[Federal Register Volume 67, Number 25 (Wednesday, February 6, 2002)]
[Notices]
[Pages 5716-5719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2766]



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Part IV





Department of Defense





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Office of the Secretary



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Science and Technology Reinvention Laboratory Personnel Management 
Demonstration Project at the U.S. Army Aviation and Missile Research, 
Development, and Engineering Center; Notice

  Federal Register / Vol. 67, No. 25 / Wednesday, February 6, 2002 / 
Notices  

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DEPARTMENT OF DEFENSE

Office of the Secretary


Science and Technology Reinvention Laboratory Personnel 
Management Demonstration Project at the U.S. Army Aviation and Missile 
Research, Development, and Engineering Center; Notice

AGENCY: Office of the Deputy Assistant Secretary of Defense (Civilian 
Personnel Policy), DoD.

ACTION: Notice of amendment of the demonstration project plan.

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SUMMARY: The National Defense Authorization Act for Fiscal Year 1995, 
as amended by Section 1114 of the National Defense Authorization Act 
for Fiscal Year 2001, authorizes the Secretary of Defense to conduct 
personnel demonstration projects at Department of Defense (DoD) 
laboratories designated as Science and Technology (S&T) Reinvention 
Laboratories. The above-cited legislation authorizes DoD 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 personnel management.
    This notice amends the Aviation and Missile Research, Development, 
and Engineering Center (AMCOM RDEC) project plan to change the method 
for pay setting upon promotion, add a staffing supplement, and make a 
technical correction to the categories of participating employees.

DATES: This amendment to the demonstration project plan may be 
implemented beginning on the date of publication of this notice in the 
Federal Register.

FOR FURTHER INFORMATION CONTACT: AMCOM RDEC: David Knepper, Aviation 
and Missile Research, Development, and Engineering Center, U.S. Army 
Aviation and Missile Command, ATTN: AMSAM-RD, Redstone Arsenal, Alabama 
35898-5000. DoD: Patricia M. Stewart, CPMS-AF, 1400 Key Blvd., Suite B-
200, Arlington, VA 22209-5144.

SUPPLEMENTARY INFORMATION:

1. Background

    Final plans were published in the Federal Register for the 
following S&T Reinvention Laboratory Demonstration Projects: Missile 
Research, Development, and Engineering Center (MRDEC) (Friday, June 27, 
1997, Volume 62, Number 124, Part IV, page 34876); and Aviation 
Research, Development, and Engineering Center (AVRDEC) (Friday, June 
27, 1997, Volume 62, Number 124, Part V, page 34906).
    Amendments to the final plans were published in the Federal 
Register as follows: To add competitive examining and Distinguished 
Scholastic Achievement Appointment authorities as part of the MRDEC and 
the AVRDEC plans (Thursday, March 11, 1999, Volume 64, Number 47, page 
12216); and to merge the two separate demonstrations into one project 
as the AMCOM RDEC (Thursday, August 31, 2000, Volume 65, Number 170, 
page 53142).
    The AMCOM RDEC demonstration project involves simplified job 
classification, paybanding, a performance-based compensation system, 
expanded employee development, and revised reduction-in-force 
procedures.

2. Overview

    Pay setting for promotion is currently achieved by awarding an 
employee a 6 percent salary increase or the lowest level in the payband 
to which promoted, whichever is greater. In many instances, the 
increase has been smaller than what would have been received under 
comparable circumstances if the employee were in the General Schedule 
(GS) system. For example, an Engineer or Scientist in the demonstration 
with a salary equivalent to a GS-13, step 5 would receive a 6 percent 
increase upon promotion from payband DB III to DB IV. In the GS system, 
the salary increase from GS-13, step 5 to the next grade is 7.74 
percent.
    The minimum salary increase upon promotion is being changed from 6 
percent to 8 percent or the lowest level in the payband to which 
promoted, which is more typical of comparable GS increases. Also, 
flexibility is being provided to the Personnel Management Board to 
raise the minimum increase beyond 8 percent on a case-by-case basis. 
The Board will document its rationale for decisions to provide an 
increase above 8 percent. This amendment is designed to alleviate a 
potential employee retention issue.
    A staffing supplement is needed to provide the AMCOM RDEC the 
flexibility to remain competitive with special salary rates in the GS 
system. Employees assigned to occupational categories and geographic 
areas covered by special rates will be entitled to a staffing 
supplement if the maximum adjusted rate for the banded GS grades to 
which assigned is a special rate that exceeds the maximum GS locality 
rate for the banded grades. The staffing supplement serves to 
compensate demonstration project employees for the comparable value of 
GS special salary rates, removing this as a potential employee hiring 
and retention issue.
    A technical correction is needed specifically to exclude employees 
covered by the Defense Civilian Intelligence Personnel System (DCIPS). 
This exclusion was in the AVRDEC Federal Register notice. However, it 
was not made part of the MRDEC plan because MRDEC at the time did not 
employ DCIPS personnel. The correction is necessary because the two 
demonstrations (MRDEC and AVRDEC) have been merged into one and the 
MRDEC plan is being followed for the consolidated AMCOM RDEC project.

I. Executive Summary

    The Department of the Army established the AMCOM RDEC personnel 
demonstration project to be generally similar in nature to the system 
in use at the Department of the Navy personnel demonstration project 
known as China Lake. The AMCOM RDEC project was built upon the concepts 
of linking performance to pay for all covered positions; simplifying 
paperwork in the processing of classification and other personnel 
actions; emphasizing partnerships among management, employees, and 
unions; and delegating authorities to line managers.

II. Introduction

    The demonstration project at the AMCOM RDEC intends to provide 
managers, at the lowest practical level, the authority, control, and 
flexibility needed to achieve a quality laboratory and quality 
products. The project will allow the laboratory to compete more 
effectively for high-quality personnel and strengthen the manager's 
role in personnel management.

A. Purpose

    The purpose of this amendment is: (1) To improve pay setting upon 
promotion to make it comparable to that received by GS employees by 
increasing the promotion salary entitlement from the current 6 percent 
or bottom of the payband to which promoted to 8 percent or the bottom 
of the payband to which promoted; (2) to allow the Personnel Management 
Board to raise the minimum increase upon promotion beyond 8 percent on 
a case-by-case basis as described below; (3) to add a staffing 
supplement to replace special salary rates that are waived in the 
demonstration project; and (4) specifically to exclude employees 
covered by the DCIPS from participating

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in the demonstration. Other basic provisions of the approved AMCOM RDEC 
demonstration project are unchanged.

B. Employee Notification and Collective Bargaining Requirements

    Employee notification will be made by delivery of a copy of this 
notice. Supervisors and employees will receive information briefings 
and training before implementation. Participating organizations must 
fulfill any collective bargaining obligations to unions that represent 
employees covered by the demonstration.

III. Personnel System Changes

A. Pay Setting for Promotion

    The pay setting for promotion provisions in the MRDEC plan, under 
Section III B at page 34888, are amended to read: ``Upon promotion, an 
employee will be entitled to an 8 percent increase in base pay or the 
lowest level in the payband to which promoted, whichever is greater. 
However, for employees assigned to occupational categories and 
geographic areas covered by special rates, the minimum salary rate in 
the payband to which promoted is the minimum salary for the 
corresponding special rate or locality rate, whichever is greater. For 
employees covered by a staffing supplement, the demonstration staffing 
adjusted pay is considered basic pay for promotion calculations. On a 
case-by-case basis, the AMCOM RDEC Personnel Management Board may 
approve requests for promotion base pay increases beyond 8 percent, in 
accordance with established AMCOM RDEC operating procedures. The Board 
will document its rationale for decisions to provide an increase above 
8 percent. Highest previous rate may also be considered in setting pay 
in accordance with existing pay-setting policies.''

B. Staffing Supplement

    The MRDEC plan is amended by adding the following as Section III G, 
Staffing Supplement:
Application of the Staffing Supplement Upon Conversion to the 
Demonstration Project
    Employees assigned to occupational categories and geographic areas 
covered by special rates will be entitled to a staffing supplement if 
the maximum adjusted rate for the banded GS grades to which assigned is 
a special rate that exceeds the maximum GS locality rate for the banded 
grades. The staffing supplement is added to base pay, much like 
locality rates are added to base pay. For employees being converted 
into the demonstration, total pay immediately after implementation of 
this intervention will be the same as immediately before this 
intervention, but a portion of the total pay will be in the form of a 
staffing supplement. Adverse action and pay retention provisions will 
not apply to the conversion process, as there will be no change in 
total salary. The staffing supplement is calculated as follows:
    Upon conversion, the demonstration base rate will be established by 
dividing the employee's former GS adjusted rate (the higher of special 
rate or locality rate) by the staffing factor. The staffing factor will 
be determined by dividing the maximum special rate for the banded 
grades by the GS unadjusted rate corresponding to that special rate 
(step 10 of the GS rate for the same grade as the special rate). The 
employee's demonstration staffing supplement is derived by multiplying 
the demonstration base rate by the staffing factor minus one. 
Therefore, the employee's final demonstration special staffing rate 
equals the demonstration base rate plus the staffing supplement. This 
amount will equal the employee's former GS adjusted rate.
    Simplified, the formula is this:

Staffing factor = (Maximum special rate for the banded grades)/(GS 
unadjusted rate corresponding to that special rate)
Demonstration base rate = (Former GS adjusted rate, special or locality 
rate)/(staffing factor)
Staffing supplement = (Demonstration base rate)  x  (staffing factor 
-1)
Salary upon conversion = (Demonstration base rate) + (staffing 
supplement) Note: This sum will equal the existing rate.

    Example: Assume there is a GS-801-11, step 03, employee stationed 
in Huntsville, Alabama, who is entitled to the greater of a special 
salary rate of $50,018 or a locality rate of $48,499 ($44,462 + 9.08 
percent). The maximum special rate for a GS-801-11, step 10 is $59,741, 
and the corresponding regular rate is $54,185. The maximum GS-11 
locality rate in Huntsville is $59,105 ($54,185 + 9.08 percent), which 
is less than the maximum special salary rate. Thus, a staffing 
supplement is payable. The staffing factor is computed as follows:

Staffing factor = $59,741/$54,185 = 1.1025
Demonstration base rate = $50,018/1.1025 = $45,368

    Then to determine the staffing supplement, multiply the 
demonstration base by the staffing factor minus 1.

Staffing supplement = $45,368  x  0.1025 = $4,650

    The staffing supplement of $4,650 is added to the demonstration 
base rate of $45,368 and the total salary is $50,018, which is the 
salary of the employee before this intervention.
    If an employee is in a band where the maximum GS adjusted rate for 
the banded grades is a locality rate, when the employee enters into the 
demonstration project, the demonstration base rate is derived by 
dividing the employee's former GS adjusted rate (the higher of locality 
rate or special rate) by the applicable locality pay factor (for 
example, 1.0908 in the Huntsville area for CY 2002). The employee's 
demonstration locality-adjusted rate will equal the employee's former 
GS adjusted rate. Any GS or special rate schedule adjustment will 
require computing the staffing supplement again. Employees receiving a 
staffing supplement remain entitled to an underlying locality rate, 
which may over time supersede the need for a staffing supplement. If 
OPM discontinues or decreases a special rate schedule, pay retention 
provisions will be applied. Upon geographic movement, an employee who 
receives the staffing supplement will have the supplement recomputed. 
Any resulting reduction in pay will not be considered an adverse action 
or a basis for pay retention.
Application of the Staffing Supplement in Circumstances Other than 
Conversion to the Demonstration Project
    Calculation of the staffing supplement discussed above was 
presented in the context of a General Schedule employee entering the 
demonstration project. Application of the staffing supplement is 
normally intended to maintain pay comparability for General Schedule 
employees entering the demonstration. However, the staffing supplement 
formulas must be compatible with non-Government employees entering the 
demonstration and also be adaptable to the special circumstances of 
employees already in the demonstration. Employees who are already in 
the demonstration project and who are in occupational categories 
covered by special salary rate tables will have their salaries examined 
for the application of a staffing supplement or a one-time salary 
adjustment.
    The principles in paragraphs 1 through 6 will govern the 
modifications necessary to the previous staffing supplement 
calculations to apply the staffing supplement to circumstances other 
than a General Schedule employee entering the demonstration project. No 
adjustment under these provisions will provide an increase greater than 
that provided by the special salary rate. An

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increase provided under this authority is not an equivalent increase, 
as defined by 5 CFR 531.403. These principles are stated with the 
understanding that the necessary conditions exist that require the 
application of a staffing supplement.
    1. If a non-Government employee is hired into the demonstration, 
then the employee's entry salary will be used for the term, ``former GS 
adjusted rate'' to calculate the demonstration base rate.
    2. If a current demonstration project employee is covered by a 
special salary rate table that has not changed (other than by annual 
general pay increases), then the employee's current demonstration 
adjusted base salary will be used for the term ``former GS adjusted 
rate'' to calculate the demonstration base rate.
    3. If a current demonstration project employee is covered by a new 
or modified special salary rate table, then the employee's current 
demonstration base rate is used to calculate the staffing supplement 
percentage. The employee's new demonstration adjusted base salary is 
the sum of the current demonstration base rate and the calculated 
staffing supplement.
    4. If a current demonstration project employee is in an 
occupational category that is covered by a special salary rate table 
and subsequently, the occupational category becomes covered by a 
different special salary rate table with a higher value (e.g.; a DB 854 
originally covered by table 422 is subsequently covered by table 999B, 
which is a higher rate schedule), then the following steps must be 
applied to calculate a new demonstration base rate:
    Step 1. To obtain a relevance factor, divide the staffing factor 
that will become applicable to the employee by the staffing factor that 
would have applied to the employee. For example, table 999B (2002 rates 
for Huntsville, AL) is applicable to a DB 854-II employee, and the 
applicable staffing factor is 1.18 ($63,938/$54,185). For table 0422 
(the table that would have applied if table 999B had not been 
implemented) the applicable staffing factor is 1.1282 ($61,130/
$54,185). Thus:

Relevance factor = 1.18/1.1282 = 1.0459

    Step 2. Multiply the relevance factor resulting from step 1 by the 
employee's current adjusted demonstration rate to determine a new 
adjusted demonstration rate.
    Step 3. Divide the result from step 2 by the applicable staffing 
factor to derive a new demonstration base rate. This new demonstration 
base rate will be used to calculate the staffing supplement and the new 
demonstration adjusted base salary.
    5. If, after the establishment of a new or adjusted special salary 
rate table, an employee enters the demonstration (whether converted 
from the General Schedule or hired from outside Government) prior to 
this intervention, then the employee's current adjusted base salary is 
used for the term ``former GS adjusted rate'' to calculate the 
demonstration base rate. This principle prevents double compensation 
due to the single event of a new or adjusted special salary rate table.
    6. If an employee is in an occupational category covered by a new 
or modified special salary rate table, and the pay band to which 
assigned is not entitled to a staffing supplement, then the employee's 
salary may be reviewed and adjusted to accommodate the salary increase 
provided by the special salary rate. The review may result in a one-
time pay increase if the employee's salary equals or is less than the 
highest special salary grade and step that exceeds the comparable 
locality grade and step. AMCOM RDEC operating procedures will identify 
the officials responsible to make such reviews and determinations. The 
applicable salary increase will be calculated by determining the 
percentage difference between the highest step 10 special salary rate 
and the comparable step 10 locality rate and applying this percentage 
to the demonstration base rate.
    An established salary including the staffing supplement will be 
considered basic pay for the same purposes as a locality rate under 5 
CFR 531.606(b), i.e., for purposes of retirement, life insurance, 
premium pay, severance pay, and advances in pay. It will also be used 
to compute worker's compensation payments and lump-sum payments for 
accrued and accumulated annual leave.
    Section V of the MRDEC plan, Conversion to the Demonstration 
Project, paragraph c is amended to read: ``Employees who are covered by 
special salary rates, upon being covered by the demonstration project, 
will no longer be considered special rate employees under the 
demonstration project. These employees will, therefore, be entitled to 
full locality pay or a staffing supplement. The adjusted salaries of 
these employees will not change. Rather, the employees will receive a 
new basic pay rate computed under the staffing supplement rules in 
Section III G, Staffing Supplement, if applicable. Adverse action and 
pay retention provisions will not apply to the conversion process, as 
there will be no change in total salary.''
    Section V of the MRDEC plan, Conversion or Movement from a Project 
Position to a General Schedule Position, paragraph a (1), first 
sentence is amended to read: ``The employees'' adjusted rate of basic 
pay under the demonstration project (including any locality payment or 
staffing supplement) is compared with step 4 rates on the highest 
applicable GS rate range.'' Paragraph b (2), first sentence is changed 
to read: ``An employee's adjusted rate of basic pay under the project 
(including any locality payment or staffing supplement) is converted to 
the GS adjusted rate on the highest applicable rate range for the 
converted GS grade.''
    Section IX of the MRDEC plan, Required Waivers to Law and 
Regulation, is amended by inserting after the first paragraph, a new 
paragraph as follows: ``The following waivers and adaptations of 
certain Title 5, U.S.C., provisions are required only to the extent 
that these statutory provisions limit or are inconsistent with the 
actions contemplated under this demonstration project. Nothing in this 
plan is intended to preclude the demonstration project from adopting or 
incorporating any law or regulation enacted, adopted, or amended after 
the effective date of this demonstration project.''
    Section IX is also amended by modifying the existing waiver to 
title 5, United States Code, chapter 53, sections 5361-5366, Grade and 
pay retention; re-numbering the existing ``(5)'' as ``(6)'; and 
inserting a new item ``(5)'' as follows: ``(5) provide that pay 
retention provisions do not apply when reduction in basic pay is due 
solely to the reallocation of demonstration project pay rates in the 
implementation of a staffing supplement'.
    Additionally, Section IX is amended by inserting the following 
provision above the existing waiver to title 5, United States Code, 
chapter 55: ``Chapter 55, Section 5542(a)(1)-(2): Overtime rates; 
computation'These sections are adapted only to the extent necessary to 
provide that the GS-10 minimum special rate (if any) for the special 
rate category to which a project employee belongs is deemed to be the 
``applicable special rate'' in applying the pay cap provisions in 5 
U.S.C. 5542.''
    Section IX is amended by inserting the following provision above 
the existing waiver to title 5, United States Code, chapter 57: 
``Chapter 55, Section 5547(a)-(b): Limitation on premium pay--These 
sections are adapted only to the extent necessary to provide that the 
GS-15 maximum special rate (if any) for the special rate category to 
which a project employee belongs is deemed to be the ``applicable 
special rate'' in

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applying the pay cap provisions in 5 U.S.C. 5547.''
    Section IX is further amended by modifying the existing waiver to 
title 5, Code of Federal Regulations, part 536; re-numbering the 
existing ``(4)'' as ``(5)''; inserting a new item ``(4)'' as follows: 
``(4) provide that pay retention provisions do not apply when reduction 
in basic pay is due solely to the reallocation of demonstration project 
pay rates in the implementation of a staffing supplement'.
    Finally, Section IX is amended by inserting the following two 
provisions above the existing waiver to title 5, Code of Federal 
Regulations, part 550.703:

    (1) ``Part 550, sections 550.105 and 550.106: Biweekly and 
annual maximum earnings limitations--These sections are adapted only 
to the extent necessary to provide that the GS-15 maximum special 
rate (if any) for the special rate category to which a project 
employee belongs is deemed to be the ``applicable special rate'' in 
applying the pay cap provisions in 5 U.S.C. 5547.''

    (2) ``Part 550, section 550.113(a): Computation of overtime pay--
This section is adapted only to the extent necessary to provide that 
the GS-10 minimum special rate (if any) for the special rate category 
to which a project employee belongs is deemed to be the ``applicable 
special rate'' in applying the pay cap provisions in 5 U.S.C. 5542.''

C. Participating Employees

    The third sentence under Section II E, Participating Employees, of 
the MRDEC plan is amended to read: ``Senior Executive Service (SES) 
employees and positions, Federal Wage System (FWS) employees, Defense 
Civilian Intelligence Personnel System (DCIPS) employees, and employees 
in the Quality Assurance Specialist (Ammunition Surveillance) (QASAS) 
career program will not be covered in the demonstration project.''

    Dated: January 30, 2002.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 02-2766 Filed 2-5-02; 8:45 am]
BILLING CODE 5001-08-P