[Federal Register Volume 70, Number 87 (Friday, May 6, 2005)]
[Notices]
[Pages 23996-23999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-9116]


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DEPARTMENT OF COMMERCE

National Institute of Standards and Technology


Alternative Personnel Management System (APMS) at the National 
Institute of Standards and Technology

AGENCY: National Institute of Standards and Technology, Department of 
Commerce.

ACTION: Notice of Modifications with Request for Comment.

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SUMMARY: This notice provides for changes to the existing provisions of 
the National Institute of Standards and Technology's (NIST) Alternative 
Personnel Management System (APMS) published October 21, 1997, (62 FR 
54606), primarily to strengthen the link between pay and performance, 
to simplify the pay-for-performance system, and to broaden the link 
between performance and retention service credit for reduction in 
force.

DATES: This notice is effective on May 6, 2005. Comments must be 
received no later than June 6, 2005.

ADDRESSES: Send or deliver comments to Robert Kirkner, Human Resources 
Management Division, National Institute of Standards and Technology, 
Building 101, Room A-133, 100 Bureau Drive, Gaithersburg, MD 20899-
3550, FAX: (301) 948-6107, or e-mail comments to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Robert Kirkner at the National 
Institute of Standards and Technology, (301) 975-3005; Joan Jorgenson 
at the U.S. Department of Commerce, (202) 482-4233; Jill Rajaee at the 
U.S. Office of Personnel Management, (202) 606-0836.

SUPPLEMENTARY INFORMATION:

Background

    In accordance with Public Law 99-574, the NIST Authorization Act 
for 1987, the Office of Personnel Management (OPM) approved a 
demonstration project plan, ``Alternative Personnel Management System 
(APMS) at the National Institute of Standards and Technology (NIST),'' 
and published the plan in the Federal Register on October 2, 1987, (52 
FR 37082). The project plan has been modified twice to clarify certain 
NIST authorities (54 FR 21331 of May 17, 1989, and 55 FR 39220 of 
September 25, 1990). The project plan and subsequent amendments were 
consolidated in the final APMS plan, which became permanent on October 
21, 1997, (62 FR 54604).
    The plan provides for modifications to be made as experience is 
gained,

[[Page 23997]]

results are analyzed, and conclusions are reached on how the system is 
working. This notice formally changes the APMS plan to further 
strengthen the links between pay and performance, and performance and 
retention service credit. Comments will be considered and any changes 
deemed necessary will be made.

    Dated: April 28, 2005.
Hratch G. Semerjian,
Acting Director.

Table of Contents

I. Executive Summary
II. Basis for APMS Plan Modification
III. Changes to the APMS Plan

I. Executive Summary

    The National Institute of Standards and Technology's (NIST) 
Alternative Personnel Management System (APMS) is designed to (1) 
improve hiring and allow NIST to compete more effectively for high-
quality researchers through direct hiring, selective use of higher 
entry salaries, and selective use of recruiting allowances; (2) 
motivate and retain staff through higher pay potential, pay-for-
performance, more responsive personnel systems, and selective use of 
retention allowances; (3) strengthen the manager's role in personnel 
management through delegation of personnel authorities; and (4) 
increase the efficiency of personnel systems through installation of a 
simpler and more flexible classification system based on pay banding 
through reduction of guidelines, steps, and paperwork in 
classification, hiring, and other personnel systems, and through 
automation.
    Since implementing the APMS, according to findings in the Office of 
Personnel Management's ``Summative Evaluation Report National Institute 
of Standards and Technology Demonstration Project: 1988-1995,'' NIST is 
more competitive for talent; NIST retained more top performers than a 
comparison group; and NIST managers reported significantly more 
authority to make decisions concerning employee pay. This modification 
builds on this success by strengthening the link between pay and 
performance and streamlining the current system.
    This amendment replaces the current 100-point rating scale with six 
performance ratings. Pay increases will be based on an annually 
determined percentage of the mid-point salary for each pay band in the 
career path and linked directly to the top three performance ratings, 
strengthening the pay-for-performance link, increasing transparency, 
and reducing potential payout variations among employees in the same 
career path and pay band and with the same performance ratings. This 
amendment also implements a required bonus for high-performing 
employees who cannot receive a pay increase because they are at the cap 
of their pay band, or their adjusted salaries would exceed the maximum 
rate for their pay band. Finally, the provisions on retention service 
credit for reduction in force and annual adjustments to basic pay are 
being modified to correspond with these changes.
    NIST will continually monitor the effectiveness of this amendment 
and provide OPM with its findings.

II. Basis for APMS Plan Modification

    The need to modify the current Pay for Performance System (PPS) 
surfaced in the results of both the 2000 and 2002 NIST Employee 
Surveys, the NIST Research Advisory Committee 2002 Report to the NIST 
Director, stakeholder focus group feedback, and in discussions of the 
NIST Senior Management Board. Generally, feedback indicated a need to 
clarify and simplify the system and suggested ways that this could be 
accomplished. The suggestions were found to have merit and are 
incorporated into this modification.
    The NIST system proposed modifications include replacing the 
current 100-point rating scale with six performance ratings and linking 
pay increases to the ratings. From highest to lowest, the six 
performance ratings are: Exceptional Contributor, Superior Contributor, 
Significant Contributor, Contributor, Marginal Contributor, and 
Unsatisfactory.
    Performance ratings are determined based on the cumulative ratings 
and relative weights of the critical elements. Critical elements are 
rated using benchmark standards and any supplemental standards. The 
ratings for the critical elements are: exceeds expectations (E), fully 
successful (S), minimally meets expectations (M), or unsatisfactory 
(U).
    Performance pay increases will be based on the annually determined 
percentage of the mid-point salary for each pay band in the career 
path. When the percentage is applied to the mid-point salary in each 
pay band, the resulting dollar amount is the unit of salary increase or 
``I'' for that pay band and career path. The ``I'' is used to determine 
salary increases NIST-wide. The Director, however, may authorize an 
operating unit to use a lower ``I'' for reasons related to solvency.
    Actual salary increases based on multiples of ``I'' are granted to 
employees in the top three performance levels as follows: Exceptional 
Contributor: ``I'' x 5; Superior Contributor: ``I'' x 3; and 
Significant Contributor: ``I.'' A salary-capped employee with an 
Exceptional Contributor or Superior Contributor rating must receive a 
bonus at least equivalent to the salary increase that would have been 
received if the employee's salary were not capped.
    In addition to receiving a performance pay increase, employees with 
Exceptional Contributor, Superior Contributor, and Significant 
Contributor ratings receive the full annual basic pay adjustment 
(general and locality pay increases) and are eligible for a bonus. 
Employees with a Contributor rating do not receive a performance pay 
increase but do receive the full annual basic pay adjustment and are 
eligible for a bonus. Employees rated Marginal Contributor or 
Unsatisfactory do not receive a performance pay increase, bonus, or 
annual basic pay adjustment.
    The current provision on additional service credit for reduction-
in-force purposes is revised to correspond with these changes. For 
retention purposes, this modification grants 10 additional years of 
service for a rating of Exceptional Contributor, eight additional years 
of service for a rating of Superior Contributor, three additional years 
of service for a rating of Significant Contributor, and one additional 
year of service for a rating of Contributor.

III. Changes in the APMS Plan

    The APMS at the NIST, published in the Federal Register October 21, 
1997, (62 FR 54604), is amended as follows:
    1. Promotion: The subsection titled ``Promotion'' (62 FR 54609) is 
replaced with the following:

Promotion

    A promotion is a change of an employee to (1) a higher pay band in 
the same career path or (2) a pay band in another career path in 
combination with an increase in pay. An employee must have a current 
performance rating of Contributor or higher to be eligible for 
promotion. The time-in-pay-band requirement for promotion eligibility 
is 52 weeks with two exceptions: (1) An employee may be promoted from 
pay band I to band II in the Support career path without time 
restriction; and (2) an employee may be promoted from pay band II to 
band III in the Support career path without time restriction if the 
employee was not promoted from a band I to band II position during the 
previous 52 weeks. (For pay provisions related to promotion, see ``Pay 
Administration.'')

[[Page 23998]]

    2. Link Between Performance and Retention: The subsection titled 
``Link Between Performance and Retention'' (62 FR 54609) is replaced 
with the following:

Link Between Performance and Retention

    An employee with a performance rating of Exceptional Contributor is 
credited with 10 additional years of service for retention purposes. An 
employee with a performance rating of Superior Contributor is credited 
with eight additional years of service for retention purposes. An 
employee with a performance rating of Significant Contributor is 
credited with three additional years of service for retention purposes. 
An employee with a performance rating of Contributor is credited with 
one additional year of service for retention purposes. The total credit 
is based on the employee's three most recent annual performance ratings 
of record received during the four-year period prior to an established 
cutoff date, for a potential total credit of 30 years. No reduction-in-
force credit converts to this system from any other performance 
appraisal system.
    3. Placement in a Lower Pay Band: The subsection titled ``Placement 
in a Lower Pay Band'' (62 FR 54609) is replaced with the following:

Placement in a Lower Pay Band

    An employee whose performance rating is Marginal Contributor or 
Unsatisfactory does not receive the NIST annual adjustment to basic 
pay. Because the minimum pay rate for each pay band is increased each 
year by the amount of the NIST annual adjustment to basic pay, it is 
possible that the new minimum rate of a pay band will exceed the basic 
pay of an employee in that pay band who does not receive the NIST 
annual adjustment to basic pay due to a Marginal Contributor or 
Unsatisfactory performance rating. When this happens, the employee is 
placed in the next lower pay band. This placement shall not be 
considered an adverse action under 5 U.S.C. 7512; nor shall grade 
(i.e., pay band) retention under 5 U.S.C. 5362 be applicable.
    4. Effect of General and Locality Pay Increases on Individual Pay: 
The subsection titled ``Effect of General and Locality Pay Increases on 
Individual Pay'' (62 FR 54610) is replaced with the following:

Effect of General and Locality Pay Increases on Individual Pay

    Only employees with a current performance rating of Contributor or 
above may receive the full amount of increase in their basic pay 
(including locality pay) at the time of pay band adjustments. This 
increase in basic pay will reflect any applicable general and/or 
locality pay increase for General Schedule employees. The increase in 
basic pay for employees with a rating of Contributor or above, whose 
basic pay is at the ceiling of their pay band, will equal the increase 
in the ceiling.
    The basic pay increase for eligible employees whose basic pay is 
below the ceiling of their band will be calculated by applying a factor 
to the employee's rate of pay. The factor is based on the net pay 
increase for General Schedule employees in the locality, including both 
the general increase and any applicable locality pay increase. 
Employees with ratings of Contributor or above will receive the full 
amount of the net increase, and the factor is equal to 1 plus the net 
increase percentage (expressed as a decimal). For example, if the net 
increase for a locality were 3.22 percent, the factor for Contributor 
or above would be 1.0322. Thus, the new rate of basic pay for an 
employee with a rating of Contributor or above would be calculated 
using the following formula:

New pay rate = (1 + net pay increase) x former pay rate

    However, a basic pay increase will be applied only to the extent 
that it does not cause an employee's basic pay to exceed the pay band 
ceiling.
    5. Performance Plans: The subsection titled ``Performance Plans'' 
(62 FR 54611) is replaced with the following:

Performance Plans

    At the beginning of each rating period, supervisors develop and 
issue performance plans with input from employees. The plans contain 
from three to six critical performance elements for each position. For 
performance planning and appraisal purposes, only critical elements are 
used. The supervisor assigns a weight of 1, 2, 3, or 4 to each element 
indicating its relative level of importance to the position, so that 
the total weight of all elements is 10. Benchmark performance standards 
define the range of performance required to exceed expectations, be 
fully successful, minimally meet expectations, and be unsatisfactory. A 
supervisor may supplement the standards to add specificity or clarify 
expectations.
    6. Performance Appraisal: The subsection titled ``Performance 
Appraisal'' (62 FR 54611) is replaced with the following:

Performance Appraisal

    The performance appraisal brings supervisors and employees together 
to discuss performance and accomplishments during the performance 
rating cycle. The appraisal leads to decisions affecting performance 
ratings, performance pay increases, and bonuses. Performance appraisals 
normally occur at the end of the rating period. However, a supervisor 
should issue a performance improvement plan and take appropriate 
follow-up action any time an employee's performance is unsatisfactory.
    7. Performance Ratings: The subsection titled ``Performance 
Ratings'' (62 FR 54612) is replaced with the following:

Performance Ratings

    The NIST APMS performance ratings are Exceptional Contributor, 
Superior Contributor, Significant Contributor, Contributor, Marginal 
Contributor, and Unsatisfactory. Performance ratings are determined 
based on the cumulative ratings and weights of the critical elements in 
the performance plan. Performance in each critical element is evaluated 
using the benchmark standards and any supplemental standards, and the 
element is assigned a rating that exceeds expectations (E), fully 
successful (S), minimally meets expectations (M), or unsatisfactory 
(U).
    The rating of the element is then matched with the weighted value 
of that critical element to produce a value for the element. For 
example, if an element is weighted 4 and the element is assigned a 
rating that exceeds expectations (E), then that element has a value of 
4E.
    Once this matching is completed and the elements are totaled, 
performance ratings are assigned using the following table.

------------------------------------------------------------------------
            Performance rating                Critical element ratings
------------------------------------------------------------------------
Exceptional Contributor...................  At least 8E; None below S.
Superior Contributor......................  At least 6E; None below S.
Significant Contributor...................  At least 3E; Up to 2M.
Contributor...............................  Up to 3M.
Marginal Contributor......................  4 or more M.
Unsatisfactory............................  1 or more U.
------------------------------------------------------------------------

    An employee with unsatisfactory performance in one or more critical 
elements is considered unsatisfactory overall and is given a 
performance improvement plan and an opportunity to improve. If the 
employee's performance remains unsatisfactory at the end of an 
opportunity to improve,

[[Page 23999]]

the supervisor initiates appropriate follow-up action; i.e., 
reassignment, proposed change to a lower pay band, or proposed removal.
    8. Performance Scores: The subsection titled ``Performance Scores'' 
(62 FR 54612) is deleted.
    9. Performance Ranking: The subsection titled ``Performance 
Ranking'' (62 FR 54612) is replaced with the following:

Performance Ranking

    Performance ranking has been tested and found to be not appropriate 
for most positions covered by this modification. The Director may 
authorize the use of ranking where it is found to be appropriate.
    10. Performance Pay Decisions: The subsection titled ``Performance 
Pay Decisions'' (62 FR 54612) is replaced with the following:

Performance Pay Decisions

    Annually, the NIST Director determines the amount of a unit of 
increase, or ``I,'' based on a percentage of the mid-point salary for 
each pay band of each career path. The percentage may vary by career 
path but must be the same for all pay bands within a career path. 
Performance pay increases are linked directly to performance ratings. 
An employee with an overall performance rating of Exceptional 
Contributor receives a performance pay increase equal to five units of 
increase, or 5 x ``I.'' A Superior Contributor receives a performance 
pay increase equal to 3 x ``I.'' A Significant Contributor receives a 
performance pay increase equal to ``I.'' The actual dollar amount of a 
performance pay increase depends upon an employee's career path and pay 
band. Employees may not receive an increase that causes their salary to 
exceed the maximum rate for their pay band.
    Employees with Contributor, Marginal Contributor, or Unsatisfactory 
ratings do not receive performance pay increases.
    11. Performance Bonuses: The subsection titled ``Performance 
Bonuses'' (62 FR 54612) is replaced with the following:

Performance Bonuses

    Bonuses are the only cash awards linked to the NIST APMS pay-for-
performance system. They are awarded at the end of the performance 
rating period and may be granted in conjunction with performance pay 
increases. A pay pool manager may award a bonus to any employee with a 
performance rating of Contributor or higher. A pay pool manager is a 
line manager who manages his or her organization's pay increase and 
bonus fund and has final decision authority over the performance 
ratings and bonuses of subordinate employees. An employee with an 
Exceptional Contributor or Superior Contributor rating whose adjusted 
salary would exceed the maximum rate for the pay band must receive a 
bonus at least equivalent to the amount of the performance pay increase 
over the maximum rate but may receive more.
    12. Employee Development: The subsection titled ``Employee 
Development'' (62 FR 54612) is replaced with the following:

Employee Development

    The objective of the NIST Employee Development Program is to 
develop the competence of employees for maximum achievement of NIST 
mission and goals. The NIST APMS legislation mandates the continuance 
of an employee development program including, in appropriate 
circumstances, a sabbatical program. The NIST APMS sabbatical program 
is consistent with the terms and conditions of the Senior Executive 
Service sabbatical program. It covers all career appointees under the 
NIST APMS who have at least seven years of Federal service and a 
current performance rating of Contributor or higher.

[FR Doc. 05-9116 Filed 5-5-05; 8:45 am]
BILLING CODE 3510-13-P