[Federal Register Volume 64, Number 121 (Thursday, June 24, 1999)]
[Notices]
[Pages 33970-34046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15984]



[[Page 33969]]

_______________________________________________________________________

Part III





Office of Personnel Management





_______________________________________________________________________



U.S. Naval Research Laboratory (NRL) Personnel Management Demonstration 
Project; Department of the Navy (DON), Washington, D.C.; Notice

  Federal Register / Vol. 64, No. 121 / Thursday, June 24, 1999 / 
Notices  

[[Page 33970]]



OFFICE OF PERSONNEL MANAGEMENT


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

(Authority: 5 U.S.C. 4703)

AGENCY: Office of Personnel Management.

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

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

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 NRL was designated as one of these laboratories. This 
notice establishes the personnel management demonstration project 
designed by NRL, with the participation of, review by, and approval of 
the DON, the DoD, and the OPM.

DATES: Implementation of this demonstration project will begin no 
earlier than 90 days after the date of congressional notification.

FOR FURTHER INFORMATION CONTACT: NRL: Ms. Betty A. Duffield, Director, 
Strategic Workforce Planning, Code 1001.2, 4555 Overlook Avenue, SW, 
Washington, DC 20375-5320, 202-767-3421. OPM: Mr. John Andre, Office of 
Merit Systems Oversight and Effectiveness, Demonstration Project Team, 
U.S. Office of Personnel Management, 1900 E Street, NW, Room 7460, 
Washington, DC 20415-6000, 202-606-1255.

SUPPLEMENTARY INFORMATION:

1. Background

    Title VI of the Civil Service Reform Act, 5 U.S.C. 4703, authorized 
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 DoD, with the approval of the OPM, to carry out 
personnel demonstration projects at DoD laboratories designated as S&T 
Demonstration Project Reinvention Laboratories. The NRL was designated 
as one of these laboratories.
    The purpose of the NRL 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 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.

2. Overview

    On February 23, 1999, OPM published the proposed demonstration 
project in the Federal Register, Volume 64, No. 35, Part III, pages 
8964 through 9027. During the public comment period ending April 9, 
1999, OPM received comments from seventeen individuals, including two 
who presented oral comments at a public hearing held on March 25, 1999. 
All comments were carefully considered.
    A few of the commenters made statements concerning or suggested 
changes to areas that lie outside the project's scope or the 
demonstration project authority of 5 U.S.C. Chapter 47. These comments 
are not included in the summary below. Most of the commenters raised 
questions to clarify the philosophical and procedural aspects of the 
innovations. In many instances, these comments are more suitably 
addressed in internal guidance and are not included in the summary 
below. Several acknowledged that the demonstration did have benefits in 
many areas. The following summary addresses the comments received 
appropriate for the Federal Register, provides responses, and notes 
resultant changes to the original project plan in the first Federal 
Register Notice. Most commenters addressed several topics which are 
counted separately. Thus, the total number of comments exceeds the 
number of individuals cited earlier.

A. Positive Comments

    Five commenters were generally supportive of the demonstration. 
They saw its various features as beneficial to employees, managers, and 
the Laboratory. Specific innovations cited included improvements in 
personnel practices such as streamlined hiring processes, simplified 
position classification, paybanding, compensation based on contribution 
to the organization, pay pool panel review of contribution assessments 
to better assure fairness and accuracy, and better alignment of 
responsibility, authority, and accountability.

B. General Project Comments

    (1) Comment: Two commenters addressed the necessity of implementing 
a demonstration project for NRL considering that the studies cited to 
evidence the need for change were conducted in the 1980's; that NRL has 
been able to attract and retain a highly-qualified motivated workforce; 
and that a ``revenue neutral'' plan could not improve overall 
performance of an above-average organization and could only provide 
more money for top contributors by providing less money to others.
    Response: There have been three recent studies (which confirm the 
findings in 100+ reports issued over the last 30 years) addressing 
science and engineering salary shortfall, especially for entry-level 
and senior personnel and those in high-demand disciplines; excessive 
recruitment delays resulting in loss of top tiered, highly sought after 
candidates; and inadequate workforce reshaping tools. These studies 
are: Naval Research Advisory Committee, ``Report on the Department of 
the Navy Science and Technology Base,'' 1996; FY-98 Defense 
Authorization Act, Section 912(c) ``Technology Leaders'' Working Group 
Reports, February 1999; and A Report from a Panel of the National 
Academy of Public Administration, ``Naval Research Laboratory: Position 
Management Analysis,'' March 1999.
    Regarding the ``revenue neutral'' aspects of demonstration 
projects, NRL has always followed a practice of cost containment being 
an industrially-funded activity. NRL will try to maintain the 
demonstration as relatively cost neutral to the degree it can be 
measured given productivity increases, the effect of workforce 
reshaping, and other such circumstances.
    The demonstration project provides that high contributors should be 
rewarded more than low contributors as it should be. By combining 
within grade increases (WGI's), quality step increases (QSI's), and 
career promotion increases into one merit increase fund, this provides 
the supervisors the flexibility and means to assign all permanent basic 
pay increases based on the actual level of contributions made to the

[[Page 33971]]

organization's mission, not merely longevity or a combination of 
longevity and performance.

C. Employee Participation

    (1) Comment: Two commenters requested clarifying information 
regarding bargaining unit employee and union participation in the 
demonstration process.
    Response: During the initial design phase, the union representative 
elected from NRL's bargaining units served on the Staffing Design Team. 
He attended the staffing design team meetings, participated in 
discussion of proposed human resource design initiatives, provided 
recommendations, and voted on the version he felt most beneficial to 
the Laboratory when several options were on the table. He also served 
on one of the subcommittees. Also, during development of the proposed 
design, the decision was made that NRL would not include the guard and 
trade and craft occupations within the demonstration project. Since 
NRL's bargaining units are within these occupations, NRL has not 
negotiated any inclusion. NRL determined that potential inclusion would 
be better negotiated once actual experience had been gained with 
proposed initiatives. Unions have been kept informed of the progress of 
the demonstration efforts as well as any potential impact it may have 
on bargaining unit employees.
    (2) Comment: One commenter argues that NRL has failed to meet 
statutory requirements to consult with employees who will be covered 
under the demonstration.
    Response: In addition to including approximately 60 employees on 
the initial design teams, NRL consulted with NRL employees in the 
following ways:

--Met with each NRL division head to brief the initial demonstration 
proposal. This resulted in substantial changes to the proposed RIF 
process.
--Prepared and distributed an Employee Briefing Handbook for all NRL 
employees.
--Conducted a series of briefings in 1996 to which all NRL employees 
were invited (approximately 1,600, over 50 percent attended). During 
the early stages of project development, published several articles in 
NRL publications provided to all employees.
--Conducted trials of CCS in 1995 and 1996, each involving 9 to 10 NRL 
divisions. Significant changes were made to CCS based on the feedback 
from those involved in these trials, including reduction in the number 
of critical elements to reduce redundancy and better reflect the 
balance of different types of NRL work.
--In the last 2 years as the structure of the project has solidified, 
NRL has continued to communicate regularly with the workforce about the 
project. Articles have been written in lab-wide publications, a web 
site established, supervisory training provided, and briefings given to 
employees in many NRL divisions.

    In all of the above instances, employees were encouraged to provide 
comments and suggestions, and were given phone numbers, e-mail and mail 
addresses of individuals to whom they could comment. In addition, input 
from employees and supervisors continues to mold details of the project 
in terms of how the automation and standard operating procedures will 
be developed to best assist and support the operation of the project.

D. Accessions and Internal Placements

    (1) Comment: Three individuals stated that the hiring of non-
citizens should not be allowed.
    Response: The goal of the NRL is to locate, hire, and retain the 
best qualified employees to accomplish the esoteric and highly 
technical research performed at the Laboratory. In order to attract and 
hire top notch scientists and engineers and to satisfy merit 
principles, the NRL advertises most of its science and engineering 
positions, many times on a nationwide basis, using paid advertisement 
in major newspapers and scientific journals. In some cases, the 
advertisement yields only one qualified candidate who is, on occasion, 
a non-citizen. The Federal government gives strong priority to hiring 
U.S. citizens and nationals, but allows for hiring of non-citizens in 
certain circumstances if the requirements of the following are met: 
immigration law; appropriations act ban on paying certain non-citizens; 
and executive order restriction on appointing non-citizens in the 
competitive service. If agencies find no qualified citizens available 
to fill a competitive service position, and if they meet all of the 
requirements of the appropriations ban and immigration rules, they may 
hire a non-citizen under an excepted appointment. It is only under 
these circumstances that the NRL hires non-citizens. Non-citizens have 
historically contributed to U.S. military research in very significant 
ways.
    (2) Comment: One commenter requested clarification of NRL's 
maintained pay provision and the reasons for exceptions to this 
provision, particularly the exception relating to the DoD Priority 
Placement Program (PPP).
    Response: Although participation of all covered employees is 
mandatory, acceptance of the new system is essential for the success of 
the project. For this reason, the NRL provided a ``grandfather'' clause 
for NRL employees on retained grade and pay immediately prior to 
implementation of the project by providing indefinite maintained pay 
entitlement if their rate of basic pay exceeds the maximum rate for 
their career level. However, if these same employees are in a RIF 
situation after the demonstration project is implemented, they will be 
subject to the demonstration project maintained pay rules while 
employed by NRL under the demonstration.
    The PPP is the Defense Department's job assistance program for 
employees who are facing separation or demotion as a result of a RIF. 
Individuals placed through the PPP in lower-graded positions, unless 
otherwise ineligible, are entitled by law to retain their grade for a 
2-year period or are entitled to indefinite pay retention. 
Notwithstanding the requirements of the NRL proposal as it affects its 
current employees, longstanding DoD policy has been to protect an 
employee's grade or pay to the maximum extent permitted by law. The 
NRL's exception to the maintained pay provision as it affects PPP 
placements affords this statutory entitlement. The same pay protection 
will be afforded NRL employees at the time they are affected by a RIF 
and are placed in non-NRL-demonstration positions.
    (3) Comment: One commenter requested clarification as to whether 
employees who are failing to contribute enough to justify their 
existing pay can contribute enough to justify a promotion.
    Response: Regarding whether an overcompensated employee may be 
promoted, overcompensation would typically suggest that an employee 
should not be promoted from his or her current position because he or 
she is not contributing at a level that justifies his or her current 
salary under the demonstration system. However, there may be 
circumstances under which an overcompensated employee would be an 
appropriate selectee for a vacancy even into a higher career level. For 
example, the new position might be in a different career field in which 
the employee had previously been successful. In addition, employees on 
maintained pay who are in a career level lower than their target career 
level, could receive a CCS promotion up to their target career level.
    (4) Comment: One commenter expressed concern that the plan denies

[[Page 33972]]

placement rights to employees in RIF Assessment Category 0 
(overcompensated employees who do not receive any portion of a general 
increase) even though these employees may be satisfactory performers.
    Response: NRL agrees with the commenter. It is not NRL's intent to 
penalize satisfactory performers in a RIF situation. The plan does have 
a mechanism in place to identify unsatisfactory performers. Thus, only 
those employees who have been identified as unsatisfactory performers 
will be denied RIF assignment rights.
    (5) Comment: One commenter suggested that the conversion plan for 
movement to a position outside the demonstration project should be 
simplified.
    Response: NRL is required to use the standardized conversion plan 
the OPM developed for all activities under a demonstration project.
    (6) Comment: One commenter requested clarification of why the date 
of the last equivalent pay increase is based on eligibility for a pay 
raise rather than for actual receipt of a pay raise.
    Response: The date of the last equivalent increase is used to 
determine an employee's date of eligibility for a within-grade increase 
should they return to a position under the traditional General Schedule 
(GS) pay system. Unlike the GS pay system, the CCS system does not have 
a predetermined equivalent increase dollar amount. Under the CCS, an 
employee could receive a pay increase of $0 up to 20 percent (or more 
with the Director of Research approval) of their basic pay. Thus, it is 
reasonable to consider date of eligibility for a pay raise as the date 
of last equivalent increase.
    (7) Comment: One commenter questioned whether rating and ranking 
would occur under the project when rating and ranking is limited to 
those instances when more than 15 candidates apply.
    Response: The plan calls for rating and ranking to be done when 
there are more than 15 qualified applicants and/or qualified preference 
eligibles. Being able to refer up to 15 qualified applicants without 
rating and ranking allows the manager a broader pool of applicants from 
which to select which is one of the key objectives of this initiative, 
i.e., to give the manager the broadest possible range of qualified 
candidates from which to choose. Moreover, under the traditional 
system, it is conceivable to have 15 qualified applicants with the same 
score after the rating and ranking process. When this happens, we are 
required to use a tie-breaking method to determine the order in which 
candidates are listed on the referral certificate and the rule of three 
governs, i.e., selection must be from the top three candidates and a 
nonpreference applicant may not be selected over a preference eligible 
applicant. Thus, under the traditional system, it can be argued that 
equally qualified candidates are not given an equal opportunity to 
compete for selection.

E. Compensation

    (1) Comment: One commenter suggested that Reductions in Pay owing 
to ``Serious Medical Problem or Injury'' should be obviated by 
``Reasonable Accommodation.''
    Response: Although NRL attemps to accommodate employees with 
medical impairments in their position of record, this is not always 
feasible. There are circumstances in which a change to a lower level 
position is an appropriate way to resolve a situation of medical 
inability to perform the original job. Such actions are properly taken 
under 5 CFR Chapter 752.
    (2) Comment: Two commenters addressed the use of a single action to 
consolidate various types of pay actions. One commenter felt this could 
be done without the need to implement CCS and the other commenter was 
concerned that the different types of pay actions and deductions would 
not be visible to employees.
    Response: The single pay action is not connected to the CCS but to 
the annual determination of total compensation. The demonstration 
project consolidates the various compensation decisions currently made 
at various times during a year into a decision made on an annual basis. 
(By law, GS WGI's are tied to individual employee service accrual.) As 
far as visibility of pay actions, each employee will receive a Notice 
of Personnel Action, SF-50, that will describe the general increase, 
merit increase, locality pay, award and/or allowance situation. 
Deductions from salary for health insurance, etc., are reported to 
employees through the biweekly leave and earnings statement issued by 
the Defense Finance and Accounting Service.
    (3) Comment: Three commenters raised questions regarding how NRL 
would use market references to establish pay under the demonstration 
project.
    Response: NRL managers and supervisors will reference market salary 
data when making personnel and organizational decisions. As part of the 
CCS process, managers and supervisors will refer to the market salary 
data to determine if the proposed salary for an individual is 
comparable to similar work in the marketplace. In addition, top 
management may be able to use market salary data as a factor in 
determining the appropriate budget allocation for the merit increase 
category for each NRL pay pool. The time after degree (or work 
experience) of the workforce may be able to be factored into the 
decision process, using the market salary data. As part of the position 
management process, managers and supervisors will also consult market 
salary data to assist in determining the appropriate Career Level for a 
proposed new position. It is NRL's goal to create and maintain a 
position and organizational structure that is effective, efficient, and 
competitive with similar organizations in private industry and 
academia.
    (4) Comment: Three commenters raised various issues regarding the 
operation of the Distinguished Contributions Allowance (DCA). Two 
commenters indicated that the DCA would not be administered in a 
uniform fashion particularly if an employee leaves; one other 
questioned the calculation to fund the DCA pool, asking why this quite 
generous bonus system is only available to such a limited number of 
employees.
    Response: Before discussing the Distinguished Contributions 
Allowance, there is some philosophy that needs to be pointed out. It is 
intended that supervisors and managers utilize fully the base salary 
ranges of the career levels and merit increases to move employees 
through the career levels as their level of work and contributions grow 
to their target career levels or the top of their assigned level. In 
addition, contribution, time-off, and special act awards are mechanisms 
by which highly deserving employees can be rewarded and recognized for 
work accomplished. The Distinguished Contributions Allowance, on the 
other hand, is designed to provide compensation for those professional 
employees who have attained the highest levels of their career fields; 
and because of high grade billet constraints or pay band salary 
limitations, NRL cannot adequately compensate them (in light of 
industry standards) for the superior, higher level of work (above their 
current career level) they are performing and are expected to perform 
over the next one to three years (S&E Professional Career Track 
employees could receive an extension up to two years for a total of 
five years). The DCA is not a part of basic salary; it is not a bonus 
or award; and the budget allocation for payment of a DCA is separate 
and apart from the other four

[[Page 33973]]

pay categories under the demonstration project.
    An employee receiving a DCA is required to sign a memorandum of 
understanding because the DCA is a temporary allowance for higher-level 
work yet to be performed. If the employee leaves NRL, the DCA would be 
terminated because the terms of the DCA would no longer be met (i.e., 
an allocation for contributions made here at NRL). If an employee is no 
longer performing work at the higher career level; or is no longer 
working on a special project (which was recognized as the reason for 
allocating a DCA), the DCA would be terminated. One is only eligible to 
receive this allocation as long as the terms of the DCA are being met. 
If the employee is not meeting the terms of the DCA, it may be 
terminated. This action is not grievable or appealable.
    Regarding the funding of the DCA, it was decided that in order to 
provide a meaningful allowance for the high level of work expected, NRL 
would need the flexibility to set allowances along a continuum up to 25 
percent of basic pay. Since the DCA would be reserved for those who had 
reached the top of their career levels, it was decided to take a 
snapshot of the current population to determine how many employees were 
at this level and what their total annual basic salaries were. Using 
various percentages of the total annual basic salaries and what the 
charge would be (depending on the percentage) to establish the budget 
allocation for DCA's, it was determined that a percentage never greater 
than 10% of the total annual basic salaries of eligible employees on a 
given date would establish the DCA budget allocation. For information 
purposes, there were 334 employees at the top of their career levels on 
the date of the calculation who would be eligible for DCA 
consideration. This is about 11 percent of the NRL workforce.
    The DCA budget allocation was established as never greater than 10 
percent of the total annual basic salaries of eligible employees. It 
was felt that this allocation would provide a pool of funds that could 
be used to better compensate extremely high-level contributors when 
their contributions are expected to continue for a short period of time 
and existing methods do not adequately compensate them (in light of 
industry standards). The approval of DCA's rests with the Director of 
Research who can incorporate a global perspective to the level of 
contributions and allowances being granted. In addition, this 
initiative will be evaluated as part of the normal demonstration 
project evaluation process.
    (5) Comment: One commenter asked why all references to pay 
throughout the plan are given in ``basic pay'' without inclusion of 
locality-based adjustments.
    Response: Basic pay is used throughout the plan because it is 
constant, i.e., it does not vary by locality pay area. It is the rate 
used government-wide to compute pay actions for employees paid under 
the General Schedule pay system before locality pay is applied. Basic 
pay, locality pay, and total salary are recorded separately on the 
employee's Notification of Personnel Action (SF 50) under the current 
system. This will not change under the demonstration project. Since the 
information provided the employee concerning pay under the project will 
be the same as the information provided under the current system, the 
wording in the project should not present a problem to employees.
    (6) Comment: One commenter stated that the rules NRL will establish 
relating to severance pay for separated employees should be currently 
available for review as part of the demonstration process public 
comment period.
    Response: The commenter is referring to the criteria NRL will need 
to define in order to make a reasonable job offer that parallels that 
now offered under Title 5 in a reduction-in-force situation. This level 
of detail is generally found in the internal operating documents.
    (7) Comment: One commenter suggested that NRL should explain 
whether, under the process to convert special salary rate employees to 
the demonstration project, there are any combinations of factors that 
could result in an employee being assigned into a lower equivalent 
grade.
    Response: The special salary rate conversion process explains that 
GS employees will be moved into the career track and career level which 
corresponds to their current GS grade and basic pay. Paragraph VI.A.4 
further explains that if the new basic pay rate after conversion to the 
demonstration project pay schedule exceeds the maximum basic pay 
authorized for the career level, the employee will be granted 
maintained pay.
    (8) Comment: One commenter stated that NRL should clarify whether 
in VI.A.4. example, step b., the digit ``1'' in the factor ``1.0787'' 
is an error.
    Response: 1.0787 is correct. To increase an existing quantity (in 
this case 1.00 for basic salary) by a percentage (in this case .0787 
for DC locality pay), and retain the existing quantity (1.00 for basic 
salary), it is proper to multiply by one, plus the percentage to be 
increased times the original amount. To increase basic salary by the 
additional amount of locality pay (for DC), it is therefore proper to 
multiply 1.0787 times the salary. This is so that the original amount 
of pay is kept, with the percentage of locality pay added. (This is 
equivalent to salary+.0787*salary; 1.0787*basic salary is a simple 
operation.)
    (9) Comment: Three questions were received on how the 2.4% merit 
pay allocation would be distributed among the pay pools.
    Response: The method(s) to be used to distribute funds among the 
various pay pools will be defined in the NRL Demonstration Standard 
Operating Procedures so they may be easily modified throughout the life 
of the demonstration without having to publish a new Federal Register. 
The actual methodology that will be used for initial implementation of 
the demonstration is still being determined. During the life of the 
demonstration the distribution of funds and the method(s) to determine 
that distribution can be modified as experience dictates. Within the 
funds available to a pay pool, the pay pool manager can distribute 
funds among occupational, organizational, or other groups.

F. Classification

    (1) Comment: One commenter requested detailed information on the 
``pending position management study.''
    Response: The National Academy of Public Administration Center for 
Human Resources Management issued its position management analysis 
report for NRL in March 1999. The information gained from this report 
will be considered and addressed in appropriate internal operating 
guidelines on position management.
    (2) Comment: One commenter stated that NRL should articulate the 
rationale and equality of applying different high grade constraints to 
administrative and technical occupations.
    Response: In developing the career tracks and levels for the 
demonstration project, an analysis was made of the career progression 
of employees under the traditional classification system. It was found 
that the science and engineering professionals in the research 
divisions actually have a normal career progression to the non-
supervisory ``journeyman'' level of GS-13. Therefore, under the 
demonstration, GS-13 was included in the target career level, with no 
interim competition or higher-level approval required. At the GS-14 and 
15 levels, however, the DoD issues high-grade controls which limit the 
number of positions NRL may have

[[Page 33974]]

at these levels and the competition for these billets is keen. In 
addition, these positions are beyond the normal progression for the 
majority of S&E professionals and many of them are supervisory. Thus, 
the GS-14 and 15 positions were combined into one career level. The 
Director of Research maintains approval authority over these positions 
because of their limited number and because these are the positions 
from which many of the senior managers for NRL are chosen.
    In the Administrative Specialist and Professional Career Track, the 
career progression for employees is generally to the GS-12 level. This 
is considered the non-supervisory, ``journeyman'' level for the vast 
majority of positions covered by this career track. The GS-13 level is 
normally the supervisory level and forms the applicant pool for filling 
the senior managerial positions in this career track. While this level 
is not considered a high-grade level for DoD high-grade controls, it 
does constitute NRL's pool of applicants for the senior administrative 
managerial positions and requires Director of Research approval for 
movement into this level just as for the S&E Professional Career Track 
level that constitutes the pool of applicants for senior S&E managerial 
positions. Just as the GS-14 and 15 S&E professional career level is 
under the DoD high-grade controls, so is the GS-14 and 15 
administrative specialist and professional career level; and the 
Director of Research approval is required for movement into this career 
level.
    (3) Comment: One commenter asked if there were no longer controls 
on movement to the top career level in the Administrative Support 
Career Track.
    Response: Every position at NRL will be assigned a target career 
level which is the top level to which an incumbent can progress without 
further competition and Position Management Officer approval. These 
target career levels vary by occupation and sometimes by position 
within an occupation and serve as a control just as the current full 
performance level of a position serves as a control.
    (4) Comment: Two commenters requested clarification on the Advanced 
Research Scientists and Engineers, Career Level V of the S&E 
Professional Career Track. Specifically, one asked why this was a DoD 
Program and both asked how many positions would be allocated to NRL.
    Response: All but one of the current S&T reinvention demonstration 
project laboratories requested a Level V or equivalent for their S&T 
professional career track. Since this level would place employees in 
two of the DoD components in positions equivalent to executive 
positions which are tightly controlled, the DoD determined that this 
new category of executive resources should be limited until it could be 
tested over a 5-year period. Therefore, DoD allocated a total of 40 
positions DoD-wide. It is up to NRL (as well as other affected 
demonstration projects) to submit requests to DoD for approval of these 
positions. DoD has not made specific number allocations to each 
demonstration project. It is our understanding that DoD will be 
allocating these positions based on merit. Therefore, NRL does not know 
how many positions will be approved.

G. CCS Appraisal Process

    A total of fifteen commenters provided over forty comments on the 
CCS appraisal process. Two commenters praised the process. One believed 
CCS had the potential to significantly improve productivity and morale 
at NRL, and the second commenter was looking forward to CCS with 
optimism. Other comments are related to ten subtopics as follows:
    (1) Comments: CCS Complexity: Two commenters believed the system to 
be too complicated. One commenter, who did not believe the system was 
overly complicated, pointed out that it was based on the current GS 
grade and step system.
    Response: Any new appraisal system requires a ``learning curve.'' 
NRL has worked to reduce this by training supervisors (including a pay 
pool panel exercise), and by encouraging and supporting trials of CCS 
within many NRL pay pools over several years. In addition, NRL 
conducted a series of briefings in 1996 to which all NRL employees were 
invited (over 50 percent attended), published articles in NRL 
publications, provided a handbook to all employees, made available a 
videotape and training materials to those seeking more information, 
established a demonstration project web site, conducted additional 
supervisor and employee briefings in 1998 and 1999, and developed a 
question and answer guide for frequently asked questions. NRL plans to 
continue its efforts until managers are satisfied with their 
understanding of the program.
    (2) Comments: Longevity: Five commenters noted that CCS eliminates 
salary growth based on longevity. Two were pleased with this approach. 
Three viewed this as a negative feature of CCS or at least as having a 
potential negative impact on employees transitioning into the 
demonstration. Two commenters pointed out that within CCS, a higher 
contribution was expected from employees at the 10th step of their 
grade as compared to employees at the first step. One suggested an 
approach that would convert GS grades to the CCS system in a manner 
that would minimize the impact on employees transitioning into the 
demonstration and retain the effect of rewarding longevity.
    Response: This suggestion was not adopted. It is true that CCS does 
not reward longevity, but neither is it designed to penalize longevity. 
It is a contribution to organizational mission assessment system, 
designed to pay employees for the level of work which they are 
contributing to the mission. Since a step 10 pay level in any GS grade 
is approximately 30 percent higher than the same grade's step 1 pay 
level, it is reasonable to expect a higher level or higher quality 
contribution from the higher paid employee.
    (3) Comments: Score and Salary Caps: Four commenters expressed 
concern about the CCS scoring and the resulting salary implications. 
Three of the commenters believed that if they are currently being paid 
at the top of their career level, they must score beyond their level in 
order not to be considered overcompensated and lose their annual 
inflation increase. The fourth commenter was concerned that the score 
cap of 80 created a negative psychological impact for those employees 
who are paid at the GS-15, step 10 level, since the maximum score 
places the employee at the top of their normal pay range which creates 
the appearance of the employee being almost overpaid. This commenter 
suggested a change to the pay and score line which would allow 
employees at the GS-15, step 10 level, access to a few scores above 80.
    Response: Three of the commenters apparently misunderstood the 
scoring process. Scores within each level encompass the salary spread 
of the GS-grades banded together for that level. The highest score 
within each level has a salary equivalent that includes the salary of 
the top step of the highest GS grade contained in the band. Therefore, 
an employee earning a salary at the top of his or her band will not be 
considered overcompensated if he or she earns the top score within the 
band. All employees who score within their normal pay range will be 
granted the annual general increase. Even for employees who score below 
their normal pay range and are determined to be overcompensated, denial 
of the general increase is not automatic, but is at the discretion of 
the pay pool manager.

[[Page 33975]]

    The commenter's suggestion for changing the pay line is not 
adopted. NRL believes it is necessary to cap the score at 80 to protect 
the efficacy and integrity of job or pay classification of NRL 
positions. NRL recognizes the effect on employees at the GS-15, step 10 
level, i.e., the score of 80 brings employees paid at this level near 
the overcompensated range. However, the benefits of protecting the 
process outweigh any negative psychological impact the capped scoring 
may create. Further, such negative impact may be overcome through 
education of the process. The actual monetary impact for employees is 
no different from the current system where the awards program is used 
to distinguish performance among the employees at the top of their 
career level. Also, under CCS, these employees may be eligible 
(depending upon their performance and contribution level) for a 
Distinguished Contributions Allowance (DCA).
    (4) Comments: General Increase Pay: Two commenters believed that 
placing the general increase pay at risk by including it in the merit 
pool would help to more fairly compensate NRL employees. Five 
additional commenters opposed inclusion. One believed that no other 
demonstration project included the general increase and that any denial 
of general increase is an adverse action that requires a finding of 
unsatisfactory performance. Another commenter believed that denial of 
general increases with its potential for employees to regress into a 
lower career level could create the problem of appealable actions 
becoming non-appealable actions.
    Response: Several demonstration projects that include denial of 
general increase have already been approved and implemented. Such 
denials do not constitute an adverse action under 5 CFR Part 432 or 
Part 752. NRL considers this to be an important and valuable component 
of its demonstration project; therefore, no change is made to eliminate 
this provision.
    (5) Comment: Yearly Accomplishment Report (YAR): One commenter 
stated that mandatory YAR's may not be necessary for all positions at 
NRL and suggested several other alternatives which would limit this 
requirement.
    Response: NRL agrees with the commenter's point and has made a 
change that will allow pay pool managers to exempt groups of positions 
from the requirement to submit a YAR, and to allow employees to submit 
YAR's at their own option in cases where they are not required.
    (6) Comment: Contribution Awards: One commenter wanted 
clarification on when a contribution award would be granted to an 
employee who was in the normal pay range (and therefore already fully 
compensated) and when an award would be granted to an overcompensated 
employee. The same commenter also questioned the reasoning behind 
allowing overcompensated employees on maintained pay to receive awards 
and not allowing awards to otherwise overcompensated employees.
    Response: Contribution awards may be based on many aspects of 
contributions, including quality, productivity, value to a sponsor, 
etc., and need not be based solely on the employee's degree of 
undercompensation. Employees in the normal pay range may do an 
outstanding job that deserves recognition but not necessarily a higher 
permanent pay. The project grants pay pool managers and panel members 
the authority to determine the factors they will consider in granting 
contribution awards, much the same as the authority exists in the 
present system.
    Overcompensated employees on maintained pay are eligible for 
contribution awards since they are employees displaced from their 
original positions unrelated to their own levels of performance or 
contribution. These employees may be in positions where they do not 
have access to higher level work equivalent to their maintained pay yet 
they are outstanding performers in the level of work available to them. 
Therefore, they should be allowed the opportunity to be recognized for 
such performance in the new position, even if it is at a lower pay 
level than the one from which they were displaced.
    (7) Comments: Fairness: Eight commenters stated several concerns 
about the equitable application of CCS elements. Some thought the 
system was too subjective and favoritism would drive the process. Some 
believed equitable consideration would not be given to research 
employees working primarily off-site (with non-NRL sponsors or in long-
term training). Some expressed concern that more credit would be given 
to scientific than support personnel. One questioned what would prevent 
managers from inverting the process, i.e., allowing budgets to dictate 
appraisals. One commenter was also concerned about the difference in 
the sizes of the pay pool and two commenters thought that the panel 
makeup would be a conflict of interest for supervisors competing for 
the same funds as their subordinates. Three commenters discussed the 
360 degree performance evaluation plan; one commented that CCS was 
contrary to this philosophy as well as other enlightened philosophies. 
The other two commenters strongly recommended using such a process in 
connection with CCS.
    Response: NRL recognizes the subjective nature of CCS appraisals. 
By and large, NRL employees are not ``widget makers.'' Meaningful 
assessment demands consideration of quality, value, customer service 
and other criteria that are subjective by nature. To reduce favoritism 
and promote fairness, the CCS process provides for review of employee 
assessments by a group of supervisory officials who are in the same 
pool. In the pay pool panel process scores assigned by individual 
supervisors are reviewed by other supervisors in the same pay pool. The 
supervisors work to apply the CCS level descriptors consistently within 
their pay pool, and to identify and correct any inappropriately 
inflated or deflated scores. The pay pool manager is a further review 
and ultimate approval level.
    CCS contains various mechanisms to ensure employees receive proper 
credit under the generic elements, descriptors, and discriminators. 
Critical elements may be weighted, supplemental criteria can be used to 
identify actual work employees are responsible for carrying out, and 
discriminators may be considered either separately or in a more 
integrated manner for groups of employees. Flexibility was deemed 
necessary for individual divisions to tailor the system to their 
special needs. Supervisors will continue to determine the value of 
employees' accomplishments when assessing their contributions. Work 
valued under the current system will likely continue to be valued under 
CCS. The CCS elements and level descriptors specifically include 
expectations regarding sponsor/customer service to recognize the 
importance of this value at NRL. In addition, supervisors and employees 
will be encouraged to communicate throughout the appraisal period to 
avoid misunderstandings at the end of the year.
    Supervisors have always been free to solicit feedback from sponsors 
and other customers to consider in employee appraisals. This will 
continue to be an option under CCS. However, a formal program providing 
for 360 degree evaluations has not currently been implemented. NRL may 
consider some type of 360 degree evaluation pilot in the future and 
will outline any such plan in the standard operating procedures.
    Most pay pools will consist of all employees within an NRL 
division;

[[Page 33976]]

standard operating procedures will identify the pay pools more 
specifically. A few pay pools, as presently planned, will include fewer 
than the recommended 35 employees. These pools will consist of about 25 
employees each. NRL believes that keeping employees in the same 
supervisory chain together for comparison purposes outweighs the 
disadvantage of a smaller pool. Panels are made up of supervisors or 
managers from the division. While NRL recognizes the possible 
appearance of a conflict of interest, the risk is deemed minimal since 
pay pool managers have ultimate approval over appraisal and pay 
decisions. In addition, pay pool panel members and managers must be 
able to explain any unusual findings to a third party evaluator who 
will be monitoring compensation trends.
    (8) Comments: Team work: Three commenters raised concerns that CCS 
might serve as a disincentive for scientific collaboration and team 
work as employees compete for available funds.
    Response: The CCS is a ``contribution to organizational mission'' 
assessment program which is what team building and Total Quality 
Leadership espouse. Scientific collaboration, cooperation and team work 
should be encouraged among all employees. This is why each career track 
under CCS has a critical element that addresses these values 
specifically.
    (9) Comments: Equitable Pay Distribution: Two commenters were 
concerned that no firm rules existed for increasing employees' pay or 
denying general increase. One of the commenters wanted clarification on 
when NRL would not award a pay increase to move an undercompensated 
employee up into the normal pay range, and when it would not deny a pay 
increase to move an overcompensated employee down towards the NPR.
    Response: One of the primary objectives of the project is to 
``provide NRL management with increased authority to manage human 
resources * * *.'' While the results of the CCS process provide the 
framework for pay adjustment decisions, NRL believes it is important 
that management judgment also be applied in making final decisions. To 
most effectively accomplish the mission of their organizations, NRL 
managers need flexibility in managing their most valuable resource, 
their employees. There are many possible situations in which a pay pool 
manager might not effect a pay adjustment that moves an over- or 
undercompensated employee into the normal pay range. One example might 
be the case of an undercompensated employee who achieved a significant 
increase in score over the previous year. The pay pool manager may 
determine that this employee is unlikely to be in a position to repeat 
this level of contribution the next year (perhaps because of a special 
project that is ending); therefore, a permanent pay increase that moved 
the employee all the way into the normal pay range would be 
inappropriate.
    (10) Comments: Employee Rights: One commenter asserted that CCS 
provisions violate merit principles. The same commenter questioned the 
applicability of performance-based action procedures, requested 
clarification on what type of actions will no longer have appeal 
rights, and offered an alternative approach to limiting appeal rights, 
i.e., allow NRL to recover attorney fees from employees if they lose 
their appeal and meet certain other conditions. A second commenter 
believed that NRL's project provides for reducing employees' pay 
through adverse action by 6 percent and denying appeal rights on such 
actions. This same commenter suggested merit principles were not being 
followed and questioned why all avenues of appeal are being removed. A 
third commenter believes there must be an official grievance procedure 
for CCS, and suggests that grievances (and decisions to deny the 
general increase) be reviewed by a committee consisting of employee 
peers, the head of a different division, and someone from OPM or EEO.
    Response: Merit principles provide that ``Equal pay should be 
provided for work of equal value, with appropriate consideration of 
both national and local rates paid by employers in the private sector . 
. ., and appropriate incentives and recognition should be provided for 
excellence in performance.'' This is precisely what NRL seeks to do 
with the merit increase provisions of CCS. Since CCS does not provide 
for automatic within-grade increases, appeal rights do not exist for 
denial of any set increase. ``Regression'' into a lower career level 
resulting from an employee's pay being frozen is not appealable to the 
Merit Systems Protection Board (MSPB). Any actual reduction in pay will 
be taken through adverse or performance-based action procedures and 
will continue to be appealable to the MSPB. There is precedent for 
limiting appeal rights when no reduction in pay occurs. Several S&T 
reinvention laboratory demonstration projects, as well as China Lake, 
one of the earliest projects tested, have similar pay for performance 
or contribution to organizational mission methods and do not allow 
outside appeal rights for regression into a lower pay level. An NRL 
employee retains his or her grievance rights concerning CCS scores 
which serve as the basis of pay determinations. Concerning the 
applicability of performance regulations, CCS critical elements, 
descriptors, and discriminators do meet the definition of 5 CFR 430 and 
appropriate steps will be taken before taking any performance-based 
action under 5 CFR 432. The suggestion to recover attorney fees from 
employees is not deemed feasible and will not be adopted.
    The suggestion regarding the content of a committee to review CCS 
grievances and general increase denials is not adopted. NRL believes 
that these tasks properly belong to managers in the employee's chain 
(particularly the pay pool manager), who are responsible for the 
effective management of their human resources. The demonstration does 
include a procedure for complaints regarding CCS appraisals, which 
requires the pay pool panel and pay pool manager to consider the 
grievance first. If the employee is not satisfied with the result, he 
or she may escalate the grievance to the next level supervisor.

3. Demonstration Project Notice Changes

    The following is a summary of substantive changes and 
clarifications which have been made to the project proposal.
    A. II. Introduction, E. Participating Organizations and Employees. 
Wording changed to clarify participation of union representative.
    B. III. Accessions and Internal Placement, E. Expanded Detail 
Authority. Clarified approval authority on details beyond one year and 
limit on details to higher-level positions.
    C. III. Accessions and Internal Placements, G. Definitions, 6. Pay 
Adjustment. Added a statement that termination of maintained pay is 
also a pay adjustment.
    D. III. Accessions and Internal Placements, G. Definitions, 9. 
Approving Manager. Clarified definition of approving manager and 
personnel actions.
    E. III. Accessions and Internal Placements, H. Pay Setting 
Determinations Outside the CCS, 2. Internal Actions. Added a statement 
to clarify that these actions cover employees within the NRL 
demonstration.
    F. III. Accessions and Internal Placements, J. Expanded Temporary 
Promotions. Clarified limit on

[[Page 33977]]

temporary promotions within a 24-month period.
    G. IV. Sustainment, B. Integrated Pay Schedule (IPS). Clarified 
adjusted basic pay cap.
    H. IV. Sustainment, C. Contribution-based Compensation System 
(CCS), 2. CCS Process and 4. Annual CCS Appraisal Process. Modified to 
clarify that the appropriate discriminators to the position need to be 
considered in the assessment process.
    I. IV. Sustainment, B. IPS, 5. Distinguished Contributions 
Allowance (DCA). Clarified conditions for which a DCA may be 
appropriate and clarified eligibility.
    J. IV. Sustainment, C. Contribution-based Compensation System 
(CCS), 4. Annual CCS Appraisal. Modified to allow exceptions to the 
mandatory yearly accomplishment report requirement.
    K. IV. Sustainment, C. Contribution-based Compensation System 
(CCS), 7. Compensation, c. Locality Increases. Clarified adjusted basic 
pay cap.
    L. V. Separations, B. RIF, 2. RIF Definitions, c. Service 
Computation Date, (1) CCS Process Results Credit, Figure 11. Clarified 
eligibility for RIF assessment categories 2. and 3.
    M. V. Separations, B. RIF, 3. Displacement Rights, (d) Ineligible 
for Displacement Rights. Changed to allow displacement rights to 
individuals in Assessment Category 0.
    N. VI. Demonstration Project Transition, A. Initial Conversion or 
Movement to the Demonstration Project, 3. WGI Buy-in. Clarified 
eligibility for the WGI buy-in.
    O. VI. Demonstration Project Transition, C. Training. Modified to 
clarify degree of training that will be available to various Laboratory 
groups.
    P. IX. Demonstration Project Costs, A. Transition. Clarified 
eligibility for the WGI buy-in.
    Q. X. Automation Support, D. RIF Support System (RIFSS). Removed 
reference to an Appendix J.
    R. Appendix E, Computation of the IPS and the NPR. Illustrative 
normal pay range rails redrawn on charts to more accurately reflect 
scores and salaries.

    Dated: June 17, 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 Placements
    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
    C. Contribution-based Compensation System (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. Service Computation Date
    (1) CCS Process Results Credit
    (2) Credit From Other Rating Systems
    (3) RIF Cutoff Date
    3. Displacement Rights
    a. Displacement Process
    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

[[Page 33978]]

    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
    D. Method of Data Collection
IX. Demonstration Project Costs
    A. Transition
    B. Cost Containment and Controls
    C. Implementation Costs
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: Requirements Document Sample
Appendix G: Sample OPM Intervention Impact Evaluation 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.

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.
---------------------------------------------------------------------------

    * 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.
---------------------------------------------------------------------------

    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,

[[Page 33979]]

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.

BILLING CODE 6325-01-P

[[Page 33980]]

[GRAPHIC] [TIFF OMITTED] TN24JN99.000



BILLING CODE 6325-01-C

[[Page 33981]]

    A union representative elected from the following bargaining units 
served on the Staffing Design Team and participated 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

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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 within a 24-month period without 
competition.
    Details beyond one-year require the approval of the Commanding 
Officer (CO), NRL and are not subject to 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 to have 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.

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

[[Page 33983]]

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. Termination of 
maintained pay is also a pay adjustment.
7. Detail
    The temporary assignment of an employee to a different 
demonstration project 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
    Managers at the directorate, division head, division 
superintendent, or directorate-level staff offices who have budget 
allocation/execution; position management; position classification; 
recruitment; and staffing authorities for their organization.

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.)
    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.
    c. 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.
2. Internal Actions
    These actions cover employees within the demonstration project, 
including demonstration project employees who apply and are selected 
for a position within the project.
    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, 
Career Level III, position may decide he or she would prefer a Career 
Level II position in the Administrative Support Career Track because it 
offers a different work

[[Page 33984]]

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 
if the employee's current salary exceeds the maximum rate for the new 
band.
    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, if the employee's current 
salary exceeds the maximum rate for the new band.
    f. Upward Mobility or Other Formal Training Program Selection. The 
employee is entitled to maintained pay, if the employee's current 
salary exceeds the maximum rate for the new band.
    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 within a 24-month 
period without competition to positions within the demonstration 
project.

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 Schedule (IPS) for all 
demonstration project positions in covered occupations. The IPS will 
replace the current GS and extend the pay schedule 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

[[Page 33986]]

    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 full performance 
levels. 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 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.

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BILLING CODE 6325-01-C
    (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.
2. Requirements Document (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:
    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).

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BILLING CODE 6325-01-C

[[Page 33989]]

    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 
Director of Research [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. Integrated Pay Schedule

    Under the demonstration project, an IPS will be established which 
will cover all demonstration project positions at NRL. This IPS, which 
does not include locality pay, will extend from the basic pay for GS-1, 
step 1 to the basic pay for ES-4 (from ``Rates of Basic Pay for Members 
of the Senior Executive Service (SES)''). The adjusted basic pay cap, 
which does include locality pay, is Executive Level IV, currently 
$118,400, for all demonstration project employees except S&E 
Professional Career Level V employees. The adjusted basic pay cap for 
S&E Professional Career Level V employees is Executive Level III, 
currently $125,900.
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 33990]]

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: employees have reached the top of their target career 
levels and (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 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 in either situation, 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, there are externally imposed 
limits to higher career levels or 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 or 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

[[Page 33991]]

retention allowance at the same time, up to a combined total of 25 
percent of 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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[[Page 33992]]

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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 career 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 33993]]

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BILLING CODE 6325-01-C

[[Page 33994]]

    Supervisors and pay pool panels determine an employee's 
contribution level for each element considering the discriminators as 
appropriate to the position. 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 for S&E Professional Level V employees 
the potential for basic pay of SES Level 4, currently $118,000, plus 
locality pay up to a cap of Executive Level III, currently $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 33996]]

    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). Pay pool managers may exempt groups of positions from the 
requirement to submit YARs; in cases where YARs are not required, 
employees may submit them at their own discretion. Standard operating 
procedures will provide guidance for pay pools 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 considering 
the discriminators as appropriate to the position. 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, summary level, and OCS 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

[[Page 33997]]

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 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. At the end of each annual appraisal period, 
employees' contribution scores will be determined by the CCS process 
described above, then their overall contribution 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.

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[[Page 33998]]

[GRAPHIC] [TIFF OMITTED] TN24JN99.008



BILLING CODE 6325-01-C

[[Page 33999]]

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, including market 
salary reference data, 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
[GRAPHIC] [TIFF OMITTED] TN24JN99.009


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 5 U.S.C. 5303 or similar authority. 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

[[Page 34000]]

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. Factors to be considered by the DOR in 
determining annual budget authority may include market salaries, 
mission priorities, and organizational growth. 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 increase authorized by law for their official duty 
station. In addition, the locality-adjusted pay of any employee may not 
exceed the rate for Executive Level IV, currently $118,400, 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 (currently $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 Director of 
Research (DOR). 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

[[Page 34001]]

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 Science and Engineering (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 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, contribution award or promotion. Figure 11 shows the RIF 
years available for each CCS RIF Assessment Category.

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BILLING CODE 6325-01-C
    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.
    (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

[[Page 34003]]

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, 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 total 
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 on grade retention will be placed in the career level 
encompassing the grade of their current position. 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. 
Employees will not be eligible for this basic pay increase if their 
current rating of record is unacceptable at the time of conversion. 
There will be no prorated payment for employees who are at step 10 or 
receiving a retained rate at the time of conversion into the 
demonstration project.
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 = demonstration 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  .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 (demonstration 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.

[[Page 34004]]

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, as discussed below, to 
fit the requirements of every employee included in the demonstration 
project and will address employee concerns and as well as the benefits 
to employees. In addition, leadership training will be provided, as 
needed, to 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. Training will 
be provided at the appropriate stage of the implementation process.
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. NRL demonstration project employees will be 
provided an overview of the demonstration project and employee 
processes and responsibilities.
    b. Supervisors and Managers. 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 
Demonstration 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

[[Page 34005]]

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.

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 laboratory demonstration 
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 main purpose 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. NRL will make arrangements for the 
continued evaluation of the project beyond the PRDC evaluation period 
and throughout the life of the demonstration project so as to fulfill 
the requirements of 5 U.S.C. Chapter 47.

B. Evaluation Models

    Figure 12 shows a general model for the evaluation of the 
demonstration program. The model is designated to evaluate two levels 
of laboratory performance: intermediate and ultimate outcomes. The 
intermediate outcomes are defined as the results from specific 
personnel system changes and the associated waivers of law and 
regulation expected to improve human resource (HR) management (i.e., 
cost, quality, timeliness). The ultimate outcomes are determined 
through improved laboratory performance, mission accomplishment, and 
customer satisfaction. Although 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.
    Organizational performance measures established by the laboratories 
will be used to evaluate the impact of a new HR system on the ultimate 
outcomes. The evaluation of the new HR system for any given laboratory 
will take into account the influence of three factors on laboratory 
performance: context, degree of implementation, and support of 
implementation. The context factor refers to the impact which 
intervening variables (i.e., downsizing, changes in mission, or the 
economy) can have on the effectiveness of the program. The degree of 
implementation considers: (1) the extent to which the proposed HR 
changes are given a fair trial period; (2) the extent to which the 
proposed changes are implemented; and (3) the extent to which the 
proposed changes conform to the HR interventions as planned. The 
support of implementation factor accounts for the impact that factors 
such as training, internal regulations and automated support systems 
have on the support available for program implementation. The support 
for program implementation factor can also be affected by the personal 
characteristics (e.g., attitudes) of individuals who are implementing 
the program.
    The degree to which the project is implemented and operated will be 
tracked to ensure that 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 
which may happen 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.

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[[Page 34006]]

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BILLING CODE 6325-01-C

[[Page 34007]]

    An intervention impact model will be used to measure the 
effectiveness of the personnel system interventions implemented at NRL 
(see Appendix G). The intervention impact model specifies each 
personnel system change or ``intervention'' will be measured and shows: 
(1) the expected effects of the intervention, (2) the corresponding 
measures, and (3) the data sources for obtaining the measures. Although 
the model makes predictions about the outcomes of specific 
interventions, causal attributions about the full impact of specific 
interventions will not always be possible for several reasons. For 
example, many of the initiatives are expected to interact with each 
other and contribute to the same outcomes. In addition, the impact of 
changes in the HR system may be mitigated by context variables (e.g., 
the job market, legislation, and internal support systems) or support 
factors (e.g., training, automated support 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 in the program, a Title 5 
U.S.C. comparison group will be compiled 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.
    Given that some of the interventions are used only in selected 
laboratories, there will be additional comparison groups created for 
the 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 several sources will be used in the evaluation. 
Information from existing management information systems and from 
personnel office records will be supplemented with perceptual survey 
data from S&T employees to assess the effectiveness and perception of 
the project. The multiple sources of data collection will provide a 
more complete picture as to how the interventions are working. The 
information gathered from one source will serve to validate information 
obtained through another source. In so doing, the confidence of overall 
findings will be strengthened as the different collection methods 
substantiate each other.
    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 analysis; (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 five years. The final report 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 five years.

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 will not be eligible for this basic pay increase if their 
current rating of record is unacceptable at the time of conversion. 
There will be no prorated payment for employees who are at step 10 or 
receiving a retained rate at the time of conversion into the 
demonstration project. This permanent pay increase will occur at the 
time the demonstration project is implemented.
    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.
    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

[[Page 34008]]

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.

C. Implementation Costs

    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.

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[GRAPHIC] [TIFF OMITTED] TN24JN99.012


BILLING CODE 6325-01-C

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 decisionmaking 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.

E. Contribution-based Compensation System Data System

    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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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,

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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.

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

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1176--Building Management Series
1199--Business and Industry Student Trainee Series
1222--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. Adminstrative 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 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*(PcaretC)
Mid rail = (1+M)*A*(PcaretC)
High rail = (1+H)*A*(PcaretC)
Where P = (B/(A*(1+H)))caret(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      20186
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. 99-15984 Filed 6-23-99; 8:45 am]
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