GS 1-Step 1: 13,362
GS 15-Step 10: 97,201
# C values: 80
Mid%: 6.00%
Hi%: 12.00%

------------------------------------------------------------------------
                  C Value                   Low Rail  Mid Rail   Hi Rail
------------------------------------------------------------------------
0.........................................    13362     14164     14965
1.........................................    13678     14499     15320
2.........................................    14002     14842     15682
3.........................................    14333     15193     16053
4.........................................    14672     15553     16433
5.........................................    15020     15921     16822
6.........................................    15375     16297     17220
7.........................................    15739     16683     17627
8.........................................    16111     17078     18045
9.........................................    16493     17482     18472
10........................................    16883     17896     18909
11........................................    17282     18319     19356
12........................................    17691     18753     19814
13........................................    18110     19196     20283
14........................................    18538     19651     20763
15........................................    18977     20116     21254
16........................................    19426     20592     21757
17........................................    19886     21079     22272
18........................................    20356     21578     22799
19........................................    20838     22088     23339
20........................................    21331     22611     23891
21........................................    21836     23146     24456
22........................................    22353     23694     25035
23........................................    22882     24255     25628
24........................................    23423     24829     26234
25........................................    23977     25416     26855
26........................................    24545     26018     27490
27........................................    25126     26633     28141
28........................................    25720     27263     28807
29........................................    26329     27909     29488
30........................................    26952     28569     30186
31........................................    27590     29245     30900
32........................................    28243     29937     31632
33........................................    28911     30646     32380
34........................................    29595     31371     33146
35........................................    30295     32113     33931
36........................................    31012     32873     34734
37........................................    31746     33651     35556
38........................................    32497     34447     36397
39........................................    33266     35262     37258
40........................................    34054     36097     38140
41........................................    34859     36951     39042
42........................................    35684     37825     39966
43........................................    36529     38720     40912
44........................................    37393     39637     41880
45........................................    38278     40575     42871
46........................................    39184     41535     43886
47........................................    40111     42518     44924
48........................................    41060     43524     45987
49........................................    42032     44554     47076
50........................................    43026     45608     48190
51........................................    44045     46687     49330
52........................................    45087     47792     50497
53........................................    46154     48923     51692
54........................................    47246     50081     52915
55........................................    48364     51266     54168
56........................................    49508     52479     55449
57........................................    50680     53721     56761
58........................................    51879     54992     58105
59........................................    53107     56293     59480
60........................................    54363     57625     60887
61........................................    55650     58989     62328
62........................................    56967     60385     63803
63........................................    58315     61814     65313
64........................................    59695     63276     66858
65........................................    61107     64774     68440
66........................................    62553     66307     70060
67........................................    64034     67876     71718
68........................................    65549     69482     73415
69........................................    67100     71126     75152
70........................................    68688     72809     76930
71........................................    70313     74532     78751
72........................................    71977     76296     80614
73........................................    73680     78101     82522
74........................................    75424     79949     84475
75........................................    77209     81841     86474
76........................................    79036     83778     88520
77........................................    80906     85760     90615
78........................................    82821     87790     92759
79........................................    84780     89867     94954
80........................................    86787     91994     97201
81........................................    88840     94171     99501
82........................................    90943     96399    101856
83........................................    93095     98680    104266
84........................................    95298    101015    106733
85........................................    97553    103406    109259
86........................................    99861    105853    111844
87........................................   102224    108358    114491
88........................................   104643    110922    117200
89........................................   107119    113547    119974
90........................................   109654    116233    122813
91........................................   112249    118984    125719
------------------------------------------------------------------------

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[FR Doc. 99-4265 Filed 2-18-99; 12:23 pm]
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