[Federal Register Volume 73, Number 233 (Wednesday, December 3, 2008)]
[Proposed Rules]
[Pages 73606-73617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28672]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 73, No. 233 / Wednesday, December 3, 2008 / 
Proposed Rules  

[[Page 73606]]



DEPARTMENT OF DEFENSE

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 9901

RIN 3206-AL75


National Security Personnel System

AGENCY: Department of Defense; Office of Personnel Management.

ACTION: Proposed rule.

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

SUMMARY: The Department of Defense (DoD) and the Office of Personnel 
Management (OPM) are issuing a proposed regulation adding Subpart E, 
Staffing and Employment, to the National Security Personnel System 
(NSPS) regulation published in the Federal Register on September 26, 
2008. NSPS is a human resources management system for DoD, originally 
authorized by the National Defense Authorization Act for Fiscal Year 
2004, amended by the National Defense Authorization Act for Fiscal Year 
2008, and the Duncan Hunter National Defense Authorization Act for 
Fiscal Year 2009. The proposed regulation governs staffing and 
employment under NSPS.

DATES: Comments must be received on or before January 2, 2009.

ADDRESSES: You may submit comments identified by docket number NSPS-
OPM-2008-0139 and/or Regulatory Information Number (RIN) 3206-AL75. 
Please arrange and identify your comments on the regulatory text by 
section number; if your comments relate to the supplementary 
information, please refer to the heading and page number. There are two 
methods for submitting comments. Please submit only one set of comments 
via one of the methods described.
     Preferred Method for Comments: The preferred method for 
submitting comments is through the Federal Rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
     Alternative Method for Comments: If unable to access the 
Federal Rulemaking Portal, comments may be mailed to the following 
address: DOD/OPM/NSPS Public Comments, PO Box 14474, Washington, DC 
20044.
    Instructions: All submissions must include the agency name and 
docket number or RIN for this rulemaking. Mailed comments must be in 
paper form. No mailed comments in electronic form (CDs, floppy disk, or 
other media) will be accepted. The Federal Rulemaking Portal, http://www.regulations.gov, will contain any public comments as received, 
without change, unless the comment contains security-sensitive 
material, confidential business information, or other information for 
which public disclosure is restricted by statute. If such material is 
received, we will provide a reference to that material in the version 
of the comment that is placed in the docket. The docket system is an 
``anonymous access'' system, which means that DoD and OPM will not know 
your identity, e-mail address, or other contact information unless you 
provide it in the body of your comment. Unless a comment is submitted 
anonymously, the names of all commenters will be public information.
    Please ensure your comments are submitted within the specified open 
comment period. Comments received after the close of the comment period 
will be marked ``late,'' and DoD and OPM are not required to consider 
them in formulating a final decision.
    Before acting on this proposal, DoD and OPM will consider all 
comments we receive on or before the closing date for comments. 
Comments filed late will be considered only if it is possible to do so 
without incurring expense or delay. Changes to this proposal may be 
made in light of the comments we receive.

FOR FURTHER INFORMATION CONTACT: For DoD, Bradley B. Bunn, (703) 696-
5604; for OPM, Charles D. Grimes III, (202) 606-8079

SUPPLEMENTARY INFORMATION: The Department of Defense (DoD or ``the 
Department'') and the Office of Personnel Management (OPM) are 
proposing to add staffing and employment provisions to the regulation 
published in the Federal Register on September 26, 2008 (Volume 73, 
Number 188) [Rules and Regulations] [Pages 56344-56420] pertaining to 
the National Security Personnel System (NSPS or ``the System''), a 
human resources (HR) management system for DoD under 5 U.S.C. 9902, as 
enacted by section 1101 of the National Defense Authorization Act for 
Fiscal Year 2004 (Pub. L. 108-136, November 24, 2003), amended by 
section 1106 of the National Defense Authorization Act for Fiscal Year 
2008 (Pub. L. 110-181, January 28, 2008), and by section 1106 of the 
Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 
(Pub. L. 110-417, October 14, 2008). The following information is 
intended to provide interested parties with relevant background 
material about, and a description of the staffing and employment 
subpart of the regulation.

Significant Changes to the Original Law

    The original NSPS statute was enacted on November 24, 2003, and 
provided the Secretary of Defense, in regulations jointly prescribed 
with the Director of OPM, the authority to establish a flexible and 
contemporary civilian personnel system called the National Security 
Personnel System. NSPS provided DoD with authority to deviate from 
Governmentwide regulations in the areas of labor relations, adverse 
actions and appeals, reduction in force, classification, compensation, 
staffing, and performance management. This new civilian personnel 
system was intended to cover most of the approximately 700,000 DoD 
civilian employees.
    The original statute provided authority to the Secretary of 
Defense, notwithstanding 5 U.S.C. chapters 31, 33 and 35, to establish 
qualifications requirements for, recruit for and make appointments to 
NSPS positions; to establish methods of assigning, reassigning, 
detailing, transferring, or promoting employees; and to establish 
workforce shaping procedures that reduce disruption and place greater 
emphasis on performance as a factor in retention. These authorities 
enabled flexible processes to assign new or different work and to 
streamline hiring processes.
    Public Law 110-181 amended title 5, United States Code, retaining 
authority for performance-based pay and classification and compensation 
flexibilities, but substantially modifying

[[Page 73607]]

other NSPS authorities. The law, among other things--
     Brings NSPS under Governmentwide rules for labor-
management relations, disciplinary actions and employee appeals of 
adverse actions, and workforce shaping (reduction in force, furlough, 
and transfer of function).
     Requires that this rule be considered a major rule for the 
purposes of section 801 of title 5, United States Code, with advance 
Congressional notification for OPM/DoD jointly-prescribed NSPS 
regulations.
     Gives these rules the status of Governmentwide rules for 
the purpose of collective bargaining under chapter 71 when these rules 
are uniformly applicable to all organizational or functional units 
included in NSPS.
     Revised the staffing and employment authorities authorized 
by NDAA 2004.
    On October 14, 2008, section 1106 of the Duncan Hunter National 
Defense Authorization Act for Fiscal Year 2009 was enacted, which 
addressed staffing and employment authorities. Pursuant to this law, 
the following NSPS staffing and employment authorities have been 
retained under NSPS: Authority for the Secretary of Defense to waive 5 
U.S.C. chapter 33 for the purpose of regulating methods of establishing 
qualification requirements for, recruitment for, and appointments to 
NSPS positions, as well as the methods of assigning, reassigning, 
detailing, transferring, or promoting employees. In so doing, the 
Secretary must comply with the provisions of 5 U.S.C. 2302(b)(11), 
regarding veterans' preference requirements and 5 U.S.C. chapter 71.

Staffing and Employment--5 CFR 9901 Subpart E

    This subpart provides DoD with authority, pursuant to 5 U.S.C. 
9902(i), to modify and replace certain provisions of title 5 pertaining 
to methods for recruitment for, and appointments to, NSPS positions and 
the methods for the assignment, reassignment, detail, transfer, and 
promotion of employees into and within NSPS. This subpart has been 
revised to (1) Reflect changes in the NSPS as a result of the 
amendments to 5 U.S.C. 9902 by the National Defense Authorization Act 
for Fiscal Year 2008 (Pub. L. 110-181) as further amended by the Duncan 
Hunter National Defense Authorization Act for Fiscal Year 2009; (2) 
provide specificity to the regulation based on existing implementation; 
(3) reflect changes in subparts A through D of the regulation as 
published on September 26, 2008, and (4) make technical changes and 
improvements.
    In order to meet its critical mission requirements worldwide and 
respond to a dynamic national security environment, the Department 
needs greater flexibility to attract, recruit, assign and retain a high 
quality workforce. Although the current General Schedule personnel 
management system is based on important core principles, the General 
Schedule does not embody the flexibility needed by DoD to meet mission 
requirements. While preserving merit principles and veterans' 
preference requirements, subpart E of the proposed regulations helps to 
streamline hiring and placement processes and provides DoD with an 
expanded set of flexible hiring tools to respond effectively to 
continuing mission changes and priorities. Under the proposed 
regulations, DoD managers will have greater flexibility in acquiring, 
advancing, and assigning a workforce tailored to the Department's 
needs. The new staffing flexibilities, in conjunction with the NSPS 
compensation and classification flexibilities, provide DoD managers 
with a greater range of options to adapt their recruitment and hiring 
strategies to meet changing mission and organizational needs, including 
consideration of the nature and duration of work. The proposed 
regulations also address the need to compete for the best talent 
available by providing the Department with the ability to streamline 
and accelerate the recruitment process.

Definitions

    The proposed regulations adopt, for staffing and employment 
purposes, the definitions for the terms ``promotion'' and 
``reassignment'' defined in regulations published in the Federal 
Register on September 26, 2008 (Volume 73, Number 188) [Rules and 
Regulations] [pages 56391--56392], to fit the NSPS pay banding 
environment. In addition, the regulations adopt the term ``reduction in 
band'' as defined in the above referenced regulations. This term 
replaces ``change to lower grade'' which does not reflect the current 
NSPS classification architecture. Under pay banding, the GS grade 
structure is collapsed into fewer, broader salary ranges. Employees 
progress through those ranges based primarily on performance and job 
duties. Under NSPS, employees can also receive increased pay as a 
result of a reassignment within or to a comparable pay band, reduction 
to a lower pay band, or promotion to a higher pay band, as provided in 
subpart C of the regulations published on September 26, 2008.

Appointing Authorities

    Governmentwide Appointing Authorities. Under the proposed 
regulations, the Department will continue to use excepted and 
competitive appointing authorities under chapters 31 and 33 of title 5, 
U.S. Code, Governmentwide regulations, or Executive orders, as well as 
other statutes. Individuals hired under those authorities will be 
designated as career, career conditional, term, temporary, or time-
limited employees, as appropriate.
    Additional NSPS Appointing Authorities. Under the proposed 
regulations, the Secretary and the Director may additionally establish 
new excepted and competitive appointing authorities for positions 
covered by NSPS. For any appointing authority that may result in entry 
into the competitive service, including excepted service appointments 
that may lead to a subsequent noncompetitive appointment to the 
competitive service, DoD and OPM will jointly publish advance notice, 
and request comment, in the Federal Register whenever it establishes 
such an authority. In addition, DoD and OPM may establish excepted 
appointing authorities for positions that are not in the competitive 
service without specific notice in the Federal Register. The proposed 
authority to establish new appointing authorities provides flexibility 
to tailor appointments to the many unique DoD missions and employment 
requirements. The proposed regulations require DoD to publish annually 
a list of appointing authorities created under this authority which 
remain in effect. DoD will prescribe appropriate implementing issuances 
to administer a new authority.
    Direct Hire Authority. The proposed regulations authorize DoD to 
exercise direct hire authority, subject to existing legal and 
regulatory standards without approval by OPM. The removal of this 
additional time consuming step enables DoD to streamline this hiring 
process while retaining the same legal and regulatory standards that 
exist under the General Schedule.
    Non-permanent Appointing Authorities. DoD may continue to use 
existing temporary, term, and time-limited appointing authorities; 
however, the proposed regulations provide for modified duration of such 
appointments as well as modified advertising requirements, examining 
procedures, and the appropriate uses of time-limited employees. Most 
significantly, non-permanent appointments under NSPS may be extended 
for longer time periods providing flexibility and tools to

[[Page 73608]]

respond to a larger variety of DoD missions requirements and 
environments. The use of non-permanent employees in DoD assures 
continuity of operations in response to temporary surges in workload, 
extended absences due to military or civilian deployment, Base 
Realignment and Closure (BRAC) actions, and the mission-driven 
activities at Defense installations worldwide. The continuing dynamic 
employment and national security environment within DoD requires that 
DoD meet mission requirements using DoD civilian employees when an 
active duty service member or contractor is not the best fit by 
providing more agile non-permanent hiring authority. These proposed 
regulations further streamline hiring practices and enhance flexibility 
by establishing criteria under which term and temporary employees who 
were hired via the competitive examining process may be converted 
without further competition to a career or career conditional 
appointment in the competitive service.
    Recruitment and Competitive Examining. In order to increase the 
efficiency of the recruiting and hiring process without compromising 
merit principles, the proposed regulations allow DoD to target its 
recruiting strategy. DoD will provide public notice for all vacancies 
in the competitive service and accept applications from all sources; 
however, if there are sufficient qualified candidates in the local 
commuting area and other targeted sources, consideration may be limited 
to those applicants. If there are insufficient qualified candidates in 
the local commuting area, DoD may consider applicants from outside that 
area. Permitting limited consideration under competitive examining to 
qualified applicants in a commuting area instead of considering 
potentially hundreds or thousands of applications from across the 
country, facilitates mission accomplishment by streamlining the hiring 
process and significantly reducing the amount of time a position 
remains vacant. The proposed regulations further streamlines hiring 
processes by extending examining authority to DoD, to be exercised in 
accordance with chapters 31 and 33 of title 5, U.S. Code. To exercise 
this authority, DoD will develop and coordinate examining procedures 
which will remain subject to OPM oversight. Examining procedures will 
adhere to the core values of merit system principles in 5 U.S.C. 2301 
and veterans' preference requirements set forth in 5 U.S.C. 3309 
through 3320, as applicable, and will be available in writing for 
applicants to review.

Altenative Promotion Procedures

    The proposed regulations establish and provide authority to use 
several alternative forms of competition for merit promotion purposes. 
These alternative promotion procedures continue to require an analysis 
of the job to be filled to identify knowledges, skills, abilities, and/
or competencies required. The alternative promotion procedures also 
require notification to potential candidates; an evaluation to 
determine highly qualified candidates; and consideration of registrants 
in the DoD Priority Placement Program or Reemployment Priority List. 
However, these promotion procedures do not require advertisement via 
the standard vacancy announcement procedures. These alternative forms 
of competition include the use of assessment boards, alternate 
certification procedures, and selection for promotion from among 
qualified employees with exceptional (i.e., role model) performance 
ratings. The alternative promotion procedures help to streamline 
internal recruitment processes thereby reducing the time period a 
position remains vacant.
    Additional key changes to this subpart include (1) Adding detailed 
rules regarding non-permanent appointing authorities for competitive 
and excepted service positions (including periods of time for which 
appointments may be made or extended and other conditions); (2) 
establishment of time limits on initial and supervisory probationary 
periods to align with time periods governing application of 
Governmentwide adverse action procedures; (3) establishment of specific 
rules on initial and supervisory probationary periods, crediting 
service and termination processes; (4) establishment of specific rules 
describing the competitive examining process; (5) establishment of 
specific rules for internal placement (including the NSPS Merit 
Promotion Program); and, (6) establishment of a career conditional 
appointment and redefinition of career appointments under NSPS to 
reflect coverage of NSPS employees under Governmentwide workforce 
shaping rules as a result of Public Law 110-181.
    Modifications to this subpart reflect changes in law and regulation 
while continuing to reflect the Department's commitment to provide 
constructive and effective ways to attract, recruit, and retain 
employees; enhance management's flexibilities to respond more 
competitively to changing labor markets; facilitate movement into and 
within NSPS; and provide the flexibility the Department needs to 
streamline the hiring process and adapt quickly to critical and 
changing mission needs and priorities while preserving merit system 
principles and veterans' preference in every aspect of the system's 
design. DoD managers will have greater flexibility in acquiring and 
advancing a workforce tailored to the Department's needs. The 
flexibilities provide DoD managers with a greater range of options to 
adapt their recruitment and hiring strategies to meet changing mission 
and organizational needs including consideration of the nature and 
duration of work. Finally, the proposed regulations also address the 
need to compete for the best talent available and reduce the period of 
time a position remains vacant by providing the Department with the 
ability to streamline and accelerate the recruitment process.
    The following table lists, by specific regulatory section, a brief 
description of each significant change to subpart E of section 9901 of 
the rule published in the Federal Register dated November 1, 2005 
(Volume 70, Number 210) [Pages 66201-66203].

------------------------------------------------------------------------
                                     Description of proposed change
------------------------------------------------------------------------
Sec.   9901.502..............  Scope of authority. This section
                                specifies the provisions of Federal
                                statute waived under the staffing and
                                employment rules for NSPS. This section
                                has been modified to reflect coverage of
                                5 U.S.C. 3321(a)(2) with respect to this
                                subpart and to delete reference to
                                waiver of 5 U.S.C. 5112(a) pertaining to
                                the general authority of the Office of
                                Personnel Management concerning position
                                classification and the development of
                                qualification requirements for a
                                position. This latter provision has
                                already been waived via waiver of 5
                                U.S.C. chapter 51 under Sec.   9901.203
                                and provisions for identification and
                                establishment of qualification
                                requirements are outlined in Sec.
                                9901.212(d).

[[Page 73609]]

 
Sec.   9901.504..............  Definitions. This section provides
                                definitions of terms specific to subpart
                                E. This revision adds definitions for
                                the terms detail, initial probationary
                                period, local commuting area, and
                                supervisory probationary period. The
                                definition for a career employee is
                                modified and a definition for a career
                                conditional employee is added. Also
                                added is the term competencies with a
                                cross reference to Sec.   9901.103 where
                                the term is defined. The revised
                                regulation slightly modifies the
                                definition of temporary employee to
                                clarify application to both the
                                competitive and excepted service and to
                                add a cross reference. Additionally, the
                                definition of term employee is revised
                                to pertain to an employee in the
                                competitive service and the definition
                                of time-limited employee is also revised
                                to pertain to an employee in the
                                excepted service.
Sec.   9901.511(c)...........  Paragraph (c), Severe shortage/critical
                                need hiring authority of this section of
                                the rule published in the Federal
                                Register dated November 1, 2005 (Volume
                                70, Number 210) [Pages 66201-66203] is
                                modified. Specifically, paragraph (c)(1)
                                is modified to provide that the
                                Secretary must make the determination
                                that a severe shortage/critical hiring
                                need exists and may make this
                                determination on his/her own or in
                                response to a written request from the
                                Head of a DoD Component.
                               Adds a new paragraph (c)(3) to this
                                section authorizing the Secretary to
                                extend a direct hire authority which is
                                due to expire when he/she determines
                                that there is or will continue to be
                                severe shortage/critical hiring need.
                               Renumbers paragraphs (c)(3) and (c)(4) as
                                (c)(4) and (c)(5), respectively.
Sec.   9901.511(d)(1)........  Non-permanent appointing authorities.
                                This paragraph retains the Secretary's
                                authority to prescribe a duration of
                                appointment for temporary, term, and
                                time-limited appointments that is
                                different than that prescribed in
                                Governmentwide rules. However, this
                                paragraph of the rule published in the
                                Federal Register dated November 1, 2005
                                (Volume 70, Number 210) [Pages 66201-
                                66203] is modified to specify the
                                procedures for appointing employees
                                under temporary, term, and time-limited
                                appointments in the competitive and
                                excepted service.
Sec.   9901.511(d)(1)(i).....  Temporary appointments. A new paragraph
                                is added describing the purpose of
                                temporary appointments, establishing
                                specific time limits for temporary
                                appointments, and providing for
                                reassigning employees on temporary
                                appointments to another temporary
                                position provided the total combined
                                service does not exceed the maximum 3-
                                year limitation.
                               New paragraphs (d)(1)(i)(A) and
                                (d)(1)(i)(B) are added to this section
                                to clarify that temporary appointments
                                may be made to both competitive and
                                excepted service positions using
                                applicable appointment procedures.
Sec.   9901.511(d)(1)(ii)....  Term appointments in the competitive
                                service. A new paragraph (d)(1)(ii)(A)
                                is added to specify procedures for the
                                use of term appointments. These
                                procedures describe the purpose of term
                                appointments, establish time limits for
                                term appointments, and provide for the
                                ability to promote, reassign, or reduce
                                in band employees on term appointments.
                                These procedures preclude the use of
                                employees on term appointments in
                                positions that should be filled on a
                                permanent basis except when necessary to
                                accomplish permanent work in
                                circumstances where the position cannot
                                be filled permanently.
                               A new paragraph (d)(1)(ii)(B) is added to
                                specify that these appointments may be
                                made competitively or noncompetitively
                                using applicable procedures.
Sec.   9901.511(d)(1)(iii)...  Time-limited appointments in the excepted
                                service. A new paragraph is added to
                                authorize non-permanent appointments in
                                the excepted service for more than 1
                                year, but does not place a limit on the
                                duration of the appointment, consistent
                                with these types of appointments under
                                OPM regulations. The new paragraph
                                specifies that these appointments may be
                                made using procedures at 5 CFR part 302
                                and provides for reassigning these
                                employees to other time-limited
                                positions in the excepted service as
                                long as the employee meets the
                                qualification requirements for the
                                position.
Sec.   9901.511(d)(2)(iv)....  Conversion to career conditional or
                                career appointment. Adds a new paragraph
                                to specify a non-permanent employee may
                                be noncompetitively converted to a
                                career conditional or career appointment
                                provided that the position he or she is
                                converted to is in the same pay schedule
                                and band for which hired on the non-
                                permanent appointment.
Sec.   9901.511(e)...........  Tenure group. Adds new paragraph
                                specifying that assignment of tenure
                                group codes for reduction in force
                                purposes is based on tenure group
                                definitions in 5 CFR 351.501(b) for
                                competitive service and 5 CFR 351.502(b)
                                for excepted service.
Sec.   9901.512..............  Probationary periods. Revises language
                                formerly found in Sec.   9901.512 of the
                                rule published in the Federal Register
                                dated November 1, 2005 (Volume 70,
                                Number 210) [Pages 66201-66203] to
                                prescribe conditions of probationary
                                periods to include types of probationary
                                periods, creditable service, failure to
                                complete a probationary period,
                                conditions for termination of
                                probationers, appeal rights, and
                                relationship of probationary periods to
                                other actions.
Sec.   9901.512(a)(1)-(a)(3).  Initial probationary period. Revises
                                paragraph (a) of this section in the
                                rule published in the Federal Register
                                dated November 1, 2005 (Volume 70,
                                Number 210) [Pages 66201-66203] to state
                                employment situations that require an
                                initial probationary period and
                                identifies applicable time limits.
Sec.   9901.512(a)(4)........  Crediting service. Adds new paragraph to
                                describe how time served under an
                                appointment is credited toward
                                completion of the initial probationary
                                period.
Sec.   9901.512(a)(5)........  Termination of probationers for
                                unsatisfactory performance and/or
                                conduct. Adds new paragraph to require
                                termination of employees during an
                                initial probationary period for
                                performance and/or conduct to follow
                                Governmentwide regulations at 5 CFR
                                315.804.
Sec.   9901.512(a)(6)........  Termination of probationers for
                                conditions arising before appointment.
                                Adds a new paragraph to require
                                termination of employees during an
                                initial probationary period for reasons
                                based in whole or in part on conditions
                                arising before the employee's
                                appointment to follow Governmentwide
                                regulations at 5 CFR 315.805.

[[Page 73610]]

 
Sec.   9901.512(a)(7)........  Appeals. Adds a new paragraph to afford
                                competitive service employees who are
                                terminated during the initial
                                probationary period limited appeal
                                rights to the Merit Systems Protection
                                Board in accordance with 5 CFR 315.806.
Sec.   9901.512(b) and (b)(1)  Supervisory probationary period. Revises
                                paragraph (b) of this section of the
                                rule published in the Federal Register
                                dated November 1, 2005 (Volume 70,
                                Number 210) [Pages 66201-66203] to
                                establish a supervisory probationary
                                period and limits such periods to 1
                                year.
                               Adds paragraph (b)(1) to this section
                                describing how service is credited
                                toward completion of the supervisory
                                probationary period.
Sec.   9901.512(b)(2)........  Failure to complete the supervisory
                                probationary period. Adds new paragraph
                                to include and expand language at Sec.
                                9901.512(b) to explain placement options
                                for employees who fail the supervisory
                                probationary period.
                               Adds paragraph (b)(iii) requiring that an
                                employee be notified in writing when
                                reassigned for failure to complete the
                                supervisory probationary period.
Sec.   9901.512(b)(2)(iv)....  Appeals. Adds new paragraph (A) to state
                                that an employee who is placed in a
                                nonsupervisory position for failure to
                                successfully complete a supervisory
                                probationary period has no appeal right.
                               Adds new paragraph (B) to permit employee
                                alleging partisan political affiliation
                                or marital status as the reason for
                                failure of the supervisory probationary
                                period to appeal to the Merit Systems
                                Protection Board under 5 CFR 315.908(b).
Sec.   9901.512(b)(2)(v).....  Relationship to other actions. Adds two
                                new paragraphs. Paragraph (A) requires
                                that when an initial probationary period
                                and a supervisory probationary period
                                are served concurrently, the former
                                takes precedence.
                               Paragraph (B) requires application of 5
                                CFR 752 when an employee is demoted to a
                                lower pay band than the one he/she left
                                to accept the supervisory position if
                                demoted for other than supervisory
                                performance.
Sec.   9901.513..............  Removes material formerly found in this
                                section addressing Qualification
                                standards. Authority for establishing
                                NSPS-unique qualification standards or
                                modifying OPM qualification standards
                                for NSPS positions is found at Sec.
                                Sec.   9901.211 and 9901.212.
Sec.   9901.514..............  Non-citizen hiring. Revises paragraph to
                                specify that non-citizens may be hired
                                to permanent, temporary, or time-limited
                                appointments in the excepted service
                                when an absence of qualified U.S.
                                citizens is demonstrated. New language
                                also prevents movement to other
                                positions unless a qualified U.S.
                                citizen is unavailable.
Sec.   9901.515(a)(1)........  Competitive examining procedures. Revises
                                paragraph (a) and (a)(1) to state that
                                competitive examining procedures may be
                                used to make career, career conditional,
                                term, and temporary appointments in the
                                competitive service. Includes language
                                authorizing the use of numerical rating
                                and ranking or category ranking and
                                selection procedures, but specifies that
                                the decision on which method to use must
                                be made prior to issuing a vacancy
                                announcement.
Sec.   9901.515(a)(2)........  New language provides that the Secretary
                                will issue uniform policies, procedures,
                                and guidance for competitive examining
                                consistent with Governmentwide
                                procedures prescribed in 5 CFR part 332
                                and provides that the authority to
                                conduct competitive examining for NSPS
                                positions may be delegated in writing.
Sec.   9901.515(b)...........  Public notice. Replaces material in
                                paragraph (b) with information
                                previously found in Sec.
                                9901.515(a)(1), (2), (3), and (4). This
                                new language specifies area of
                                consideration and public announcement
                                for positions filled using competitive
                                examining procedures.
Sec.   9901.515(c)...........  Numerical rating and ranking procedures.
                                Revises paragraph to specify procedures
                                to be used when filling positions using
                                numerical rating and ranking approach
                                and to clarify that preference eligible
                                applicants may not be passed over to
                                select a non-preference eligible, unless
                                procedures for passing over a preference
                                eligible are followed.
Sec.   9901.515(d)...........  Alternative rating and selection
                                procedures (category rating). Replaces
                                material at paragraph (c) to specify
                                procedures to be used when filling
                                positions using the category rating and
                                selection method of competitive
                                examining.
Sec.   9901.515(e)...........  Passing over preference eligibles. Adds
                                new paragraph confirming OPM retains
                                authority to grant or deny a request to
                                pass over a preference eligible with a
                                compensable service-connected disability
                                of 30% or more and to make medical
                                qualifications determinations pertaining
                                to preference eligibles.
Sec.   9901.516..............  Internal placement. This section is
                                revised to codify current application of
                                NSPS regulations with regard to internal
                                placement.
Sec.   9901.516(a)...........  Determining levels of work and movement
                                within and across career groups. Adds
                                paragraph to state that the definitions
                                found in Sec.   9901.103 for the terms
                                promotion, reassignment, and reduction
                                in band must be applied when determining
                                whether an action does or does not
                                require competition and in applying pay
                                administration procedures.
Sec.   9901.516(b)...........  Eligibility for promotion to full
                                performance band. Adds paragraph to
                                require rating of record at Level 3 or
                                above (or determination by authorized
                                management official that performance
                                meets this level) before an employee in
                                a career ladder position may be promoted
                                to the full performance band.
Sec.   9901.516(c)...........  Time after competitive appointment
                                restriction. Adds paragraph that
                                indicates that the restrictions on
                                movement of an employee immediately
                                after initial appointment are not
                                applicable to NSPS positions.
Sec.   9901.516(d)...........  Details. Adds paragraph to prescribe that
                                details may be made without a time limit
                                and that an official personnel action is
                                only required in certain situations.

[[Page 73611]]

 
Sec.   9901.516(e)...........  NSPS Merit Promotion Program. Adds
                                paragraphs (e)(1) through (e)(5) that,
                                in conjunction with requirements at 5
                                CFR part 335, establish the NSPS Merit
                                Promotion Program. Prescribes that all
                                actions must be taken in accordance with
                                merit system principles. Requires
                                employees who are absent for legitimate
                                reasons to receive consideration for
                                vacancies. Requires applicants to meet
                                minimum qualification standards.
                                Requires a job analysis to identify the
                                basic duties and responsibilities of the
                                position to be filled and the knowledge,
                                skills, and abilities and/or
                                competencies necessary to successfully
                                perform the work of the position.
                                Prescribes management's right to select
                                or not select from among any group of
                                highly qualified candidates and from
                                appropriate sources of candidates.
                                Requires maintenance of records for a
                                specified period documenting how each
                                competitive service position is filled
                                through internal competitive procedures
                                to allow reconstruction of the placement
                                action if necessary.
Sec.   9901.516(e)(6)........  Competitive actions. Adds paragraph to
                                specify which promotion actions require
                                the application of competitive
                                procedures (e.g., promotion to a higher
                                pay band, temporary promotion or
                                temporary detail to a higher pay band
                                for more than 180 days, et al.).
Sec.   9901.516(e)(7)........  Exceptions to competition. Adds paragraph
                                to specify which promotion actions do
                                not require competitive procedures
                                (e.g., promotion to a full performance
                                band when competition previously
                                occurred, promotion when position is
                                reclassified as a result of the issuance
                                of a new classification standard,
                                promotion when position is reclassified
                                because of additional duties and
                                responsibilities, et al.).
Sec.   9901.516(e)(8)........  Alternative promotion procedures. Adds
                                new paragraph describing alternative
                                forms of competition that do not require
                                a vacancy announcement, to include
                                assessment boards, alternative
                                certification, and exceptional
                                performance promotion. Employees must be
                                made aware that these flexibilities may
                                be used; notice may be given via
                                newsletters, bulletin boards, Web sites,
                                or other common methods of employee
                                communication.
Sec.   9901.516(e)(9)........  Grievances. Adds new paragraph providing
                                for employee right to file a complaint
                                relating to a promotion action via
                                appropriate grievance procedures.
                                Although there is no right of appeal to
                                OPM, OPM may conduct investigations of
                                substantial violations of OPM
                                requirements.
------------------------------------------------------------------------

Next Steps

    The National Defense Authorization Act for Fiscal Year 2008 
requires that this rule be considered a major rule for the purpose of 
section 801 of title 5, United States Code. As such, before it can take 
effect, the Department will submit to each House of the Congress and to 
the Comptroller General a report containing the rule, a general 
statement relating to the rule, and the proposed effective date of the 
rule. The rule may not be effective until the date occurring 60 days 
after the later of (1) Congressional receipt of the report, or (2) the 
date the rule is published in the Federal Register. Congress has the 
opportunity to delay implementation of the rule based on the procedures 
set forth in 5 U.S.C. 801-808.

E.O. 12866, Regulatory Review

    DoD and OPM have determined that this action is a significant 
regulatory action within the meaning of Executive Order 12866 because 
there is significant public interest in the National Security Personnel 
System. DoD and OPM have analyzed the expected costs and benefits of 
the revised HR system, and that analysis was presented in the 
supplementary information published with the rule on September 26, 2008 
(Volume 73, Number 188) on page 56389.
    The primary benefit to the public of NSPS resides in the HR 
flexibilities that will enable DoD to attract, build, and retain a 
high-performing workforce focused on effective and efficient mission 
accomplishment. A performance-based pay system that rewards excellent 
performance will result in a more qualified and proficient workforce 
and will generate a greater return on investment in terms of 
productivity and effectiveness. Taken as a whole, the changes included 
in these proposed regulations will improve upon the original NSPS 
regulations and result in a contemporary, merit-based HR system that 
focuses on performance, generates respect and trust, and supports the 
primary mission of DoD.
    This rule has been reviewed by the Office of Management and Budget 
in accordance with E.O. 12866.

Regulatory Flexibility Act

    DoD and OPM have determined that these regulations would not have a 
significant economic impact on a substantial number of small entities 
because they would apply only to Federal agencies and employees.

Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)

    This proposed regulatory action will not impose any additional 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act.

E.O. 12988, Civil Justice Reform

    This proposed regulation is consistent with the requirements of 
E.O. 12988. The regulation clearly specifies the effects on existing 
Federal law or regulation; provides clear legal standards; has no 
retroactive effects; specifies procedures for administrative and court 
actions; defines key terms; and is drafted clearly.

E.O. 13132, Federalism

    DoD and OPM have determined these proposed regulations would not 
have Federalism implications because they would apply only to Federal 
agencies and employees. The proposed regulations would not have 
financial or other effects on States, the relationship between the 
Federal Government and the States, or the distribution of power and 
responsibilities among the various levels of government.

Unfunded Mandates

    These proposed regulations would not result in the expenditure by 
State, local, or tribal governments of more than $100 million annually. 
Thus, no written assessment of unfunded mandates is required.

List of Subjects in 5 CFR Part 9901

    Administrative practice and procedure, Government employees, Labor 
management relations, Labor unions, Reporting and recordkeeping 
requirements, Wages.


[[Page 73612]]


Office of Personnel Management.
Michael W. Hager,
Acting Director, Office of Personnel Management.
Department of Defense.
Gordon England,
Deputy Secretary of Defense.

    Accordingly, under the authority of section 9902 of title 5, United 
States Code, the Department of Defense and the Office of Personnel 
Management are proposing to add subpart E to part 9901 of title 5, Code 
of Federal Regulations to read as follows:

PART 9901--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM 
(NSPS)

Subpart E--Staffing and Employment

Sec.

General

9901.501 Purpose.
9901.502 Scope of authority.
9901.503 Coverage.
9901.504 Definitions.

External Recruitment and Internal Placement

9901.511 Appointing authorities.
9901.512 Probationary periods.
9901.513 [Reserved]
9901.514 Non-citizen hiring.
9901.515 Competitive examining procedures.
9901.516 Internal placement.

    Authority: 5 U.S.C. 9902.

Subpart E--Staffing and Employment

General


Sec.  9901.501  Purpose.

    (a) This subpart sets forth policies and procedures for the 
recruitment for, and appointment to, positions; and assignment, 
reassignment, detail, transfer, or promotion of employees, consistent 
with 5 U.S.C. 9902(a) and (i).
    (b) The Secretary will comply with merit principles set forth in 5 
U.S.C. 2301 and with 5 U.S.C. 2302 (dealing with prohibited personnel 
practices).
    (c) The Secretary will adhere to veterans' preference principles 
set forth in 5 U.S.C. 2302(b)(11), consistent with 5 U.S.C. 9902(i).


Sec.  9901.502  Scope of authority.

    When a specified category of employees, applicants, and positions 
is covered by the system established under this subpart, the provisions 
of 5 U.S.C. 3301, 3302, 3304, 3317(a), 3318 and 3319 (except with 
respect to veterans' preference), 3321 (except 3321(a)(2)), 3324, 3325, 
3327, 3330, and 3341 are modified or waived and replaced with respect 
to that category except as otherwise specified in this subpart. In 
accordance with Sec.  9901.101, the Secretary may prescribe 
implementing issuances to carry out the provisions of this subpart.


Sec.  9901.503  Coverage.

    (a) This subpart applies to eligible DoD employees and positions in 
the categories listed in paragraph (b) of this section, subject to a 
determination by the Secretary under Sec.  9901.102(b).
    (b) The following employees and positions in DoD organizational and 
functional units are eligible for coverage under this subpart:
    (1) Employees and positions who would otherwise be covered by 5 
U.S.C. chapter 33 (excluding members of the Senior Executive Service); 
and
    (2) Such others designated by the Secretary as authorized under 5 
U.S.C. 9902.


Sec.  9901.504  Definitions.

    In this subpart--
    Career conditional employee means an individual appointed without 
time limit to a competitive service position in NSPS who does not meet 
the definition of a career employee.
    Career employee means an individual appointed without time limit to 
a competitive service position in NSPS who has served 3 years of 
substantially continuous service as described in 5 CFR 315.201(b).
    Competencies has the meaning given that term in Sec.  9901.103.
    Detail means the temporary assignment, other than temporary 
reassignment or temporary promotion, of an employee to another position 
with the expectation that the employee will return to the permanent 
position of record upon expiration of the assignment. For pay and 
benefit purposes, an employee continues to encumber the position from 
which the employee was detailed.
    Initial probationary period means the initial period of service 
immediately following an employee's appointment to the competitive or 
excepted service, as specified in Sec.  9901.512, during which an 
authorized management official determines whether the employee fulfills 
the requirements of the position to which assigned.
    Local commuting area is the geographic area that usually 
constitutes one area for employment purposes. It includes any 
population center (or two or more neighboring ones) and the surrounding 
localities in which people live and can reasonably be expected to 
travel back and forth daily to their usual place of employment.
    Promotion has the meaning given that term in Sec.  9901.103.
    Reassignment has the meaning given that term in Sec.  9901.103. For 
the purpose of part 351 of this title, an official position does not 
include a position to which an employee is reassigned on a temporary or 
time-limited basis.
    Reduction in band has the meaning given that term in Sec.  
9901.103.
    Supervisory probationary period means the first year of service 
immediately following an employee's initial appointment or placement in 
a supervisory position, as provided in 5 U.S.C. 3321(a)(2), during 
which an authorized management official determines whether the employee 
fulfills the requirements of the position to which assigned.
    Temporary employee means an individual in the competitive or 
excepted service who is employed for a limited period of time not to 
exceed 1 year. The individual's appointment may be extended, up to a 
maximum established under Sec.  9901.511(d), to perform the work of a 
position that does not require an additional permanent employee.
    Term employee means an individual in the competitive service who is 
employed for a period of more than 1 year up to a maximum established 
under Sec.  9901.511(d).
    Time-limited employee means an individual in the excepted service 
who is employed for a period of more than 1 year up to a maximum 
established under Sec.  9901.511(d).

External Recruitment and Internal Placement


Sec.  9901.511  Appointing authorities.

    (a) Competitive and excepted appointing authorities. The Secretary 
may continue to use excepted and competitive appointing authorities 
under chapter 33 of title 5, U.S. Code, Governmentwide regulations, or 
Executive orders, as well as other statutes, and those individuals 
appointed under these authorities will be given career, career 
conditional, term or temporary appointments in the competitive service 
or permanent, time-limited, or temporary appointments in the excepted 
service, as appropriate. The competitive appointing authorities under 
this paragraph are subject to the procedures in part 330 of this title, 
except for 5 CFR 330.208 and 330.501.
    (b) Additional appointing authorities. (1) The Secretary and the 
Director may enter into written agreements providing for new excepted 
and competitive appointing authorities for positions covered by the 
National Security Personnel System, including noncompetitive 
appointments, and

[[Page 73613]]

excepted appointments that may lead to a subsequent noncompetitive 
appointment to the competitive service.
    (2) DoD and OPM will jointly publish a notice, and request 
comments, in the Federal Register when establishing a new competitive 
appointing authority or a new excepted appointing authority that may 
lead to a subsequent noncompetitive appointment to a competitive 
service position.
    (3) The Secretary will prescribe appropriate implementing issuances 
to administer a new appointing authority established under paragraph 
(b) of this section.
    (4) At least annually, a consolidated list of all appointing 
authorities established under this section and currently in effect will 
be published in the Federal Register.
    (c) Severe shortage/critical need hiring authority. (1) The 
Secretary will determine when a severe shortage of candidates or a 
critical hiring need exists, as defined in 5 CFR part 337, subpart B, 
for particular occupations, pay bands, career groups, and/or geographic 
locations. The Secretary may decide that such a shortage or critical 
need exists, or may make this decision in response to a written request 
from the Head of a DoD Component. These authorities may be used without 
regard to competitive examination requirements described in Sec.  
9901.515. Public notice will be provided in accordance with 5 U.S.C. 
3304(a)(3)(A).
    (2) For each specific authority, the Secretary will document the 
basis for the severe shortage or critical hiring need, consistent with 
5 CFR 337.204(b) or 337.205(b), as applicable.
    (3) The Secretary may extend a direct hire authority if the 
Secretary determines there is or will continue to be a severe shortage 
of candidates or a critical hiring need for a particular position(s) as 
of the date the authority is due to expire.
    (4) The Secretary will terminate or modify a specific authority to 
make appointments under this section when it is determined that the 
severe shortage or critical need upon which the authority was based no 
longer exists.
    (5) The Secretary will notify OPM of determinations made under this 
paragraph (c).
    (d) Non-permanent appointing authorities. (1) The Secretary may 
authorize appointments with time limits in the competitive or excepted 
service, as appropriate, when the need for an employee's services is 
not permanent. These appointments will be either temporary, term, or 
time-limited as defined below:
    (i) Temporary appointments. Temporary appointments are for a 
specified period not to exceed 1 year and may be made in either the 
competitive or the excepted service. A temporary appointment may be 
extended for 2 additional years, in increments not to exceed 1 year, to 
a maximum of 3 years. Temporary appointments may be made and extended 
to positions involving intermittent or seasonal work without regard to 
the maximum time limits. The circumstances under which a temporary 
appointment is appropriate include, but are not limited to: Filling a 
position to address a temporary workload peak or to complete a project; 
meeting a staffing need that is anticipated not to exceed a one-year 
timeframe for reasons such as abolishment, reorganization, or 
contracting out of a function; anticipated reduction in funding; 
filling positions temporarily because the positions are expected to be 
needed for placement of permanent employees who would otherwise be 
displaced; or when the incumbent will be out of the position for a 
temporary period of time, but is expected to return. A temporary 
employee may be reassigned to another temporary position provided the 
total combined service under the temporary appointment does not exceed 
the maximum three-year time limitation, the employee meets the 
qualification requirements of the position, and provided the conditions 
specific to the employee's appointing authority are met. Temporary 
appointments are made as follows:
    (A) Competitive service. Temporary appointments to positions in the 
competitive service may be made using competitive procedures under 
Sec.  9901.515, using the severe shortage/critical need hiring 
authorities described in Sec.  9901.511(c), or by using direct hire 
procedures under 5 CFR part 337, as appropriate. Temporary appointments 
to positions in the competitive service also may be made 
noncompetitively consistent with 5 CFR part 316, or by any 
noncompetitive appointing authorities granted to or by the Secretary.
    (B) Excepted service. Temporary appointments to positions in the 
excepted service are made under the procedures prescribed in 5 CFR part 
302.
    (ii) Term appointments in the competitive service. (A) Term 
appointments are in the competitive service and will be for a period of 
more than 1 year, but not to exceed 5 years. The term appointment may 
be extended by an authorized management official for 1 additional year 
to a maximum of 6 years. The circumstances under which a term 
appointment is appropriate include, but are not limited to, project 
work, extraordinary workload, uncertainty of future funding, scheduled 
contracting out or abolishment of a function, the need to maintain 
permanent positions for placement of potential surplus employees, or 
when the incumbent will be out of the position for a significant period 
of time, but is expected to return. A term employee may be promoted, 
reassigned or reduced in band to another term position provided the 
total combined service under the term appointment does not exceed the 
maximum six-year time limitation and the employee meets the 
qualification requirements of the position.
    (B) Term appointments may be made using competitive procedures 
under Sec.  9901.515, using the severe shortage/critical need hiring 
authorities described in Sec.  9901.511(c), or by using direct hire 
procedures under 5 CFR part 337, as appropriate. Term appointments also 
may be made noncompetitively consistent with 5 CFR part 316 or by any 
noncompetitive appointing authorities granted to or by the Secretary.
    (iii) Time-limited appointments in the excepted service. Time-
limited appointments are in the excepted service and will be for a 
period of more than 1 year. Time-limited appointments to positions in 
the excepted service are made under the procedures prescribed in 5 CFR 
part 302. A time-limited employee may be reassigned to another time-
limited position in the excepted service provided the employee meets 
the qualification requirements of the position and the conditions 
specific to the appointing authority applicable to the employee.
    (2) Conversion to career conditional or career appointment. A non-
permanent employee serving in a competitive service position may be 
converted without further competition to a permanent position (i.e., 
career or career-conditional) if--
    (i) The vacancy announcement met the requirements of Sec.  
9901.515(a) and included the possibility of noncompetitive conversion 
to a permanent position (i.e., career or career-conditional) at a later 
date;
    (ii) The individual was appointed using the competitive examining 
procedures set forth in Sec.  9901.515(b) and (c);
    (iii) The employee completed at least 2 years of continuous service 
at Level 3 (Valued Performer) or better; and
    (iv) The employee is converted to a career conditional or career 
position in

[[Page 73614]]

the same pay schedule and band for which hired.
    (e) Tenure group. For reduction in force purposes, NSPS employees 
appointed to the competitive service are placed in one of the tenure 
groups defined in 5 CFR 351.501(b) or, if appointed to the excepted 
service, one of the tenure groups defined in 5 CFR 351.502(b).


Sec.  9901.512  Probationary periods.

    (a) Initial probationary period. (1) An employee who is given a 
career, career conditional, or term appointment in the competitive 
service or a permanent or time-limited appointment in the excepted 
service under this part is required to complete a probationary period 
when the employee:
    (i) Is appointed from a competitive list of eligibles established 
under Sec.  9901.515, using the severe shortage/critical need hiring 
authorities described in Sec.  9901.511(c), or by using direct hire 
procedures under 5 CFR part 337; or
    (ii) Is appointed to the competitive service either by special 
authority or by conversion under subparts F or G of 5 CFR part 315, 
unless specifically exempt from probation by the authority itself; or
    (iii) Is reinstated, unless, during any period of service which 
affords a current basis for reinstatement, the employee completed an 
initial probationary period; or
    (iv) Is appointed to a position in the excepted service under the 
procedures prescribed in part 302 of this title.
    (2) An employee serving an initial probationary period at the time 
his or her permanent position is converted into NSPS, or at the time he 
or she is assigned from a non-NSPS position to an NSPS position, or at 
the time he or she is reappointed through the DoD Priority Placement 
Program or Reemployment Priority List established under part 330 of 
this title after being involuntarily separated through no fault of the 
employee, will continue the probationary period, i.e., the probationary 
period does not start over.
    (3) The probationary period required by Sec.  9901.512(a) is as 
follows:
    (i) Competitive service--1 year.
    (ii) Excepted service--2 years, except for preference eligibles who 
have appeal rights after 1 year under 5 CFR part 752.
    (4) Crediting Service. (i) Time spent in a non-pay status in excess 
of one workday during the initial probationary period will extend the 
probationary period by an equal amount of time.
    (ii) Service during an initial probationary period from which an 
employee is separated for performance or conduct does not count toward 
completion of probation required under a subsequent NSPS appointment.
    (iii) The probationary period for part-time employees is computed 
on the basis of calendar time, in the same manner as for full-time 
employees. For intermittent employees, i.e., those who do not have 
regularly scheduled tours of duty, each day or part of a day in pay 
status counts as one day of credit toward the 260 days (actual ``work 
days'' in a year, excluding weekends) needed to complete the 1-year 
probationary period. The probationary period may not be completed in 
less than 1 year calendar time.
    (iv) Absence (whether on or off the rolls) due to compensable 
injury or military duty is creditable in full upon restoration under 
part 353 of this title to Federal service. An employee serving a 
probationary period who leaves Federal service to become a volunteer 
with the Peace Corps or the Corporation for National and Community 
Services serves the remainder of the probationary period upon 
reinstatement provided the employee is reinstated within 90 days of 
termination of service as a volunteer or training for such service.
    (5) Termination of probationers for unsatisfactory performance and/
or conduct. When an authorized management official proposes to 
terminate an employee during his or her initial probationary period 
because his or her performance and/or conduct during this period fails 
to demonstrate his or her fitness or qualifications for continued 
employment, the official will follow procedures at 5 CFR 315.804.
    (6) Termination of probationers for conditions arising before 
appointment. When an authorized management official proposes to 
terminate an employee during his or her initial probationary or trial 
period for reasons based in whole or in part on conditions arising 
before the employee's appointment, the official will follow procedures 
at 5 CFR 315.805.
    (7) Appeals. Under NSPS, a competitive service employee who is 
terminated during the initial probationary period will have limited 
appeal rights to the Merit Systems Protection Board (MSPB) under 5 CFR 
315.806.
    (b) Supervisory probationary period. Under NSPS, an employee is 
required to serve a probationary period upon initial appointment to a 
supervisory position. The supervisory probationary period is 1 year. An 
employee serving a supervisory probationary period at the time his or 
her permanent position is converted into NSPS will continue the 
probationary period in the new position; i.e., the supervisory 
probationary period does not start over.
    (1) Crediting service toward completion of the supervisory 
probationary period. (i) An employee who is reassigned, transferred, 
promoted or reduced in band from one supervisory position to another 
while serving a supervisory probationary period is subject to the 
probationary period prescribed for the new position. Service in the 
former position is credited toward completion of the probationary 
period in the new position.
    (ii) Temporary service in a supervisory position prior to the 
supervisory probation when there is no break in service is creditable 
toward completion of a supervisory probationary period. This includes 
service on temporary promotion or reassignment to another supervisory 
position while serving a supervisory probation. Service in a 
nonsupervisory position is not creditable.
    (iii) Time spent in a non-pay status in excess of one workday 
during the supervisory probationary period will extend the probationary 
period by an equal amount of time.
    (iv) Service during a supervisory probationary period from which an 
employee was separated or demoted for performance and/or conduct does 
not count toward completion of a supervisory probationary period 
required under a subsequent appointment.
    (v) Absence (whether on or off the rolls) due to compensable injury 
or military duty is creditable in full toward completion of a 
supervisory probationary period upon restoration to Federal service 
under part 353 of this title.
    (2) Failure to complete the supervisory probationary period. (i) 
Except as described in paragraph (b)(2)(ii) of this section, an 
employee who, for reasons of supervisory performance, does not 
satisfactorily complete the probationary period is entitled to be 
assigned to a position at a grade or pay band and pay no lower than 
that held before assignment to the supervisory position.
    (ii) A nonsupervisory employee who is reduced in band into a 
position which requires a supervisory probationary period and who, for 
reasons of supervisory performance, does not satisfactorily complete 
the probationary period is entitled to be reassigned to a grade or pay 
band no lower than that held when serving the supervisory probation. 
The employee is eligible for repromotion in accordance with NSPS 
promotion rules under Sec.  9901.516.

[[Page 73615]]

    (iii) The agency must notify the employee in writing that he or she 
is being assigned for failure to complete the supervisory probationary 
period.
    (iv) Appeals. (A) An employee, who, in accordance with the 
provisions of this section, is assigned to a nonsupervisory position, 
has no appeal right, except as provided in paragraph (b)(2)(iv)(B) of 
this section.
    (B) An employee who alleges that a Component action under this 
section was based on partisan political affiliation or marital status 
may appeal to the MSPB under 5 CFR 315.908(b).
    (v) Relationship to other actions. (A) If an employee is required 
to concurrently serve both a supervisory and an initial probationary 
period, the latter takes precedence.
    (B) An action that demotes an employee to a pay band lower than the 
one the employee left to accept the supervisory position, for reasons 
other than supervisory performance, is governed by part 752 of this 
title.


Sec.  9901.513  [Reserved]


Sec.  9901.514  Non-citizen hiring.

    The Secretary may establish procedures for appointing non-citizens 
to permanent, temporary, or time-limited positions in the excepted 
service, provided there is a demonstrated absence of qualified U.S. 
citizens and applicable immigration and security requirements are met. 
Non-citizens may not be promoted, reassigned, or reduced in band, 
except in situations where a qualified U.S. citizen is once again 
unavailable.


Sec.  9901.515  Competitive examining procedures.

    (a)(1) Under NSPS, competitive examining is authorized to appoint 
applicants to career, career conditional, term, and temporary 
appointments in the competitive service. In recruiting applicants from 
outside the civil service for competitive appointments to competitive 
service positions in NSPS, Components with examining authority may use 
either numerical rating and ranking or alternative ranking and 
selection procedures (i.e., category rating). Components must decide 
which procedures to use prior to issuing a vacancy announcement and 
include this information in the vacancy announcement.
    (2) The Secretary will issue uniform policies, procedures, and 
guidance concerning competitive examining for NSPS within the 
Department and may delegate in writing authority for competitive 
examining for NSPS positions. These policies, procedures, and guidance 
will be consistent with part 332, subparts A and C, of this title.
    (b) Public notice. (1) Components will accept applications from all 
U.S. citizens, to include current Federal employees, and at a minimum, 
will consider applicants from the local commuting area. Components may 
concurrently consider applicants from other targeted recruitment 
sources, as specified in the vacancy announcement. If there are 
insufficient qualified candidates in both the local commuting area and 
targeted recruitment sources, Components may consider applicants from 
outside that area.
    (2) When limiting consideration, the vacancy announcement will 
clearly state that consideration will be limited if sufficient 
qualified candidates are received from the local commuting area and 
other targeted recruitment sources. If sufficient candidates are not 
received from the local commuting area and other targeted recruitment 
sources, consideration will be expanded to all applicants; i.e., the 
area of consideration will not be expanded incrementally.
    (3) No minimum announcement opening period is required. The open 
period will be based on the type of position being filled and the 
availability of qualified candidates in the labor market.
    (c) Numerical rating and ranking procedures. When filling positions 
using numerical rating and ranking, the procedures issued by the 
Secretary will be followed. All qualified applicants may be referred 
and selection may be made from among any referred applicants except 
that a preference eligible will not be passed over to select a non-
preference eligible, unless procedures under 5 U.S.C. 3318 for passing 
over a preference eligible are followed.
    (d) Alternative ranking and selection procedures (category rating). 
When filling positions using category rating, procedures issued by the 
Secretary will be followed in lieu of the procedures in part 337, 
subpart C, except for Sec.  337.304, of this title.
    (e) Passing over preference eligibles. OPM retains the authority to 
grant or deny a pass over request of a preference eligible with a 
compensable service-connected disability of 30 percent or more and to 
make medical qualifications determinations pertaining to preference 
eligibles. The Secretary has the authority to grant or deny a pass over 
request of a preference eligible with a compensable service-connected 
disability of less than 30 percent.


Sec.  9901.516  Internal placement.

    (a) Determining levels of work and movement within and across 
career groups. The determination of when an action is a promotion, 
reassignment, or reduction in band for competitive or noncompetitive 
movement and related pay administration purposes, either between NSPS 
positions or to an NSPS position from a non-NSPS position, must be made 
by applying the definitions of those terms at Sec.  9901.103.
    (b) Eligibility for promotion to full performance band. An employee 
with a rating of record of Level 1 or Level 2 is not eligible for 
promotion to the full performance band of the position until such time 
as the employee attains a rating of record of Level 3 or above. An 
employee who does not have an NSPS rating of record may be promoted to 
the full performance band of the position if an authorized management 
official conducts a performance assessment and determines that the 
employee is performing at the equivalent of Level 3 or above.
    (c) Time after competitive appointment restriction. Restrictions on 
the movement of an employee immediately after the employee's initial 
appointment to Federal service as described in 5 CFR part 330, subpart 
E, are not applicable to NSPS positions.
    (d) Details. There is no time limit on details or any requirement 
to extend them incrementally. An official personnel action is not 
required to document a detail unless the detail exceeds one year, 
crosses Component and/or Agency lines or assigns an employee from NSPS 
to another pay system within the Component, e.g., NSPS to General 
Schedule, or documents developmental rotational assignments or 
deployment.
    (e) NSPS Merit Promotion Program. In accordance with the 
Secretary's authority to prescribe regulations for the assignment, 
reassignment, reinstatement, detail, transfer, and promotion of 
individuals or employees into or within NSPS, the procedures below, in 
conjunction with the merit promotion requirements in part 335 of this 
title constitute the NSPS Merit Promotion Program. Internal placement 
actions may be made on a permanent or temporary basis using competitive 
and noncompetitive procedures.
    (1) All actions taken under the NSPS Merit Promotion Program, 
whether involving the identification, qualification, evaluation, or 
selection of candidates, will be made without regard to race, color, 
religion, age, gender, national origin, political affiliation, 
disability, sexual orientation, marital or family status or other 
prohibited criteria

[[Page 73616]]

and will be based solely on job-related factors.
    (2) Vacancy announcements will identify areas of consideration that 
are sufficiently broad to ensure the availability of high quality 
candidates, taking into account the nature and level of the positions 
covered. Employees within the area of consideration who are absent for 
legitimate reason, e.g., on detail, on leave, at training courses, in 
the military service, or serving in public international organizations 
or on Intergovernmental Personnel Act assignments, must receive 
appropriate consideration for promotion if they apply for a vacant 
position; i.e., they cannot be excluded from consideration because they 
are absent. Employees who are unable to apply for vacant positions 
while they are away may also make other appropriate arrangements for 
consideration.
    (3) To be eligible for promotion or placement, candidates must meet 
the minimum qualification standards prescribed by either OPM or the 
Department, as appropriate. Prior to the recruitment process, 
authorized management officials will identify through job analysis the 
job-related criteria that will be used to evaluate and determine the 
best qualified candidates for referral. The job analysis will identify 
the basic duties and responsibilities of the position being filled; the 
knowledge, skills, abilities, and/or competencies required to perform 
the duties and responsibilities; and the factors that are important in 
evaluating candidates. The job analysis may cover a single position or 
group of positions, or an occupation or group of occupations, having 
common characteristics. Candidate evaluation will give due weight to 
performance appraisals and incentive awards. When evaluating a 
candidate's performance appraisals, consideration may be given to the 
differences in performance appraisal systems. Job analysis requirements 
will conform to the Uniform Guidelines on Employee Selection Procedures 
in 29 CFR part 1607, and 5 CFR part 300, subpart A.
    (4) Management has the right to select or not select from among a 
group of highly qualified candidates and to select from appropriate 
sources of candidates.
    (5) Components will maintain a temporary record of each promotion 
to a competitive service position filled through internal competitive 
procedures to allow reconstruction of the placement action, including 
documentation on how candidates were rated, ranked, and referred. These 
records may be destroyed after 2 years or after the program has been 
formally evaluated by OPM (whichever occurs first) if the time limit 
for grievance has lapsed and destruction would otherwise be consistent 
with the Department's Priority Placement Program requirements.
    (6) Competitive actions. (i) Except as provided in paragraph (e)(7) 
of this section, competitive procedures apply to promotion of an 
employee to a higher pay band (i.e., a higher level of work) and to the 
following actions:
    (A) Temporary promotion or detail to a higher pay band for more 
than 180 days. Prior service during the preceding 12 months under 
noncompetitive temporary promotions or details to higher pay-banded 
positions counts toward the 180-day total. A temporary promotion may be 
made permanent without further competition, provided the temporary 
promotion was originally made under competitive procedures and the fact 
that the temporary promotion might lead to a permanent promotion was 
made known to all potential candidates;
    (B) Reassignment or reduction in band to a position with more 
promotion potential than a position previously held on a permanent 
basis in the competitive service (except as permitted by reduction in 
force regulations at 5 CFR part 351);
    (C) Transfer to a position at a higher pay band or with more 
promotion potential than a position previously held on a permanent 
basis in the competitive service; and
    (D) Reinstatement to a permanent, term, or temporary position at a 
higher pay band or with more promotion potential than a position 
previously held on a permanent basis in the competitive service.
    (ii) When determining whether the promotion potential of a General 
Schedule position is lower than that of the promotion potential of the 
NSPS position to which an employee moves, the definitions of higher, 
lower, and comparable levels of work under Sec.  9901.103 will be 
applied.
    (7) Exceptions to competition. (i) Competitive procedures do not 
apply to:
    (A) Promotion resulting from the upgrading of a position to a 
higher pay band level without significant change in the duties and 
responsibilities due to the issuance of a new NSPS classification 
standard or the correction of an initial classification error;
    (B) Promotion resulting from an employee's position being 
classified at a higher pay band level because of additional duties and 
responsibilities;
    (C) Promotion resulting from previous competitive selection for a 
position with documented potential to a higher pay band;
    (D) Temporary promotion or detail to a higher pay band or a 
position with known promotion potential for 180 days or less;
    (E) Promotion to a higher pay band previously held on a permanent 
or term basis in the competitive service from which an employee was 
separated or demoted for other than performance or conduct reasons;
    (F) Promotion, reassignment, reduction in band, transfer, or 
reinstatement to a position having promotion potential no greater than 
the potential of a position an employee currently holds or previously 
held on a permanent basis in the competitive service (or in another 
merit system with which OPM has an approved interchange agreement) and 
did not lose because of performance or conduct reasons;
    (G) Consideration of a candidate not given proper consideration in 
a competitive promotion action;
    (H) Placement resulting from reduction in force procedures under 5 
CFR part 351; and
    (I) The appointment of career SES appointees with competitive 
service reinstatement eligibility to any position for which they 
qualify in the competitive service at any salary level, consistent with 
5 CFR part 317, subpart G.
    (ii) When determining whether the promotion potential of a General 
Schedule position is lower than that of the promotion potential of the 
NSPS position to which an employee moves, the definitions of higher, 
lower, and comparable levels of work under Sec.  9901.103 will be 
applied.
    (8) Alternative promotion procedures. The Secretary may authorize 
the use of the following alternative procedures to fill NSPS positions. 
Use of these alternative procedures does not require the posting of 
vacancy announcements; however, employees must be made aware that these 
processes may be utilized via newsletters, bulletin boards, Web sites, 
or other common methods of employee communication. Use of these 
alternative procedures is subject to the requirements of the DoD 
Priority Placement Program and the Reemployment Priority List.
    (i) Assessment boards. (A) Boards may convene to assess internal 
candidates for current and future advancement opportunities based on 
pre-established criteria. Pre-established criteria may include 
experience, training, awards, education, performance evaluation scores 
(ratings of record) or other appropriate

[[Page 73617]]

information consistent with merit system principles and the ``Uniformed 
Guidelines on Employee Selection Procedures.''
    (B) Boards will categorize employees into specific levels of 
candidates to generate referral lists of ranked candidates for 
occupational groups. These referral lists are valid for one year from 
the date generated. Selection from the referral list should be further 
justified based on specific job-related factors unique to the actual 
vacancy.
    (C) Boards, which should be comprised of senior level managers 
(subject matter experts for each particular occupational group), may be 
convened on an ad hoc basis or may be held annually in conjunction with 
the performance evaluation process.
    (ii) Alternate certification. A selecting official may make a by-
name request for an individual from any appropriate source of 
Department or Component employees. The employee may be selected if 
ranked within the highest quality group as determined by rating factors 
established for the position.
    (iii) Exceptional performance promotion. (A) An employee whose most 
recent rating of record is a Level 5 performance rating may be promoted 
to a vacant position in a higher pay band when the vacant position has 
the same occupational series (or related interdisciplinary/
interoccupational series) and similar function as the position the 
employee held at the time he or she received the Level 5 rating.
    (B) Selecting officials must determine and document the area of 
consideration, and must consider all employees in the area of 
consideration whose current Level 5 rating was based on performance in 
the same occupational series and similar function as the vacancy being 
filled.
    (9) Grievances. Employees have the right to file a complaint 
relating to a promotion action. Such complaints will be resolved under 
appropriate grievance procedures. The standards for adjudicating 
complaints are set forth in 5 CFR part 300, subpart A. There is no 
right of appeal to OPM, but OPM may conduct investigations of 
substantial violations of OPM requirements.

[FR Doc. E8-28672 Filed 12-2-08; 8:45 am]
BILLING CODE 6325-39-P