[Federal Register Volume 74, Number 248 (Tuesday, December 29, 2009)]
[Notices]
[Pages 68936-68966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30479]



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Part IV





Department of Defense





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Office of the Secretary



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Science and Technology Reinvention Laboratory Personnel Management 
Demonstration Project, Department of the Army, Army Research, 
Development and Engineering Command, Edgewood Chemical Biological 
Center (ECBC); Notice

  Federal Register / Vol. 74 , No. 248 / Tuesday, December 29, 2009 / 
Notices  

[[Page 68936]]


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DEPARTMENT OF DEFENSE

Office of the Secretary


Science and Technology Reinvention Laboratory Personnel 
Management Demonstration Project, Department of the Army, Army 
Research, Development and Engineering Command, Edgewood Chemical 
Biological Center (ECBC)

AGENCY: Office of the Under Secretary of Defense (Civilian Personnel 
Policy) (DUSD (CPP)), Department of Defense (DoD).

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

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SUMMARY: Section 342(b) of Public Law 103-337, as amended, authorizes 
the Secretary of Defense to conduct personnel demonstration projects at 
Department of Defense (DoD) laboratories designated as Science and 
Technology Reinvention Laboratories (STRLs). The above-cited 
legislation authorizes DoD to conduct demonstration projects to 
determine whether a specified change in personnel management policies 
or procedures would result in improved Federal personnel management. 
Section 1107 of Public Law 110-181 as amended by section 1109 of Public 
Law 110-417 requires the Secretary of Defense to execute a process and 
plan to employ the Department's personnel management demonstration 
project authorities found in title 5 United States Code (U.S.C.) 
section 4703 at the STRLs enumerated in 5 U.S.C. 9902(c)(2), as 
redesignated in section 1105, Public Law 111-84, and 73 Federal 
Register (FR) 73248 to enhance the performance of these laboratories. 
The ECBC is listed as one of the designated STRLs.

DATES: Implementation of this demonstration project will begin no 
earlier than February 1, 2010.

FOR FURTHER INFORMATION CONTACT: Edgewood Chemical Biological Center 
ECBC: Ms. Kim Hoffman, U.S. Army ECBC, Directorate of Program 
Integration, Workforce Management Office (RDCB-DPC-W), 5183 Blackhawk 
Road, Building 3330, Room 264, Aberdeen Proving Ground, MD 21010-5424.
    DoD: Ms. Betty Duffield, CPMS-PSSC, Suite B-200, 1400 Key 
Boulevard, Arlington, VA 22209-5144.

SUPPLEMENTARY INFORMATION:

1. Background

    Since 1966, many studies of Department of Defense (DoD) 
laboratories have been conducted on laboratory quality and personnel. 
Almost all of these studies have recommended improvements in civilian 
personnel policy, organization, and management. Pursuant to the 
authority provided in section 342(b) of Public Law 103-337, as amended, 
a number of DoD STRL personnel demonstration projects were approved. 
These projects are ``generally similar in nature'' to the Department of 
Navy's ``China Lake'' Personnel Demonstration Project. The terminology, 
``generally similar in nature,'' does not imply an emulation of various 
features, but rather implies a similar opportunity and authority to 
develop personnel flexibilities that significantly increase the 
decision authority of laboratory commanders and/or directors.
    This demonstration project involves: (1) Two appointment 
authorities (permanent and modified term); (2) extended probationary 
period for newly hired engineering and science employees; (3) pay 
banding; (4) streamlined delegated examining; (5) modified reduction-
in-force (RIF) procedures; (6) simplified job classification; (7) a 
pay-for-performance based appraisal system; (8) academic degree and 
certificate training; (9) sabbaticals; and (10) a Voluntary Emeritus 
Corps.

2. Overview

    DoD published notice in 73 FR 73248, December 2, 2008, that 
pursuant to subsection 1107(c) of Public Law 110-181 the three STRLs 
listed in 73 FR 73248 not having personnel demonstration projects at 
this time may adopt any of the flexibilities of the other laboratories 
listed in subsection 9902(c)(2), as redesignated in section 1105 of 
Public Law 111-84, and further provided notice of the proposed adoption 
of an existing STRL demonstration project by two centers under the 
United States (U.S.) Army Research, Development and Engineering Command 
(RDECOM): ECBC and Natick Soldier Research, Development and Engineering 
Center (NSRDEC). The notice indicated that these two centers intended 
to adopt the STRL Personnel Management Demonstration project designed 
by the U.S. Army Communications--Electronics Command, Research, 
Development, and Engineering organizations (a reorganization changed 
this designation to the U. S. Army Communications--Electronics 
Research, Development and Engineering Center (CERDEC)). Relative to 
ECBC's intent to adopt the CERDEC demonstration project, DoD received 
comments from three employees during the public comment period which 
ended on January 2, 2009: Two presented interests on behalf of the 
Unions they represent and the other presented comments on behalf of the 
organization itself. All comments were carefully considered.
    The following summary addresses the pertinent comments received, 
provides responses, and notes resultant changes to the original CERDEC 
project plan published in 66 FR 54872, October 30, 2001. Each commenter 
addressed more than one topic and each topic was counted separately. 
Thus, the total number of comments exceeds the number of individuals 
cited above.

A. Pay-for-Performance System

    Ten comments were received that relate to the pay-for-performance 
system.
(1) General
    Comments: Three comments were received concerning the pay-for-
performance system in general as follows: questioned impact to ``good'' 
workers since this system is designed to reward ``very high'' 
performers; asserted that individual performance appears to be more 
critical and questioned impact to teamwork; and expressed concern that 
favoritism could impact employees getting a fair share in payouts from 
pay pools which have a fixed amount of money.
    Response: The demonstration project performance management system 
is designed to provide greater differentiation among performers, as 
opposed to the current Total Army Performance Evaluation System (TAPES) 
which has evolved into most employees being rated at the same level. 
This new approach is based on a pay-for-performance model which allows 
for greater communication between supervisor and employee, promotes 
clearer accountability of performance, facilitates employee career 
progression and provides an understandable and rational basis for pay 
changes by linking pay and performance. Under a pay-for-performance 
appraisal system there is a fixed amount of money for allocation to all 
employees rated. It is expected that higher performing employees earn 
greater rewards than lower performing employees. It is important to 
note that under this demonstration project, no employee who is rated at 
an acceptable level (10 or above on a scale of 0-50) loses base pay. A 
reduction in base pay could only occur if an employee receives an 
unacceptable rating (9 or below on a scale of 0-50) and is the subject 
of an adverse action.
    Pay-for-performance systems are often viewed as increasing 
competition among employees for limited financial

[[Page 68937]]

rewards and are believed to have a negative impact on teamwork. 
However, the Office of Personnel Management (OPM), in an independent 
evaluation of laboratory demonstration projects analyzed this factor 
and concluded that teamwork had actually improved and that the pay-for-
performance system had no negative effect on teamwork. Furthermore, a 
rigorous review process is an integral part of the demonstration 
project's pay-for-performance system which links base pay and bonus to 
organizational, team and individual performance. Interpersonal skills 
is one of the critical performance elements in every employee's 
performance plan. This element includes such qualities as being an 
effective team player, coordinating actions with others, being 
considerate of differing viewpoints, maintaining effective 
relationships, etc., all of which encourage sustainment of teamwork. 
Lastly, special act and other traditional 5 U.S.C. awards are still 
viable options that can be used to reward groups for exceptional team 
work.
    Major features in the design of the rating system are intended to 
overcome perceptions of favoritism and limited differentiation among 
ratings. Improved communication throughout the rating cycle facilitates 
building a common understanding of performance expectations and 
progress toward achieving those expectations. The automated performance 
management tool helps assure that objectives are in place on a timely 
basis, accomplishments are recorded, and communication related to 
performance is on-going. The pay-for-performance system uses standard 
performance elements and performance benchmarks to evaluate employee 
performance that supports the mission, allows managers to make 
meaningful performance distinctions, considers pay in making 
performance-based pay decisions and provides information to employees 
about the results of the appraisal process and pay decision. At the end 
of the rating period, employees submit their accomplishments. Following 
the initial scoring of each employee, raters in an organizational unit 
along with their next level of supervision, meet to ensure consistency 
and equity of the ratings. Through discussion and consensus building, 
consistent and equitable ratings are determined based on similar level 
of performance, level of work and level of base pay. This improves upon 
the current performance appraisal system where there are only brief 
performance standards described for the fully successful level and 
rating is typically done by a supervisor with review and approval by a 
senior rater.
    The demonstration project plan includes other means of checks and 
balances that address perceptions of favoritism and bias. A Personnel 
Management Board has been created to provide oversight for the project 
and includes members representing each directorate. A cross-section of 
employees participate in a Workforce Advisory Group and are actively 
involved in identifying training needs and developing operating 
procedures. Training in the pay-for-performance system and other 
aspects of the demonstration project will be mandatory for all 
supervisors. Finally, perceived fairness of the appraisal process has 
been identified as an area for evaluation and will be included in 
surveys of the workforce and focus group discussions with employees. An 
annual report with a thorough review and analysis of the pay-for-
performance cycle will be published to assist in providing greater 
transparency.
(2) Rating
    Comments: One commenter believes that higher scores are needed each 
year to receive pay increases and questioned whether salary increases 
taper off after a few years. The same commenter questioned whether 
managers will be involved in rating employees they do not have direct 
contact with and whether pay pool managers will be familiar with those 
they are rating.
    Response: Base pay increases and/or bonuses are earned based on an 
employee's total performance score. Scores of 21 or higher earn a 
performance payout. Higher scores are not needed each year to receive a 
base pay increase. Base pay increases can continue to be earned which 
allows progression in base pay up to the maximum base pay rate for the 
employee's pay band. Once an employee reaches the maximum base pay rate 
for their pay band their base pay is ``capped,'' similar to when an 
employee reaches step 10 of their General Schedule (GS) grade. The 
performance payout earned is then converted to bonus. The project plan 
also includes two performance-based rules (midpoint rule and 
significant accomplishment rule) that may affect base pay increases. 
Refer to III.C.10. and III.C.11. for how these rules relate to scores. 
It is important to note that as base pay progresses over time, 
performance expectations also increase and are factored into the 
appraisal process.
    As to the rating process, first-line supervisors initially rate 
their employees. These initial scores are then subject to discussion, 
review and reconciliation and may result in adjustments upward or 
downward. Review of the scores across organizational lines continues at 
succeeding levels up the management chain to the final level of review 
which is the pay pool manager. Participants in the next level 
reconciliation will have full knowledge of their respective preceding 
level's discussions and decisions to represent those employees. Other 
participants may have varying degrees of direct knowledge of an 
employee's performance but will be knowledgeable of the nature of the 
technologies/work being performed. The requirement for raters to 
explain their recommended ratings and the active discussion within the 
group emphasizes to each rater the importance of taking performance 
management earnestly. The process of reconciliation serves to overcome 
variations in expectations from one rater to another, helps to ensure 
that different raters apply the performance benchmarks consistently, 
and resolves variances in what one manager considers exceptional work 
from another who judges it as merely acceptable.
(3) Pay Pools
    Comments: One commenter recommended that the base pay and bonus pay 
pool funding percentage be revised to set a minimum percentage rather 
than ranges. Another commenter questioned how many pay pools would be 
set for the Rock Island site. This same commenter asked who would serve 
as the pay pool manager(s) for the Rock Island site.
    Response: The laboratory considered the recommendation to alter the 
pay pool funding percentage and has amended III.C.7. ``Pay Pools'' to 
define pay pool funding for base pay increases and bonuses at minimum 
levels as opposed to a range of minimum and maximum. The base pay 
increase pool of money will be set at no less than the current minimum 
of 2% and the bonus increase pool of money will be set at no less than 
the current minimum of 1%. Higher amounts may be set within budgetary 
limits.
    With regard to the questions concerning pay pools and pay pool 
manager(s) at one of ECBC's remote sites (Rock Island), the Personnel 
Management Board will annually determine the number of pay pools using 
guidelines such as size, number of supervisory/non-supervisory 
employees participating, etc., and make a recommendation to the 
Technical Director for final approval. Once the pay

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pools have been decided, then the pay pool managers will be named for 
each pay pool by the Personnel Management Board. All employees will be 
informed of their pay pool assignment and designated pay pool manager.
(4) Payout Determinations
    Comments: One commenter questioned how payouts are computed and the 
factors that affect the equation. The same commenter asked whether 
management can decide to not give a base pay increase or bonus for an 
employee's rating and give payouts in the form of all bonus rather than 
a combination of base pay increase and bonus.
    Response: Management cannot arbitrarily decide to not give a pay 
increase or a bonus. An employee's performance payout is based on the 
employee's score, the shares earned for that score, the value of the 
shares and the employee's adjusted base pay. The performance payout is 
calculated based on provisions set forth in the FR Notice and the 
resulting payout is a base pay increase and/or bonus. Scores translate 
into shares and each point above the score of 20 is worth one tenth of 
a share with a maximum score of 50 equaling 3 shares. There is no 
discretion on the amount of shares earned. For example, a score of 32 
earns 1.2 shares. The value of a single share, however, may vary from 
one pay pool to another since it is based on factors relative to 
individual pay pools (such as the number of shares awarded in the pay 
pool, etc.). Figure 3 (III.C.8.) illustrates the formula for computing 
share value. The value of a share is computed after the scores for each 
individual in the pay pool have been finalized. The payout (base pay 
increase/bonus) is calculated by first multiplying the shares earned by 
the share value and multiplying that product by base pay. An adjustment 
is then made to account for locality pay or staffing supplement.
    Payouts are typically a combination of base pay increase and bonus. 
The split is generally determined by the funding in the pay pool (i.e., 
if the pay pool funding is two-thirds base pay and one-third bonus 
funding, then the payout split would be two-thirds base pay increase 
and one-third bonus). For employees at the maximum base pay of their 
band or affected by a performance-based rule, some or all of the payout 
converts to bonus as determined by the end of the band or the specific 
performance rule. The full amount of the base pay increase and bonus 
may also be affected if an employee leaves the demonstration project 
prior to the effective date of the payout. There is some discretion on 
the part of the pay pool manager to shift all or some of an employee's 
bonus portion to base pay increase depending on available unexpended 
base pay funds and other criteria to be established. Any dollar 
increase to an employee's base pay increase will be offset by a 
corresponding decrease in the employee's bonus. Thus, the employee's 
total performance payout is unchanged. Internal operating procedures 
will provide further guidance.

B. Pay

    Nine comments were received related to pay.
(1) General
    Comments: Five comments were received regarding pay in general as 
follows: whether the GS salary tables will be used as a guide and at 
what point an employee's salary is capped; whether employees will 
receive the annual general pay increase; an interest in history of 
employees reaching the top of their pay band since GS employees can 
reach the top of their grade over time; a remark that morale could be 
an issue for careerists who have paid their dues since new employees 
under the demonstration will have greater monetary incentives available 
to them; and a suggestion to relieve pay compression by providing 
additional waivers to permit full locality payment.
    Response: The minimum and maximum rate of base pay for each band 
continues to be linked to the GS rates of pay. The rates are updated 
each year following the general pay increase which typically takes 
place in January. As long as the general pay increase is authorized, 
all employees in the demonstration project who are performing at an 
acceptable level will receive it. Acceptable performance under the 
demonstration project is defined as a total score of 10 or above and 
every performance element scored at 10 or above (on a scale of 0-50). 
If an employee is on a Performance Improvement Plan (PIP) due to 
unacceptable performance when the general pay increase takes effect, 
he/she will not receive it until such time as the performance improves 
to an acceptable level and remains so for at least 90 days.
    Maximum potential base pay progression depends on the end point of 
the employee's pay band. For example, if the base pay rate range is GS-
12/step 1 to GS-13/step 10, as is the case for DE-III, the employee can 
progress in base pay beyond the GS-12/step 10 base pay rate up to the 
maximum of the GS-13/step 10 base pay rate equivalent based on 
individual performance. Refer to III.A.2. which illustrates the pay 
band structure and the crosswalk to GS grades.
    Under the demonstration project, base pay progression within a pay 
band is directly linked to individual performance. As a result, we can 
not specify a certain number of years it would take to progress from 
the minimum to the maximum of the band. However, progress through the 
band will be one of the areas assessed. As previously stated, employees 
are eligible (based on their performance scores) to receive annual base 
pay increases (unless they have reached the top of their band or are 
impacted by a performance-based rule). Annual base pay increases 
replace the traditional within-grade increases and quality step 
increases. In addition, an employee under the GS system is limited in 
base pay progression to step 10 of their grade. Under the demonstration 
project, however, employees are placed in pay bands which cover a wider 
range of base pay than a single grade (except for DK-III) and 
promotions are required only for movement to a higher band.
    Under the GS pay system, employees must perform at an acceptable 
level and meet length of service requirements in order to be entitled 
to a within-grade increase. The waiting period for a step increase 
changes from one year to two years and then to three years over time, 
totaling eighteen years for normal progression in grade from step 1 to 
step 10. While it is true that most GS employees will reach step 10 of 
their grade given enough time, it is not a guarantee because of the 
performance factor. The demonstration pay-for-performance system 
rewards good performance and as such, it is entirely possible that 
employees in the demonstration project could receive base pay increases 
that are equivalent to or higher than a step increase each year and 
could, therefore, progress in their band faster than they would under 
the GS system.
    Motivating and incentivizing the workforce is one of the objectives 
of the laboratory demonstration project. In fact, in an evaluation of 
laboratory demonstration projects, OPM conducted a pulse survey which 
concluded that motivation levels remained high and that pay 
satisfaction increased in all labs. As previously described, employees 
have the opportunity to advance without competition within a pay band, 
thus eliminating previous promotion requirements and grade limitations. 
While it is true that under the demonstration project pay may be set 
anywhere in the band for newly hired employees, decisions are based on

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the qualifications of the individual, the unique requirements of the 
position and the labor market considerations relative to the 
occupation. Other demonstration projects who are offering higher 
starting base pay for interns, as an example, have seen a significant 
increase in the recruitment of graduates with higher Grade Point 
Averages (GPAs) and are able to recruit at more selective colleges and 
universities. Although the starting base pay is higher than the GS 
counterpart, this is offset by slower pay progression that is dependent 
upon individual performance and tends to be slower than the rapid 
career ladder promotions that occur in the GS system. Consequently, at 
the conclusion of the 18-30 month internship, employees' base pay is 
comparable.
    As to the last comment, there is concern that individuals whose 
base pay is at the higher end of the GS-15 base pay range do not 
receive their full locality pay. This situation also occurs within the 
demonstration project for the Engineering and Science (E&S) and the 
Business and Technical (BT) occupational families since Pay Band IV of 
both is linked to a range of GS base pay with a cap equivalent to the 
GS-15, step 10 base pay rate. However, increasing the maximum base pay 
for GS-15 equivalent pay bands will create a compensation imbalance 
with individuals in Scientific and Professional and Senior Executive 
Service positions. This locality cap issue is being examined at higher 
levels; therefore, no change is proposed.
(2) Supervisory Pay
    Comments: One commenter proposed that supervisory/team leader pay 
adjustments and pay differentials be changed to provide up to ten 
percent for team leaders. Another commenter asked whether supervisory 
pay is based on the number of employees supervised.
    Response: The suggestion to increase the maximum for team leader 
pay adjustments and differentials from five percent to ten percent of 
base pay was considered and senior management agreed that this change 
would increase our flexibility to incentivize team leaders when 
warranted. Therefore, language has been added to revise the amount of 
pay adjustments and pay differentials for team leaders from ``up to 
five percent'' to ``up to ten percent'' in III.F.7. ``Supervisory and 
Team Leader Pay Adjustments'' and III.F.8. ``Supervisory/Team Leader 
Pay Differentials.''
    As to the second comment, for a position to be classified as 
supervisory, the individual must spend at least 25 percent of their 
time performing supervisory duties, e.g. assigning/reviewing work, 
evaluating performance, approving leave, etc. Pay is not based on a 
specific number of employees supervised but the number of employees 
supervised may be an influencing factor in determinations related to 
supervisory base pay adjustments and pay differentials. Adjustments and 
differentials will be used selectively, not routinely, to compensate 
supervisors and/or team leaders who meet detailed criteria contained in 
the demonstration project internal operating procedures.
(3) Internal Placement
    Comments: One commenter suggested that a pay increase of up to a 
defined amount should be permitted when a person moves to a position of 
greater responsibility (reassignment) within the same pay band. Another 
commenter inquired how performance payouts are handled for employees on 
temporary assignments/promotions and whether pay increases are 
withdrawn when the temporary assignment/promotion ends.
    Response: Since broad pay bands include positions of varying 
complexity and responsibility, a base pay increase would provide 
incentive to encourage employees to accept positions of greater 
responsibility in the same pay band. Therefore, language has been added 
at III.F.5. to address this issue and to define ``reassignment'' in 
III.E.2. A reassignment may be effected without a change in base pay. 
However, a base pay increase may be granted where a reassignment 
significantly increases the complexity, responsibility, authority or 
for other compelling reasons. Such an increase is subject to specific 
guidelines to be established by the Personnel Management Board.
    With regard to a temporary assignment/promotion, an employee can be 
rated if they are under approved objectives for the position for a 
minimum of 120 days. The payout is calculated using the computations in 
III.C.8. When a temporary promotion is terminated, pay will be 
determined based on the position of record, with appropriate 
adjustments to reflect pay events during the temporary promotion, 
subject to policies established by the Personnel Management Board. 
Those adjustments may not increase the base pay for the position of 
record beyond the applicable pay band maximum base pay. Internal 
operating procedures will provide further guidance.

C. Extraordinary Achievement Recognition

    Two comments were received about the Extraordinary Achievement 
Recognition.
    Comments: One commenter suggested that the Extraordinary 
Achievement Recognition language be moved to a separate section since 
it is considered after and separate from the pay pool payout process. 
The same commenter also proposed that the Extraordinary Achievement 
Recognition language be revised to allow for bonus as an alternative to 
a base pay increase since capped employees would be precluded from 
receiving this recognition.
    Response: While an Extraordinary Achievement Recognition is 
considered after the pay pool payout process, it is not entirely 
separate from the process itself. Following the performance evaluation 
process, the pay pool manager is the agent who requests permission from 
the Personnel Management Board to grant a base pay increase higher than 
the one generated by the compensation formula for that employee. 
However, senior management is in agreement that a separate paragraph 
would clarify the intent and process for the Extraordinary Achievement 
Recognition and the provision has been moved to a separate paragraph in 
III.C.9. ``Base Pay Increases and Bonuses.''
    As to the second comment, language has been added to the new 
section at III.C.9. as referenced above allowing for the option to 
grant either a base pay increase and/or a bonus as an Extraordinary 
Achievement Recognition. This permits employees whose base pay is at 
the maximum of their pay band to receive this recognition.

D. Pay Bands

    Two comments were received concerning Pay Bands.
    Comments: One commenter advised that reconsideration be given to 
initial placement of all GS-14 engineers and scientists to the E&S 
occupational family (DB) Pay Band IV and requested clarification of how 
any subsequent conversions for GS-14 E&S positions will be handled. 
Another comment received suggested that the number of Pay Band V 
positions be expanded to permit a certain number or percent at each 
STRL since the current limited number has already been allocated to 
other organizations which would preclude ECBC from having this 
flexibility.
    Response: We have carefully considered these comments. With

[[Page 68940]]

regard to placement of GS-14 E&S employees, language has been changed 
in III.A.1. and added in III.A.2. to reflect that upon conversion into 
the demonstration project, E&S employees currently at grade GS-14 will 
be assigned to either Pay Band III or Pay Band IV based on a review of 
the duties and responsibilities of the position as compared to the 
classification criteria.
    In response to the second comment, the use of Pay Band V has proven 
to be beneficial in recruiting and retaining highly-qualified senior 
scientific technical managers in those STRL personnel demonstration 
projects that have such positions. The limited number of such positions 
makes it difficult to meet the requirements of all the STRLs who wish 
to use this flexibility. The DoD is currently reviewing all Pay Band V 
positions. No change is proposed in the number of Pay Band V positions 
pending the completion of the DoD review.

E. Probationary Period

    Two comments were received about the extended probationary period.
    Comments: One commenter advised that a recent court decision 
limited the intent of the extended probationary period. The other 
commenter questioned why the probationary period is extended to three 
years and is only applicable to new engineers and scientists.
    Response: The purpose of extending the probationary period is to 
allow supervisors a proper period of time to fully evaluate an 
employee's performance and conduct. It applies to newly hired engineers 
and scientists since this group is often given advanced training during 
their first year on the job, which removes them from the workplace and 
direct observations of their performance. This can minimize the time 
available for the supervisor to determine whether the employee should 
be retained beyond the probationary period.
    The extended probationary period of up to three years allows 
supervisors sufficient time to properly, objectively and completely 
evaluate an employee's performance and conduct. Probationary employees 
whose conduct and/or performance is unsatisfactory may be terminated in 
accordance with the procedures in part 315 of title 5 of the Code of 
Federal Regulations (CFR). However, a recent court decision has 
extended adverse action procedural and substantive protections to 
individuals defined as employees without regard to whether the 
individuals are serving a probationary period. To permit termination 
during the probationary period without using adverse action procedures, 
waivers have been added under IX. ``Required Waivers to Law and 
Regulation'' to allow for up to a three-year probationary period and to 
remove from the definition of employee, except for those with veterans' 
preference, those serving a probationary period under an initial 
appointment.
    If a probationary employee's performance is determined to be 
satisfactory at a point prior to the end of the three-year period, a 
supervisor has the option of ending the probationary period at an 
earlier date, but not before the employee has completed one year of 
continuous service.

F. Conversion

    Two comments were received related to conversion into the 
demonstration project.
    Comments: One commenter inquired whether management can place an 
employee into a lower band upon conversion than where they are under 
the GS system. Another commenter recommended that conversion of interns 
into the demonstration project occur when the employees reach their 
full performance level for their GS position.
    Response: Initial entry into the demonstration project is 
accomplished through a full employee-protection approach that ensures 
initial placement of each employee into a pay band with no loss of pay 
upon conversion. Employees are placed in an occupational family (i.e., 
DB, DE, DK) based upon their occupational series and in a pay band that 
includes their current grade. The GS-14 grade occurs in two bands of 
the E&S occupational family, which are Pay Band III and Pay Band IV. 
The placement of GS-14 employees in the DB family will be decided upon 
a review of the position's duties and responsibilities as compared to 
the demonstration project classification criteria and may occur in 
either DB Pay Band III or DB Pay Band IV. Placement of a GS-14 into DB-
III, however, is not placement in a lower graded position.
    As to the second comment, interns typically receive several career 
promotions prior to reaching their full performance level. Average base 
pay performance payouts may not provide increases as substantial as 
career promotions under the GS. Delaying conversion into the 
demonstration project pay bands until interns reach their full 
performance level will assure that the interns' base pay is 
commensurate with the full performance level base pay rate. Therefore, 
the language at II.E. has been revised to reflect that interns will not 
convert into demonstration project pay bands until they reach their 
full performance level.

G. Classification

    One comment was received concerning classification.
    Comment: One commenter questioned that with the GS system having 
over 400 series and the laboratory demonstration project with only 22, 
how classification of positions will be conducted and who (i.e., 
employees) will be involved in that process.
    Response: OPM series and position titles will continue to be used 
in the demonstration project. Based on the nature of the work, the 
series will be assigned to one of three occupational families. A 
listing of the series assigned to each occupational family for ECBC is 
contained in Appendix B. Demonstration project classification criteria 
will be developed for each occupational family. These classification 
criteria will replace the OPM classification standards and guides for 
purposes of grading. The Technical Director will have classification 
authority and this authority may be re-delegated. As is the case now, 
Civilian Personnel Advisory Center (CPAC) specialists will assist the 
classification authority to assure that positions are properly 
classified in accordance with the demonstration project criteria.
    On conversion into the demonstration project, employees will be 
assigned to an occupational family and pay band based on their current 
occupational series and grade. Since there is an overlapping band for 
engineers and scientists at the GS-14 level, the assignment of the pay 
band will be on a case-by-case basis. The classification conversion 
will be performed by the servicing Civilian Personnel Office, and each 
employee will receive a Notification of Personnel Action, Standard Form 
50, documenting the change from GS to the demonstration project. 
Employees will continue to be able to initiate a classification appeal 
as described in the operating procedures.

H. Promotion

    One comment was received related to promotion eligibility.
    Comment: One commenter suggested that the minimum score of ``30'' 
to be eligible for a competitive promotion is too high.
    Response: We considered the suggestion to lower the minimum 
performance score of ``30'' required for promotion eligibility. Scores 
of 10 and higher are considered ``acceptable performance'' and scores 
of 21 and

[[Page 68941]]

higher earn a performance payout. Setting a minimum score of 30 for 
promotion sets the requirement higher than the score for a performance 
payout and may discourage the use of scores in the 21 to 29 range. 
Accordingly, the minimum performance score for promotion has been 
changed from ``30'' to ``21'' in III.E.1. ``Promotions.''

I. Reduction in Force (RIF)

    One comment was received regarding RIF.
    Comment: One commenter asked what criteria is used during a RIF.
    Response: Existing RIF procedures will be followed with slight 
modifications. Separate competitive areas will be established for 
demonstration project employees at each geographic location. Within 
each competitive area, competitive levels will be established based on 
the occupational family (DB, DE, DK), pay band, occupational series, 
etc. In order to determine who is affected in a RIF, employees are 
listed in RIF retention order based on tenure group, veterans' 
preference and adjusted length of Federal service, in that sequence. An 
employee's length of service is adjusted by receiving additional years 
of service based on the last three total performance scores during the 
preceding four years (e.g., 48-50 = 10 years, 45-47 = 9 years, and so 
on; refer to II.H.3.). A score below 20 adds no credit for RIF. Under 
the demonstration project, the adjusted service computation date is 
calculated by adding the additional years, not by averaging.

J. Historical Analysis

    Two comments were received concerning demonstration project data 
results.
    Comment: One commenter questioned acceptance of the demonstration 
project in comparison to the GS system beyond anecdotal evidence and 
inquired whether surveys were conducted at other demonstration project 
sites. Another commenter asserted that CERDEC has not presented data 
showing a more effective organization under the demo project.
    Response: The Office of Personnel Management (OPM) started 
conducting surveys of STRL personnel demonstration projects as far back 
as 1996 and have several reports, all of which include CERDEC data 
subsequent to its implementation, on their Web site at http://www.opm.gov/aps/about/reports/index.aspx. According to the 2006 report, 
``historic data for past demonstration projects'' * * * ``show support 
grows slowly over time and that it takes at least five years to gain 
the support of two-thirds of the participating employees. Typically, 
support stabilizes at the two-thirds level, and that level is 
considered a benchmark with respect to the change efforts these 
demonstration projects represent.''

K. Miscellaneous Comments

    There were ten comments in this area as follows:
(1) Positive Comment
    One commenter voiced support of the demonstration and remarked that 
the flexibilities afforded will help the Center achieve greater 
effectiveness.
(2) Administrative Changes/Technical Updates
    Two comments were received related to administrative changes and 
technical updates to the Federal Register document.
    Comments: One commenter advised that updates throughout the 
document were needed to reference ECBC rather than CECOM RDE and to 
reflect legal or regulatory changes. The same commenter also suggested 
that the occupational series listing in Appendix B be revised to 
include those series employed at ECBC.
    Response: A number of changes were made to the final Federal 
Register to include ECBC as the name of the organization; its 
organizational and workforce information; approval authorities; and 
technical modifications to conform to changes in the law and governing 
regulations. In addition, some areas have been re-formatted for clarity 
and to improve readability. Throughout the document changes have been 
made to clarify and provide consistent use of pay terminology. Minor 
revisions have been made to Appendix C: Performance Elements to be 
consistent with the descriptions currently in use by CERDEC.
(3) Resources
    One comment was received regarding staffing requirements for the 
project.
    Comment: One commenter asked what additional staffing requirements 
(personnel, software) are required to implement the project.
    Response: There is currently one civilian who is assigned overall 
demonstration project management responsibility for ECBC. This employee 
is assisted by a part-time contractor. Staffing requirements may be 
adjusted over the course of the project as necessary. Each directorate/
office will continue to process personnel actions through their 
respective human resources analyst. It is expected that various working 
groups beyond the Personnel Management Board will be established to 
contribute to various components and phases of the project.
    As to software, ECBC is planning to adopt an existing automated 
system, developed at Fort Monmouth, NJ. It's a Web-based tool that 
supports development of position descriptions and all actions in 
support of the pay-for-performance rating process. The application 
enables employees to input objectives and record accomplishments, 
raters to score the performance, and higher-level supervisors to review 
employee scores and analyze scoring trends to achieve greater 
consistency across organizational lines.
(4) Reference to the National Security Personnel System (NSPS)
    Five comments were received that made reference to NSPS.
    Comment: Two comments cited quotes from publications relating to 
fairness under the NSPS pay-for-performance system. Two comments cited 
quotes from articles and one comment referenced the 2008 National 
Defense Authorization Act (NDAA) concerning inclusion of bargaining 
unit members under NSPS. Management will continue to comply with the 
labor relation provisions of 5 U.S.C. 4703(f) and 7117 concerning 
inclusion of bargaining unit employees.
    With regard to references concerning inclusion of bargaining unit 
members under NSPS, collective bargaining rights are granted under 
Federal law and the demonstration project does not impede those rights. 
ECBC is committed to meeting its bargaining obligation under the law.

3. Access to Flexibilities of Other STRLs

    Flexibilities published in this Federal Register shall be available 
for use by all STRLs listed in section 9902(c)(2) of title 5, United 
States Code, as redesignated in section 1105 of Public Law 111-84, if 
they wish to adopt them in accordance with DoD Instruction 1400.37; 
pages 73248 to 73252 of volume 73, Federal Register; and the fulfilling 
of any collective bargaining obligations.

    Dated: December 17, 2009.
Patricia Toppings,
OSD Federal Register Liaison Officer, Department of Defense.

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems With the Present System
    C. Changes Required/Expected Benefits
    D. Participating Organizations

[[Page 68942]]

    E. Participating Employees and Union Representation
    F. Project Design
    G. Personnel Management Board
III. Personnel System Changes
    A. Pay Banding
    B. Classification
    C. Pay for Performance
    D. Hiring Authority
    E. Internal Placement
    F. Pay Setting
    G. Employee Development
    H. Reduction-in-Force Procedures
IV. Implementation Training
V. Conversion
    A. Conversion to the Demonstration Project
    B. Conversion out of the Demonstration Project
    C. Personnel Administration
    D. Automation
    E. Experimentation and Revision
VI. Project Duration
VII. Evaluation Plan
    A. Overview
    B. Evaluation Model
    C. Evaluation
    D. Method of Data Collection
VIII. Demonstration Project Costs
    A. Cost Discipline
    B. Developmental Costs
IX. Required Waivers to Law and Regulation
    A. Waivers to title 5, U.S.C.
    B. Waivers to title 5, CFR
Appendix A: ECBC Employees by Duty Locations
Appendix B: Occupational Series by Occupational Family
Appendix C: Performance Elements
Appendix D: Intervention Model

I. Executive Summary

    This project adopts with some modifications the STRL personnel 
management demonstration project, designed by the then named U.S. Army 
Communications-Electronics Command (CECOM), Research, Development and 
Engineering (RDE) organizations, with participation and review by the 
Department of the Army (DA) and DoD. After implementation of the CECOM 
RDE demonstration project, CECOM reorganized. Its laboratory, the 
Communications-Electronics Research Development and Engineering Center 
(CERDEC), was realigned under RDECOM. At the same time, the ECBC was 
also realigned under RDECOM. The ECBC includes the ECBC organization at 
the Edgewood Area of Aberdeen Proving Ground, employees matrixed to the 
Joint Program Executive Office for Chemical/Biological Defense (JPEO-
CBD) and ECBC employees with duty stations at other sites.
    The ECBC provides integrated science, technology and engineering 
solutions to address chemical and biological vulnerabilities and 
threats. ECBC's core competency is working with chemical and biological 
agents at all stages of the materiel life cycle. ECBC maintains the 
following fundamental capabilities:
    (1) Chemistry and Bioscience of Chemical and Biological Warfare.
    (2) Inhalation Toxicology.
    (3) Aerosol Physics.
    (4) Filtration Sciences.
    (5) Agent Spectroscopy/Algorithm Development.
    (6) Chemical and Biological Testing and Evaluation.
    (7) Chemical and Biological Materiel Acquisition.
    (8) Agent Handling and Surety.
    (9) Chemical Munitions Field Operations.
    In order to sustain these unique capabilities, the ECBC must be 
able to hire, retain and continually motivate enthusiastic, innovative, 
and highly-educated scientists and engineers, supported by skilled 
business management and administrative professionals as well as a 
skilled administrative and technical support staff.
    The goal of the project is to enhance the quality and 
professionalism of the ECBC workforce through improvements in the 
efficiency and effectiveness of the human resource system. The project 
interventions will strive to achieve the best workforce for the ECBC 
mission, adjust the workforce for change, and improve workforce 
satisfaction. This demonstration project extends the CERDEC 
demonstration project to ECBC. The CERDEC project built on the 
concepts, and uses much of the same language, as the demonstration 
projects developed by the Army Research Laboratory (ARL); the Aviation 
and Missile Research, Development, and Engineering Center (AMRDEC); the 
Navy's ``China Lake;'' and the National Institute of Standards and 
Technology (NIST). The results of the project will be evaluated within 
five years of implementation.

II. Introduction

A. Purpose

    The purpose of the project is to demonstrate that the effectiveness 
of DoD STRLs can be enhanced by expanding opportunities available to 
employees and by allowing greater managerial control over personnel 
functions through a more responsive and flexible personnel system. 
Federal laboratories need more efficient, cost effective, and timely 
processes and methods to acquire and retain a highly creative, 
productive, educated, and trained workforce. This project, in its 
entirety, attempts to improve employees' opportunities and provide 
managers, at the lowest practical level, the authority, control, and 
flexibility needed to achieve the highest quality organization and hold 
them accountable for the proper exercise of this authority within the 
framework of an improved personnel management system.
    Many aspects of a demonstration project are experimental. 
Modifications may be made from time to time as experience is gained, 
results are analyzed, and conclusions are reached on how the system is 
working. The provisions of this project plan will not be modified, or 
extended to individuals or groups of employees not included in the 
project plan without the approval of the ODUSD(CPP). The provisions of 
DoDI 1400.37, are to be followed for any modifications, adoptions, or 
changes to this demonstration project plan.

B. Problems With the Present System

    The current Civil Service GS system has existed in essentially the 
same form since the 1920's. Work is classified into one of fifteen 
overlapping pay ranges that correspond with the fifteen grades. Base 
pay is set at one of those fifteen grades and the ten interim steps 
within each grade. The Classification Act of 1949 rigidly defines types 
of work by occupational series and grade, with very precise 
qualifications for each job. This system does not quickly or easily 
respond to new ways of designing work and changes in the work itself.
    The performance management model that has existed since the passage 
of the Civil Service Reform Act has come under extreme criticism. 
Employees frequently report there is inadequate communication of 
performance expectations and feedback on performance. There are 
perceived inaccuracies in performance ratings with general agreement 
that the ratings are inflated and often unevenly distributed by grade, 
occupation and geographic location.
    The need to change the current hiring system is essential as ECBC 
must be able to recruit and retain scientific, engineering, acquisition 
support and other professionals and skilled technicians. ECBC must be 
able to compete with the private sector for the best talent and be able 
to make job offers in a timely manner with the attendant bonuses and 
incentives to attract high-quality employees.
    Finally, current limitations on training, retraining and otherwise 
developing employees make it difficult to correct skill imbalances and 
to prepare current employees for new lines of work to meet changing 
missions and emerging technologies.

[[Page 68943]]

C. Changes Required/Expected Benefits

    The primary benefit expected from this demonstration project is 
greater organizational effectiveness through increased employee 
satisfaction. The long-standing Department of the Navy ``China Lake'' 
and NIST demonstration projects have produced impressive statistics on 
increased job satisfaction and quality of employees versus that for the 
Federal workforce in general. This project will demonstrate that a 
human resource system tailored to the mission and needs of the ECBC 
workforce will facilitate:
    (1) Increased quality in the workforce and resultant products,
    (2) Increased timeliness of key personnel processes,
    (3) Increased retention of ``excellent performers,''
    (4) Increased success in recruitment of personnel with critical 
skills,
    (5) Increased management authority and accountability,
    (6) Increased satisfaction of customers, and
    (7) Increased workforce satisfaction with the personnel management 
system.

An evaluation model was developed for the Director, Defense, Research 
and Engineering (DDR&E) in conjunction with STRL service 
representatives and the OPM. The model will measure the effectiveness 
of this demonstration project, as modified in this plan, and will be 
used to measure the results of specific personnel system changes.

D. Participating Organizations

    The RDECOM ECBC is comprised of the ECBC at the Edgewood Area of 
Aberdeen Proving Ground, Maryland, ECBC employees matrixed to JPEO-CBD 
and ECBC employees geographically dispersed at the locations shown in 
Appendix A. It should be noted that some sites currently employ fewer 
than ten people and that the sites may change should ECBC reorganize or 
realign. Successor organizations will continue coverage in the 
demonstration project.

E. Participating Employees and Union Representation

    This demonstration project will cover approximately 1,100 ECBC 
civilian employees under title 5, U.S.C. in the occupations listed in 
Appendix B. The project plan does not cover members of the Senior 
Executive Service (SES), Scientific and Professional (ST) employees, 
Federal Wage System (FWS) employees, employees presently covered by the 
Defense Civilian Intelligence Personnel System (DCIPS), Department of 
Army (DA) and Army Command centrally funded interns and students 
employed under the Student Career Experience Program. Employees on 
temporary appointments will not be covered in the demonstration 
project.
    Department of Army, Army Command centrally funded, and local 
interns (hired prior to implementation of the project) will not be 
converted to the demonstration project until they reach their full 
performance level. They will also continue to follow the TAPES 
performance appraisal system. Local interns hired after implementation 
of the project will be covered by all terms of the demonstration 
project.
    The National Federation of Federal Employees (NFFE), Federal 
District 1, Local 178 and the American Federation of Government 
Employees (AFGE) Local 15 represent a majority of ECBC employees. Of 
those employees assigned to ECBC, approximately 87% are represented by 
a labor union.
    To foster union acceptance of ECBC's proposed personnel 
demonstration project, initial discussions with the local NFFE union 
began in May 2006. Later that same month, at ECBC's invitation, the 
NFFE Local 178 participated in a presentation briefed by CERDEC which 
covered the major aspects of their personnel demonstration project 
plan. Subsequent to this meeting, senior leadership for both ECBC and 
NFFE Local 178 had changed. ECBC's new Technical Director continued to 
support the former Director's initiative to adopt a personnel 
demonstration project and committed to the effort. In July 2008, senior 
management arranged for another meeting with NFFE which included the 
new local president and regional representative to re-introduce and 
discuss key features of the project plan.
    In October 2008, ECBC began similar discussions with the AFGE Local 
15. ECBC has maintained on-going communication with the Unions 
regarding its intent to pursue approval for a laboratory personnel 
demonstration project. The unions have received updates as specific 
phases of the project have evolved and have been invited to attend town 
hall meetings and smaller information sessions provided to the 
workforce. ECBC will continue to fulfill its obligation to consult and/
or negotiate with all labor organizations in accordance with 5 U.S.C. 
Sections 4703(f) and 7117.

F. Project Design

    The ECBC has been a DOD STRL since June 1995. This status 
authorized ECBC to participate in all of the STRL initiatives, to 
include the authority to carry out personnel demonstration projects. In 
December 2005, RDECOM Headquarters asked ECBC of their intent to pursue 
a personnel demonstration project. In-depth discussions with both 
CERDEC and NSRDEC resulted in an ECBC Laboratory Demonstration decision 
brief to its senior leadership in April 2006. At the conclusion of that 
briefing, ECBC senior leadership voted to move toward adopting CERDEC's 
existing laboratory personnel demonstration project. Subsequently, the 
ECBC submitted a request to adopt the CERDEC demonstration project. The 
CERDEC demonstration project was the most recently approved 
demonstration project, used an inclusive approach for its design, and 
benefitted from the experiences of prior STRL demonstration projects. 
After the enactment of the National Defense Authorization Act for 
Fiscal Year 2008 providing for full implementation of the personnel 
demonstration project, the DoD announced ECBC's intent to adopt the 
CERDEC demonstration project in 73 FR 73248, December 2, 2008.

G. Personnel Management Board

    ECBC has created a Personnel Management Board to oversee and 
monitor the fair, equitable, and consistent implementation of the 
provisions of the demonstration project to include establishment of 
internal controls and accountability. Members of the board are senior 
leaders appointed by the ECBC Technical Director. As needed, ad hoc 
members, (such as labor counsel, human resource representatives, etc.) 
will serve as advisory members to the board.
    The board will execute the following:
    (1) Determine the composition of the pay-for-performance pay pools 
in accordance with the guidelines of this proposal and internal 
procedures;
    (2) Review operation of pay pools and provide guidance to pay pool 
managers;
    (3) Oversee disputes in pay pool issues;
    (4) Formulate and execute the civilian pay budget;
    (5) Manage the awards pools;
    (6) Determine hiring and promotion base pay as well as exceptions 
to pay-for-performance base pay increases;
    (7) Conduct classification review and oversight, monitoring and 
adjusting classification practices and deciding board classification 
issues;
    (8) Approve major changes in position structure;
    (9) Address issues associated with multiple pay systems during the 
demonstration project;
    (10) Establish Standard Performance Elements and Benchmarks;

[[Page 68944]]

    (11) Assess the need for changes to demonstration project 
procedures and policies;
    (12) Review requests for Supervisory/Team Leader Base Pay 
Adjustments and provide recommendations to the appropriate Center 
Director;
    (13) Ensure in-house budget discipline;
    (14) Manage the number of employees by occupational family and pay 
band;
    (15) Develop policies and procedures for administering 
Developmental Opportunity Programs;
    (16) Ensure that all employees are treated in a fair and equitable 
manner in accordance with all policies, regulations and guidelines 
covering this demonstration project; and
    (17) Monitor the evaluation of the project.

III. Personnel System Changes

A. Pay Banding

    The design of the ECBC pay banding system takes advantage of the 
many reviews performed by DA and DoD. The design has the benefit of 
being preceded by exhaustive studies of pay banding systems currently 
practiced in the Federal sector, to include those practiced by the 
Navy's ``China Lake'' experiment and NIST. The pay banding system will 
replace the current GS structure. Currently, the fifteen grades of the 
GS are used to classify positions and, therefore, to set pay. The GS 
covers all white-collar work-administrative, technical, clerical and 
professional. Changes in this rigid structure are required to allow 
flexibility in hiring, developing, retaining, and motivating the 
workforce.
1. Occupational Families
    Occupations with similar characteristics will be grouped together 
into one of three occupational families with pay band levels designed 
to facilitate pay progression. Each occupational family will be 
composed of pay bands corresponding to recognized advancement and 
career progression expected within the occupations. These pay bands 
will replace individual grades and will not be the same for each 
occupational family. Each occupational family will be divided into 
three to five pay bands with each pay band covering the same pay range 
now covered by one or more GS grades. Employees track into an 
occupational family based on their current series as provided in 
Appendix B. With the exception of the Engineering and Science Pay Band 
III and IV *, employees are initially assigned to the highest band in 
which their grade fits. For example a Management Analyst, GS-343-12, in 
the Business and Technical occupational family is assigned to Pay Band 
III as illustrated in Figure 1. The upper and lower pay rate for base 
pay of each band is defined by the GS rate for the grade and step as 
indicated in Figure 1 except for Pay Band V of the E&S occupational 
family (refer to III.A.3.). Comparison to the GS grades was used in 
setting the upper and lower base pay dollar limits of the pay band 
levels. However, once employees are moved into the demonstration 
project, GS grades will no longer apply. The current occupations have 
been examined, and their characteristics and distribution have served 
as guidelines in the development of the following three occupational 
families:
    Engineering and Science (E&S) (Pay Plan DB): This occupational 
family includes technical professional positions, such as engineers, 
physicists, chemists, mathematicians, operations research analysts and 
computer scientists. Specific course work or educational degrees are 
required for these occupations. Five bands have been established for 
the E&S occupational family:
    (1) Band I is a student trainee track covering GS-1, step 1 through 
GS-4, step 10.
    (2) Band II is a developmental track covering GS-5, step 1 through 
GS-11, step 10.
    (3) Band III * is a full-performance technical track covering GS-
12, step 1 through GS-14, step 10.
    (4) Band IV * includes both senior technical positions along with 
supervisors/managers covering GS-14, step 1 through GS-15, step 10.
    (5) Band V is a senior scientific-technical manager. The pay range 
is: Minimum base pay is 120 percent of the minimum base pay of GS-15; 
maximum base pay is Level IV of the Executive Schedule (EX-IV); and 
maximum adjusted base pay is Level III of the Executive Schedule (EX-
III).

* Bands III and IV overlap at the end and start points. These two bands 
have been designed following a feature used by the Navy's ``China 
Lake'' project. Upon conversion into the demonstration project, 
employees in the E&S family currently at grade GS-14 will be assigned 
to either Band III or Band IV based on a review of the duties and 
responsibilities of the position as compared to the classification 
criteria.

    Business & Technical (B&T) (Pay Plan DE): This occupational family 
includes such positions as computer specialists, equipment specialists, 
quality assurance specialists, telecommunications specialists, 
engineering and electronics technicians, procurement coordinators, 
finance, accounting, administrative computing, and management analysis. 
Employees in these positions may or may not require specific course 
work or educational degrees. Four bands have been established for the 
B&T occupational family:
    (1) Band I is a student trainee track covering GS-1, step 1 through 
GS-4, step 10.
    (2) Band II is a developmental track covering GS-5, step 1 through 
GS-11, step 10.
    (3) Band III is a full performance track covering GS-12, step 1 
through GS-13, step 10.
    (4) Band IV is a senior technical/manager track covering GS-14, 
step 1 through GS-15, step 10.
    General Support (GEN) (Pay Plan DK): This occupational family is 
composed of positions for which specific course work or educational 
degrees are not required. Clerical work usually involves the processing 
and maintenance of records. Assistant work requires knowledge of 
methods and procedures within a specific administrative area. This 
family includes such positions as secretaries, office automation 
clerks, and budget/program/computer assistants. Three bands have been 
established for the GEN occupational family:
    (1) Band I includes entry-level positions covering GS-1, step 1 
through GS-4, step 10.
    (2) Band II includes full-performance positions covering GS-5, step 
1 through GS-8, step 10.
    (3) Band III includes senior technicians/assistants/secretaries 
covering GS-9 step 1 through step 10.
2. Pay Band Design
    The pay bands for the occupational families and how they relate to 
the current GS framework are shown in Figure 1.

[[Page 68945]]



                                                                Figure 1--Pay Band Chart
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Equivalent GS grades
      Occupational family       ------------------------------------------------------------------------------------------------------------------------
                                            I                       II                      III                     IV                       V
--------------------------------------------------------------------------------------------------------------------------------------------------------
E&S............................  GS-01--GS-04...........  GS-05--GS-11..........  GS-12--GS-14..........  GS-14--GS-15..........  >GS-15.
Business & Technical...........  GS-01--GS-04...........  GS-05--GS-11..........  GS-12--GS-13..........  GS-14--GS-15..........
General Support................  GS-01--GS-04...........  GS-05--GS-08..........  GS-9..................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Employees will be converted into the occupational family and pay 
band that corresponds to their GS/GM series and grade. With respect to 
conversion of Engineering and Science GS-14 positions, placement to a 
DB-III or DB-IV will be based on a review of the duties and 
responsibilities of the position as compared to the classification 
criteria. Each employee converted to the demonstration project is 
assured, upon conversion, an initial place in the system without loss 
of pay. New hires will ordinarily be placed at the lowest base pay rate 
in a pay band. Exceptional qualifications, specific organizational 
requirements, or other compelling reasons may lead to a higher entrance 
base pay within a band. As the rates of the GS are increased due to the 
annual general pay increases, the upper and lower base pay rates of the 
pay bands will also increase. Since pay progression through the bands 
depends directly on performance, there will be no scheduled Within-
Grade Increases (WGIs) or Quality Step Increases (QSIs) for employees 
once the pay banding system is in place. Special rate schedules will no 
longer be applicable to demonstration project employees. Special 
provisions have been included to ensure no loss of pay upon conversion 
(See III.E.9. Staffing Supplements).
3. Pay Band V
    The pay banding plan expands the pay banding concept used at 
``China Lake'' and NIST by creating Pay Band V for the E&S occupational 
family. This pay band is designed for Senior Scientific Technical 
Managers (SSTM). The current definitions of Senior Executive Service 
(SES) and Scientific and Professional (ST) positions do not fully meet 
the needs of the ECBC organization.
    The SES designation is appropriate for executive level managerial 
positions whose classification exceeds GS-15. The primary competencies 
of SES positions relate to supervisory and managerial responsibilities. 
Positions classified as ST are designed for bench research scientists 
and engineers. These positions require a very high level of technical 
expertise and have little or no supervisory responsibilities.
    The ECBC has positions that may warrant classification above GS-15 
because of their technical expertise requirements. These positions have 
characteristics of both SES and ST classifications. Most of these 
positions are responsible for supervising other GS-15 positions, 
including lower level supervisors, non-supervisory engineers and 
scientists, and in some cases ST positions. The supervisory and 
managerial requirements exceed those appropriate for ST positions.
    Management considers the primary requirement for these positions to 
be knowledge of and expertise in the specific scientific and technology 
areas related to the mission of their organization, rather than the 
executive leadership qualifications that are characteristic of the SES. 
Historically, incumbents of these positions have been recognized within 
the community as scientific and engineering leaders who possess strong 
managerial and supervisory abilities. Therefore, although some of these 
employees have scientific credentials that might compare favorably with 
ST criteria, classification of these positions as STs is not an option 
because the managerial and supervisory responsibilities cannot be 
ignored.
    Pay Band V will apply to a new category of positions designated as 
Senior Scientific Technical Managers (SSTM). Positions so designated 
will include those requiring scientific/engineering technical expertise 
and full managerial and supervisory authority. Their scientific/
engineering technical expertise and responsibilities warrant 
classification above the GS-15 level.
    Current GS-15 positions will convert into the demonstration project 
at Pay Band IV. After conversion these positions will be reviewed 
against established criteria to determine if the positions should be 
reclassified to Pay Band V. Other positions possibly meeting criteria 
for designation as SSTM will be reviewed on a case-by-case basis. The 
pay range for SSTM positions is: minimum base pay is 120 percent of the 
minimum base pay of GS-15; maximum rate of base pay is Level IV of the 
Executive Schedule (EX-IV); and maximum adjusted base pay is Level III 
of the Executive Schedule (EX-III). Adjusted base pay is base rate plus 
locality or staffing supplement as appropriate.
    Vacant SSTM positions will be filled competitively to ensure that 
selectees are preeminent technical leaders in specialty fields who also 
possess substantial managerial and supervisory abilities. Panels will 
be created to assist in filling SSTM positions. Panel members typically 
will be SES members, ST employees and later those designated as SSTMs. 
In addition, General Officers and recognized technical experts from 
outside ECBC may also serve as appropriate. The panel will apply 
criteria developed largely from the OPM Research Grade Evaluation Guide 
for positions exceeding the GS-15 level and other OPM guidance related 
to positions exceeding the GS-15 level. The purpose of the panel is to 
ensure impartiality, breadth of technical expertise, and a rigorous and 
demanding review.
    SSTM positions will be subject to limitations imposed by DoD. SSTM 
positions will be established only in a STRL that employs scientists, 
engineers, or both. Incumbents of these positions will work primarily 
in their professional technical capacity on research and development 
and secondarily, will perform managerial or supervisory duties.
    The final component of Pay Band V is the management of all Pay Band 
V assets. Specifically, this authority will be exercised at the DA 
level, and includes the following: authority to classify, create, or 
abolish positions within the limitations imposed by DoD; recruit and 
reassign employees in this pay band; set pay and appraise performance 
under this project's pay-for-performance system.

B. Classification

1. Occupational Series
    The present GS classification system has over 400 occupational 
series, which are divided into 23 occupational groupings. ECBC 
currently has positions in approximately 65 occupational series that 
fall into 16 occupational groupings.

[[Page 68946]]

All positions listed in Appendix B will be in the classification 
structure. Provisions will be made for including other occupations in 
response to changing missions.
2. Classification Standards and Position Descriptions
    ECBC will use CERDEC's fully automated classification system 
modeled after the Navy's ``China Lake'' and ARL's automated systems. 
ARL developed a Web-based automated classification system that can 
create standardized, classified position descriptions under the new pay 
banding system in a matter of minutes. The present system of OPM 
classification standards will be used for the identification of proper 
series and occupational titles of positions within the demonstration 
project. Current OPM position classification standards will not be used 
to grade positions in this project. However, the grading criteria in 
those standards will be used as a framework to develop new and 
simplified standards for the purpose of pay band determinations. The 
objective is to record the essential criteria for each pay band within 
each occupational family by stating the characteristics of the work, 
the responsibilities of the position, and the competencies required. 
New position descriptions will replace the current DA job descriptions. 
The classification standard for each pay band will serve as an 
important component in the new position description, which will also 
include position-specific information, and provide data element 
information pertinent to the job. The computer-assisted process will 
produce information necessary for position descriptions. The new 
descriptions will be easier to prepare, minimize the amount of writing 
time and make the position description a more useful and accurate tool 
for other personnel management functions.
    Specialty work codes (narrative descriptions) will be used to 
further differentiate types of work and the competencies required for 
particular positions within an occupational family and pay band. Each 
code represents a specialization or type of work within the occupation.
3. Fair Labor Standards Act
    Fair Labor Standards Act (FLSA) exemption and non-exemption 
determinations will be consistent with criteria found in 5 CFR part 
551. All employees are covered by the FLSA unless they meet the 
criteria for exemption. The duties and responsibilities outlined in the 
classification standards for each pay band will be compared to the FLSA 
criteria. As a general rule, the FLSA status can be matched to 
occupational family and pay band as indicated in Figure 2. For example, 
positions classified in Pay Band I of the E&S occupational family are 
typically nonexempt, meaning they are covered by the overtime 
entitlements prescribed by the FLSA. An exception to this guideline 
includes supervisors/managers whose primary duty meet the definitions 
outlined in the OPM GS Supervisory Guide. Therefore, supervisors/
managers in any of the pay bands who meet the foregoing criteria are 
exempt from the FLSA. Supervisors with classification authority will 
make the determinations on a case-by-case basis by comparing assigned 
duties and responsibilities to the classification standards for each 
pay band and the 5 CFR 551 FLSA criteria. Additionally, the advice and 
assistance of the servicing CPAC will be obtained in making 
determinations. The benchmark position descriptions will not be the 
sole basis for the determination. Basis for exemption will be 
documented and attached to each position description. Exemption 
criteria will be narrowly construed and applied only to those employees 
who clearly meet the spirit of the exemption. Changes will be 
documented and provided to the CPAC.

                          Figure 2--FLSA Status
                               [Pay bands]
------------------------------------------------------------------------
      Occupational family           I       II      III     IV       V
------------------------------------------------------------------------
E&S............................  N        N/E     E       E       E
B&T............................  N        N/E     E       E
GEN............................  N        N       E       ......
------------------------------------------------------------------------
N--Non-Exempt from FLSA; E--Exempt from FLSA.
N/E--Exemption status determined on a case-by-case basis.


    Note: Although typical exemption status under the various pay 
bands is shown in the above table, actual FLSA exemption 
determinations are made on a case-by-case basis.

4. Classification Authority
    The ECBC Technical Director will have delegated classification 
authority and may, in turn, re-delegate this authority to appropriate 
levels. Position descriptions will be developed to assist managers in 
exercising delegated position classification authority. Managers will 
identify the occupational family, job series, functional code, 
specialty work code, pay band level, and the appropriate acquisition 
codes. Personnel specialists will provide ongoing consultation and 
guidance to managers and supervisors throughout the classification 
process. These decisions will be documented on the position 
description.
5. Classification Appeals
    Classification appeals under this demonstration project will be 
processed using the following procedures: An employee may appeal the 
determination of occupational family, occupational series, position 
title, and pay band of his/her position at any time. An employee must 
formally raise the area of concern to supervisors in the immediate 
chain of command, either verbally or in writing. If the employee is not 
satisfied with the supervisory response, he/she may then appeal to the 
DoD appellate level. Appeal decisions rendered by DoD will be final and 
binding on all administrative, certifying, payroll, disbursing, and 
accounting officials of the government. Classification appeals are not 
accepted on positions which exceed the equivalent of a GS-15 level. 
Time periods for cases processed under 5 CFR part 511 apply.
    An employee may not appeal the accuracy of the position 
description, the demonstration project classification criteria, or the 
pay-setting criteria; the assignment of occupational series to the 
occupational family; the propriety of a pay schedule; or matters 
grievable under an administrative or negotiated grievance procedure, or 
an alternative dispute resolution procedure.
    The evaluations of classification appeals under this demonstration 
project are based upon the demonstration project classification 
criteria. Case files will be forwarded for adjudication through the 
CPAC providing personnel service and will include copies of appropriate 
demonstration project criteria.

C. Pay for Performance

1. Overview
    The purpose of the pay-for-performance system is to provide an 
effective, efficient, and flexible method for assessing, compensating, 
and managing the ECBC workforce. It is essential for the development of 
a highly productive workforce and to provide management at the lowest 
practical level, the authority, control, and flexibility needed to 
achieve a quality organization and meet mission requirements. The pay-
for-performance system allows for more employee involvement in the 
assessment process, strives to increase communication between 
supervisor and employee, promotes a clear accountability of

[[Page 68947]]

performance, facilitates employee career progression, and provides an 
understandable and rational basis for pay changes by linking pay and 
performance.
    The pay-for-performance system uses annual performance payouts that 
are based on the employee's total performance score rather than within-
grade increases, quality step increases, promotions from one grade to 
another where both grades are now in the same pay band (i.e., there are 
no within-band promotions) and performance awards. The normal rating 
period will be one year. The minimum rating period will be 120 days. 
Pay-for-performance payouts can be in the form of increases to base pay 
and/or in the form of bonuses that are not added to base pay but rather 
are given as a lump sum bonus. Other awards such as special acts, time-
off awards, etc., will be retained separately from the pay-for-
performance payouts.
    The system will have the flexibility to be modified, if necessary, 
as more experience is gained under the project.
2. Performance Objectives
    Performance objectives define a target level of activity, expressed 
as a tangible, measurable objective, against which actual achievement 
can be compared. These objectives will specifically identify what is 
expected of the employee during the rating period and will typically 
consist of three to ten results-oriented statements. The employee and 
his/her supervisor will jointly develop the employee's performance 
objectives at the beginning of the rating period. These are to be 
reflective of the employee's duties/responsibilities and pay band along 
with the mission/organizational goals and priorities. Objectives will 
be reviewed annually and revised upon changes in pay reflecting 
increased responsibilities commensurate with pay increases. Use of 
generic one-size-fits-all objectives will be avoided, as performance 
objectives are meant to define an individual's specific 
responsibilities and expected accomplishments. In contrast, performance 
elements as described in the next paragraph will identify generic 
performance characteristics, against which the accomplishment of 
objectives will be measured. As a part of this demonstration project, 
training focused on overall organizational objectives and the 
development of performance objectives will be held for both supervisors 
and employees. Performance objectives may be jointly modified, changed 
or deleted as appropriate during the rating cycle. As a general rule, 
performance objectives should only be changed when circumstances 
outside the employee's control prevent or hamper the accomplishment of 
the original objectives. It is also appropriate to change objectives 
when mission or workload shifts occur.
3. Performance Elements
    Performance elements define generic performance characteristics 
that will be used to evaluate the employee's success in accomplishing 
his/her performance objectives. The use of generic characteristics for 
scoring purposes helps to ensure comparable scores are assigned while 
accommodating diverse individual objectives. This pay-for-performance 
system will utilize those performance elements provided in Appendix C. 
All elements are critical. A critical performance element is defined as 
an attribute of job performance that is of sufficient importance that 
performance below the minimally acceptable level requires remedial 
action and may be the basis for removing an employee from his/her 
position. Non-critical elements will not be used. Each of the 
performance elements will be assigned a weight, which reflects its 
importance in accomplishing an individual's performance objectives. A 
minimum weight is set for each performance element. The sum of the 
weights for all of the elements must equal 100.
    A single set of performance elements will be used for evaluating 
the annual performance of all ECBC personnel covered by this plan. This 
set of performance elements may evolve over time, based on experience 
gained during each rating cycle. This evolution is essential to capture 
the critical characteristics the organization encourages in its 
workforce toward meeting individual and organizational objectives. This 
is particularly true in an environment where technology and work 
processes are changing at an increasingly rapid pace. The ECBC 
Personnel Management Board will annually review the set of performance 
elements and set them for the entire organization before the beginning 
of the rating period. The following is an initial set of performance 
elements along with their minimum weight:
    (1) Technical Competence (Minimum Weight: 15%).
    (2) Interpersonal Skills (Minimum Weight: 10%).
    (3) Management of Time and Resources (Minimum Weight: 15%).
    (4) Customer Satisfaction (Minimum Weight: 10%).
    (5) Team/Project Leadership (Minimum Weight: 15%).
    (6) Supervision/Equal Employment Opportunity (EEO) (Minimum Weight: 
25%).
    All employees will be rated against the first four performance 
elements. Team/Project Leadership is mandatory for team leaders (within 
this document ``team leader'' refers to non-supervisory team leaders as 
determined by the OPM GS Leader Grade Evaluation Guide). Supervision/
EEO is mandatory for all managers/supervisors. At the beginning of the 
rating period, pay pool managers will review the objectives and weights 
assigned to employees within the pay pool, to verify consistency and 
appropriateness.
4. Performance Feedback and Formal Ratings
    The most effective means of communication is person-to-person 
discussion between supervisors and employees of requirements, 
performance goals and desired results. Employees and supervisors alike 
are expected to actively participate in these discussions for optimum 
clarity regarding expectations and identify potential obstacles to 
meeting goals. In addition, employees should explain (to the extent 
possible) what they need from their supervisor to support goal 
accomplishment. The timing of these discussions will vary based on the 
nature of work performed, but will occur at least at the mid-point and 
end of the rating period. The supervisor and employee will discuss job 
performance and accomplishments in relation to the performance 
objectives and elements. At least one review, normally the mid-point 
review, will be documented as a formal progress review. More frequent, 
task specific, discussions may be appropriate in some organizations. In 
cases where work is accomplished by a team, team discussions regarding 
goals and expectations will be appropriate.
    The employee will provide a list of his/her accomplishments to the 
supervisor at both the mid-point and end of the rating period. An 
employee may elect to provide self-ratings on the performance elements 
and/or solicit input from team members, customers, peers, supervisors 
in other units, subordinates, and other sources which will permit the 
supervisor to fully evaluate accomplishments during the rating period.
    At the end of the rating period, following a review of the 
employee's accomplishments, the supervisor will rate each of the 
performance elements by assigning a score between 0 and 50. Benchmark 
performance standards have

[[Page 68948]]

been developed that describe the level of performance associated with a 
score. Using these benchmarks, the supervisor decides where (at any 
point on a scale of 0 to 50) the performance of the employee fits and 
assigns an appropriate score. It should be noted that these scores are 
not discussed with the employee or considered final until all scores 
are reconciled and approved by the pay pool manager. The element scores 
will then be multiplied by the element-weighting factor to determine 
the weighted score expressed to two decimal points. The weighted scores 
for each element will then be totaled to determine the employee's 
overall appraisal score and rounded to a whole number as follows: if 
the digit to the right of the decimal is between five and nine, it 
should be rounded to the next higher whole number; if the digit to the 
right of the decimal is between one and four, it should be dropped.
    A total score of 10 or above will result in a rating of acceptable. 
A total score of 9 or below will result in a rating of unacceptable, 
and requires the employee be placed on a Performance Improvement Plan 
(PIP) immediately or following a temporary assignment. A score of 9 or 
below in a single element will also result in a rating of unacceptable, 
and requires the employee be placed on a PIP. A new rating of record 
will be issued if the employee's performance improves to an acceptable 
level at the conclusion of the PIP.
5. Unacceptable Performance
    Informal employee performance reviews will be a continuous process 
so that corrective action, to include placing an employee on a PIP, may 
be taken at any time during the rating cycle. Whenever a supervisor 
recognizes an employee's performance on one or more performance 
elements is unacceptable, the supervisor should immediately inform the 
employee. Efforts will be made to identify the possible reasons for the 
unacceptable performance. An employee who is on a PIP is not eligible 
to receive the general pay increase (refer to III.C.13.).
    As an informal first step, the supervisor and employee may explore 
a temporary assignment to another unit in the organization. This 
recognizes that conflicts sometimes occur between a supervisor and an 
employee, or that an employee may be assigned to a position for which 
he/she is not suited. The supervisor is under no obligation to explore 
this option prior to taking more formal action. If the temporary 
assignment is not possible or has not worked out, and the employee 
continues to perform at an unacceptable level or has received an 
unacceptable rating, written notification outlining the unacceptable 
performance will be provided to the employee. At this point an 
opportunity to improve will be structured in a PIP. The supervisor will 
identify the items/actions that need to be corrected or improved, 
outline required time frames (no less than 30 days) for such 
improvement, and provide the employee with any available assistance as 
appropriate. Progress will be monitored during the PIP, and all 
counseling sessions will be documented.
    If the employee's performance is acceptable at the conclusion of 
the PIP, no further action is necessary. If a PIP ends prior to the end 
of the annual performance cycle and the employee's performance improves 
to an acceptable level, the employee is appraised again at the end of 
the annual performance cycle.
    If the employee fails to improve during the PIP, the employee will 
be given notice of proposed appropriate action. This action can include 
removal from the Federal service, placement in a lower pay band with a 
corresponding reduction in pay (demotion), reduction in pay within the 
same pay band, or change in position or occupational family. For the 
most part, employees with an unacceptable rating will not be permitted 
to remain at their current pay and may be reduced in pay band. 
Reductions in base pay within the same pay band or changes to a lower 
pay band will be accomplished with a minimum of a five-percent decrease 
in an employee's base pay.

    Note: Nothing in this subsection will preclude action under 5 
U.S.C. chapter 75, when appropriate.

    All relevant documentation concerning a reduction in pay or removal 
based on unacceptable performance will be preserved and made available 
for review by the affected employee or a designated representative. As 
a minimum, the record will consist of a copy of the notice of proposed 
personnel action, the employee's written reply, if provided, or a 
summary when the employee makes an oral reply. Additionally, the record 
will contain the written notice of decision and the reasons therefore 
along with any supporting material (including documentation regarding 
the opportunity afforded the employee to demonstrate improved 
performance).
    If the employee's performance deteriorates to an unacceptable 
level, in any element, within two years from the beginning of a PIP, 
follow-on actions may be initiated with no additional opportunity to 
improve. If an employee's performance is at an acceptable level for two 
years from the beginning of the PIP, and performance once again 
declines to an unacceptable level, the employee will be given an 
additional opportunity to improve, before management proposes follow-on 
actions.
6. Reconciliation Process
    Following the initial scoring of each employee by the rater, the 
rating officials in an organizational unit, along with their next level 
of supervision, will meet to ensure consistency and equity of the 
ratings. In this step, each employee's performance objectives, 
accomplishments, preliminary scores and pay are compared. Through 
discussion and consensus building, consistent and equitable ratings are 
reached. Managers will not prescribe a distribution of total scores. 
The pay pool manager will then chair a final review with the rating 
officials who report directly to him or her to validate these ratings 
and resolve any scoring issues. If consensus cannot be reached in this 
process, the pay pool manager makes all final decisions. After this 
reconciliation process is complete, scores are finalized. Payouts 
proceed according to each employee's final score and adjusted base pay. 
Upon approval of this plan, implementing procedures and regulations 
will provide details on this process to employees and supervisors.
7. Pay Pools
    ECBC employees will be placed into pay pools. Pay pools are 
combinations of organizational elements (e.g., Directorates, Divisions, 
Branches, Teams, etc.) that are defined for the purpose of determining 
performance payouts under the pay-for-performance system. The 
guidelines in the next paragraph are provided for determining pay 
pools. These guidelines will normally be followed. However, the ECBC 
Technical Director may deviate from the guidelines if there is a 
compelling need to do so and document their rationale in writing.
    The ECBC Technical Director will establish pay pools. Typically, 
pay pools will have between 35 and 300 employees. A pay pool should be 
large enough to encompass a reasonable distribution of ratings but not 
so large as to compromise rating consistency. Supervisory personnel 
will be placed in a pay pool separate from subordinate non-supervisory 
personnel. Team leaders classified by the GS Leader Grade Evaluation 
Guide will be included in a supervisory pay pool.

[[Page 68949]]

Those team leaders who have project responsibility but who do not 
actually lead other workers will be included in a non-supervisory pay 
pool. Neither the pay pool manager nor supervisors within a pay pool 
will recommend or set their own individual pay. Decisions regarding the 
amount of the performance payout are based on the established formal 
payout calculations.
    Funds within a pay pool available for performance payouts are 
calculated from anticipated pay increases under the existing system and 
divided into two components, base pay and bonus. The funds within a pay 
pool used for base pay increases, are those that would have been 
available from within-grade increases, quality step increases and 
promotions (excluding the costs of promotions still provided under the 
banding system). This amount will be defined based on historical data 
and will be set at no less than two percent of total adjusted base pay 
annually. The funds available to be used for bonus payouts are funded 
separately within the constraints of the organization's overall award 
budget. This amount will be defined based on historical data and at no 
less than one percent of total adjusted base pay annually. The sum of 
these two factors is referred to as the pay pool percentage factor. The 
ECBC Personnel Management Board will annually review the pay pool 
funding and recommend adjustments to the ECBC Technical Director to 
ensure cost discipline over the life of the demonstration project. Cost 
discipline is assured within each pay pool by limiting the total base 
pay increase to the funds available, based on what would have been 
available in the GS system from within-grade increases, quality step 
increases and within-band promotions. The ECBC Technical Director may 
reallocate the amount of funds assigned to each pay pool as necessary 
to ensure equity and to meet unusual circumstances.
8. Performance Payout Determination
    The performance payout an employee will receive is based on the 
total performance score from the pay-for-performance assessment 
process. An employee will receive a performance payout as a percentage 
of adjusted base pay. This percentage is based on the number of shares 
that equates to their final appraisal score. Shares will be awarded on 
a continuum as follows:

------------------------------------------------------------------------
                             Score = Shares
-------------------------------------------------------------------------
50 = 3
40 = 2
30 = 1
21 = .1
10 - 20 = 0
------------------------------------------------------------------------
< = 9 = 0 (Performance Improvement Plan required).

    Fractional shares will be awarded for scores that fall in between 
these scores. For example: A score of 38 will equate to 1.8 shares, and 
a score of 44 will equate to 2.4 shares.
    The value of a share cannot be exactly determined until the rating 
and reconciliation process is completed and all scores are finalized. 
The share value is expressed as a percentage. The formula that computes 
the value of each share uses base pay rates and is based on (1) the sum 
of the base pay of all employees in the pay pool times the pay pool 
percentage factor, (2) the employee's base pay, (3) the number of 
shares awarded to each employee in the pay pool, and (4) the total 
number of shares awarded in the pay pool. This formula assures that 
each employee within the pool receives a share amount equal to all 
others in the same pool who are at the same rate of base pay and 
receiving the same score. The formula is shown in Figure 3.

Figure 3. Formula
[GRAPHIC] [TIFF OMITTED] TN29DE09.002

    An individual payout is calculated by first multiplying the shares 
earned by the share value and multiplying that product by base pay. An 
adjustment is then made to account for locality pay or staffing 
supplement.
    A pay pool manager is accountable for staying within pay pool 
limits. The pay pool manager makes final decisions on base pay 
increases and/or bonuses to individuals based on rater recommendation, 
the final score, the pay pool funds available, and the employee's pay.
9. Base Pay Increases and Bonuses
    The amount of money available for performance payouts is divided 
into two components, base pay increases and bonuses. The base pay and 
bonus funds are based on the pay pool funding formula established 
annually. Once the individual performance amounts have been determined, 
the next step is to determine what portion of each payout will be in 
the form of a base pay increase as opposed to a bonus payment. The 
payouts made to employees from the pay pool may be a mix of base pay 
and bonus, such that all of the allocated funds are disbursed as 
intended. To continue to provide performance incentives while also 
ensuring cost discipline, base pay increases may be limited or capped. 
Certain employees will not be able to receive the projected base pay 
increase due to base pay caps. Base pay is capped when an employee 
reaches the maximum rate of base pay in an assigned pay band, when the 
mid-point rule applies (see below) or when the Significant 
Accomplishment/Contribution rule applies (see below). Also, for 
employees receiving retained rates above the applicable pay band 
maximum, the entire performance payout will be in the form of a bonus 
payment.
    When capped, the total payout an employee receives will be in the 
form of a bonus versus the combination of base pay and bonus. Bonuses 
are cash payments and are not part of the base pay for any purpose 
(e.g., lump sum payments of annual leave on separation, life insurance, 
and retirement). The maximum base pay rate under this demonstration 
project will be the unadjusted base pay rate of GS-15/step 10, except 
for employees in Pay Band V of the E&S occupational family. In this 
case, the pay range is as noted in III.A.3.
    If the organization determines it is appropriate, it may re-
allocate a portion (up to the maximum possible amount) of the 
unexpended base pay funds for capped employees to uncapped employees. 
This re-allocation will be determined by the pay pool manager. Any 
dollar increase in an employee's projected base pay increase will be 
offset, dollar for dollar, by an accompanying reduction in the 
employee's projected bonus payment. Thus, the employee's total 
performance payout is unchanged.
    In addition, a pay pool manager may request approval from the 
Personnel Management Board for use of an Extraordinary Achievement 
Recognition. Such recognition grants a base pay increase and/or bonus 
to an employee that is higher than the one

[[Page 68950]]

generated by the compensation formula for that employee. Examples that 
might warrant consideration are extraordinary achievements or 
accelerated compensation for a local intern. The funds available for an 
Extraordinary Achievement Recognition are separately funded within the 
constraints of the organization's budget.
10. Mid-Point Rule
    To provide added performance incentives as an employee progresses 
through a pay band, a mid-point rule will be used to determine base pay 
increases. The mid-point rule dictates that any employee must receive a 
score of 30 or higher for his/her base pay to cross the mid-point of 
the base pay range for his/her pay band. Also, once an employee's base 
pay exceeds the mid-point, the employee must receive a score of 30 or 
higher to receive any additional base pay increases. Any amount of an 
employee's performance payout, not paid in the form of a base pay 
increase because of the mid-point rule, will be paid as a bonus. This 
rule effectively raises the standard of performance expected of an 
employee once the mid-point of a band is crossed. This applies to all 
employees in every occupational family and pay band.
11. Significant Accomplishment/Contribution Rule
    The purpose of this rule is to maintain cost discipline while 
ensuring that employee payouts are in consonance with accomplishments 
and levels of responsibility. The rule will apply only to employees in 
E&S Pay Band III whose base pay falls within the top 15 percent of the 
band. For employees meeting these criteria, the following provisions 
will apply:
    (1) If an employee's score falls in the top third of scores 
received in his/her pay pool, he/she will receive the full allowable 
base pay increase portion of the performance payout. The balance of the 
payout will be paid as a lump sum bonus.
    (2) If an employee's score falls in the middle third of scores 
received in his/her pay pool, the base pay increase portion will not 
exceed one percent of base pay. The balance of the payout will be paid 
as a lump sum bonus.
    (3) If an employee's appraisal score falls in the bottom third of 
scores received in his/her pay pool, the full payout will be paid as a 
lump sum bonus.
12. Awards
    To provide additional flexibility in motivating and rewarding 
individuals and groups, some portion of the performance award budget 
will be reserved for special acts and other categories as they occur. 
Awards may include, but are not limited to, special acts, patents, 
suggestions, on-the-spot, and time-off. The funds available to be used 
for traditional 5 U.S.C. awards are separately funded within the 
constraints of the organization's budget.
    While not directly linked to the pay-for-performance system, this 
additional flexibility is important to encourage outstanding 
accomplishments and innovation in accomplishing the diverse mission of 
ECBC. Additionally, to foster and encourage teamwork among its 
employees, organizations may give group awards. Under the demonstration 
project, a team may elect to distribute such awards among themselves.
    Thus, a team leader or supervisor may allocate a sum of money to a 
team for outstanding performance, and the team may decide the 
individual distribution of the total dollars among themselves. The 
Commanding General, RDECOM will have the authority to grant special act 
awards to covered employees of up to $10,000 IAW the criteria of AR 
672-20, Incentive Awards. This authority may be delegated to the 
Technical Director, ECBC.
13. General Pay Increase
    Employees, who are on a PIP at the time pay determinations are 
made, do not receive performance payouts or the annual general pay 
increase. An employee who receives an unacceptable rating of record 
will not receive any portion of the general pay increase or RIF service 
credit until such time as his/her performance improves to the 
acceptable level and remains acceptable for at least 90 days. When the 
employee has performed acceptably for at least 90 days, the general pay 
increase will not be retroactive but will be granted at the beginning 
of the next pay period after the supervisor authorizes its payment. 
These actions may result in a base pay that is identified in a lower 
pay band. This occurs because the minimum rate of base pay in a pay 
band increases as the result of the general pay increase (5 U.S.C. 
5303). This situation (a reduction in band level with no reduction in 
pay) will not be considered an adverse action, nor will band retention 
provisions apply.
14. Reverse Feedback
    Employee feedback to supervisors is considered essential for the 
success of the pay-for-performance system. A feedback instrument for 
subordinates to anonymously evaluate the effectiveness of their 
supervisors is being developed and shall be implemented as part of the 
demonstration project. Supervisors and their managers will be provided 
the results of that feedback in a format that does not identify 
individual raters or ratings. The data will be aggregated into a 
summary and used to establish both personal and organizational 
performance development goals. The use of this type of instrument will 
help focus attention on desired leadership behaviors, structure the 
feedback in a constructive manner, and offset the power imbalance that 
often prevents supervisors from getting useful feedback from their 
employees.
15. Grievances
    An employee may grieve the performance rating/score received under 
the pay-for-performance system. Non-bargaining unit employees, and 
bargaining unit employees covered by a negotiated grievance procedure 
that does not permit grievances over performance ratings, must file 
under administrative grievance procedures. Bargaining unit employees 
whose negotiated grievance procedures cover performance rating 
grievances must file under those negotiated procedures.
16. Adverse Actions
    Except where specifically waived or modified in this plan, adverse 
action procedures under 5 CFR part 752 remain unchanged.

D. Hiring Authority

1. Qualifications
    The qualifications required for placement into a position in a pay 
band within an occupational family will be determined using the OPM 
Operating Manual for Qualification Standards for GS Positions. Since 
the pay bands are anchored to the GS grade levels, the minimum 
qualification requirements for a position will be the requirements 
corresponding to the lowest GS grade incorporated into that pay band. 
For example, for a position in the E&S occupational family, Pay Band II 
individuals must meet the basic requirements for a GS-5 as specified in 
the OPM Qualification Standard for Professional and Scientific 
Positions.
    Selective factors may be established for a position in accordance 
with the OPM Qualification Standards Operating Manual, when determined 
to be critical to successful job performance. These factors will become 
part of the minimum requirements for the position, and applicants must 
meet them in order to be eligible. If used, selective factors will be 
stated as part of the qualification requirements in vacancy 
announcements and recruiting bulletins.

[[Page 68951]]

2. Delegated Examining
    Competitive service positions will be filled through Merit Staffing 
and through direct-hire authority or under Delegated Examining. Recent 
legislative changes provide for delegation of direct-hire authority for 
shortage category positions under the Defense Acquisition Workforce 
Improvement Act (DAWIA) at certain levels as well as direct hire 
authority for qualified candidates with an advanced degree to 
scientific and engineering positions within 5 U.S.C. 9902(c)(2) STRL 
laboratories as redesignated under section 1105 of Public Law 111-84. 
Where delegated to the laboratory level, direct-hire authority will be 
exercised in accordance with the requirements of the delegation of 
authority. The ``Rule of Three'' will be eliminated. When there are no 
more than 15 qualified applicants and no preference eligibles, all 
eligible applicants are immediately referred to the selecting official 
without rating and ranking. Rating and ranking will be required only 
when the number of qualified candidates exceeds 15 or there is a mix of 
preference and non-preference applicants. Statutes and regulations 
covering veterans' preference will be observed in the selection process 
and when rating and ranking are required. If the candidates are rated 
and ranked, a random number selection method will be used to determine 
which applicants will be referred when scores are tied after the rating 
process. Veterans will be referred ahead of non-veterans with the same 
score.
3. Legal Authority
    For actions taken under the auspices of the demonstration project, 
the legal authority, Public Law 103-337, as amended, will be used. For 
all other actions, the nature of action codes and legal authority codes 
prescribed by OPM, DoD, or DA will continue to be used.
4. Revisions to Term Appointments
    ECBC conducts a variety of projects that range from three to six 
years. The current four-year limitation on term appointments often 
forces the termination of term employees prior to completion of 
projects they were hired to support. This disrupts the research and 
development process and affects the organization's ability to 
accomplish the mission and serve its customers.
    ECBC will continue to have career and career-conditional 
appointments and temporary appointments not to exceed one year. These 
appointments will use existing authorities and entitlements. Under the 
demonstration project, ECBC will have the added authority to hire 
individuals under a modified term appointment. These appointments will 
be used to fill positions for a period of more than one year, but not 
more than a total of five years when the need for an employee's 
services is not permanent. The modified term appointments differ from 
term employment as described in 5 CFR 316 in that they may be made for 
a period not to exceed five, rather than four years. The Technical 
Director is authorized to extend a term appointment one additional 
year.
    Employees hired under the modified term appointment authority are 
in a non-permanent status, but may be eligible for conversion to 
career-conditional appointments. To be converted, the employee must (1) 
have been selected for the term position under competitive procedures, 
with the announcement specifically stating that the individual(s) 
selected for the term position may be eligible for conversion to a 
career-conditional appointment at a later date; (2) have served two 
years of continuous service in the term position; (3) be selected under 
merit promotion procedures for the permanent position; and (4) be 
performing at the acceptable level of performance with a current score 
of 30 or greater.
    Employees serving under regular term appointments at the time of 
conversion to the demonstration project will be converted to the new 
modified term appointments provided they were hired for their current 
positions under competitive procedures. These employees will be 
eligible for conversion to career-conditional appointments if they (1) 
have served two years of continuous service in the term position; (2) 
are selected under merit promotion procedures for the permanent 
position; and (3) are performing at the acceptable level of performance 
with a current score of 30 or greater (or equivalent if not yet rated 
under the demonstration project). Time served in term positions prior 
to conversion to the modified term appointment is creditable, provided 
the service was continuous. Employees serving under regular or modified 
term appointments under this plan will be covered by the plan's pay-
for-performance system.
5. Extended Probationary Period
    The current one-year probationary period will be extended to three 
years for all newly hired permanent career-conditional employees in the 
E&S occupational family. The purpose of extending the probationary 
period is to allow supervisors an adequate period of time to fully 
evaluate an employee's ability to complete a cycle of work and to fully 
assess an employee's contribution and conduct. The three-year 
probationary period will apply only to new hires subject to a 
probationary period.
    If a probationary employee's performance is determined to be 
satisfactory at a point prior to the end of the three-year probationary 
period, a supervisor has the option of ending the probationary period 
at an earlier date, but not before the employee has completed one year 
of continuous service. If the probationary period is terminated before 
the end of the three-year period, the immediate supervisor will provide 
written reasons for his/her decision to the next level of supervision 
for concurrence prior to implementing the action.
    Aside from extending the time period for all newly hired permanent 
career-conditional employees in the E&S occupational family, all other 
features of the current probationary period are retained including the 
potential to remove an employee without providing the full substantive 
and procedural rights afforded a non-probationary employee. Any 
employee appointed prior to the implementation date will not be 
affected.
6. Termination of Probationary Employees
    Probationary employees may be terminated when they fail to 
demonstrate proper conduct, technical competency, and/or acceptable 
performance for continued employment, and for conditions arising before 
employment. When a supervisor decides to terminate an employee during 
the probationary period because his/her work performance or conduct is 
unacceptable, the supervisor shall terminate the employee's services by 
written notification stating the reasons for termination and the 
effective date of the action. The information in the notice shall, at a 
minimum, consist of the supervisor's conclusions as to the inadequacies 
of the employee's performance or conduct, or those conditions arising 
before employment that support the termination.
7. Supervisory Probationary Periods
    Supervisory probationary periods will be made consistent with 5 CFR 
part 315. Employees who have successfully completed the initial 
probationary period will be required to complete an additional one-year 
probationary period for initial appointment to a supervisory position. 
If, during this probationary

[[Page 68952]]

period, the decision is made to return the employee to a non-
supervisory position for reasons related to supervisory performance, 
the employee will be returned to a comparable position of no lower pay 
than the position from which promoted or reassigned.
8. Volunteer Emeritus Corps
    Under the demonstration project, the ECBC Director will have the 
authority to offer retired or separated employees voluntary positions. 
The ECBC Director may re-delegate this authority. Voluntary Emeritus 
Corps assignments are not considered employment by the Federal 
government (except for purposes of injury compensation). Thus, such 
assignments do not affect an employee's entitlement to buyouts or 
severance payments based on an earlier separation from Federal service. 
The volunteer's Federal retirement pay (whether military or civilian) 
is not affected while serving in a voluntary capacity. Retired or 
separated Federal employees may accept an emeritus position without a 
break or mandatory waiting period.
    The Voluntary Emeritus Corps will ensure continued quality services 
while reducing the overall salary line by allowing higher paid 
employees to accept retirement incentives with the opportunity to 
retain a presence in the ECBC community. The program will be beneficial 
during manpower reductions, as employees accept retirement and return 
to provide a continuing source of corporate knowledge and valuable on-
the-job training or mentoring to less experienced employees.
    To be accepted into the Voluntary Emeritus Corps, a volunteer must 
be recommended by an ECBC manager to the Director or delegated 
authority. Not everyone who applies is entitled to an emeritus 
position. The responsible official will document acceptance or 
rejection of the applicant. For acceptance, documentation must be 
retained throughout the assignment. For rejection, documentation will 
be maintained for two years.
    Voluntary Emeritus Corps volunteers will not be permitted to 
monitor contracts on behalf of the Government or to participate on any 
contracts or solicitations where a conflict of interest exists. The 
volunteers may be required to submit a financial disclosure form 
annually. The same rules that currently apply to source selection 
members will apply to volunteers.
    An agreement will be established among the volunteer, the 
responsible official and the CPAC. The agreement must be finalized 
before the assumption of duties and shall include:
    (1) A statement that the voluntary assignment does not constitute 
an appointment in the Civil Service, is without compensation, and the 
volunteer waives any claims against the Government based on the 
voluntary assignment;
    (2) A statement that the volunteer will be considered a Federal 
employee only for the purpose of injury compensation;
    (3) The volunteer's work schedule;
    (4) Length of agreement (defined by length of project or time 
defined by weeks, months, or years);
    (5) Support provided by the organization (travel, administrative 
support, office space, and supplies);
    (6) A statement of duties;
    (7) A statement providing that no additional time will be added to 
a volunteer's service credit for such purposes as retirement, severance 
pay, and leave as a result of being a volunteer;
    (8) A provision allowing either party to void the agreement with 
two working days written notice;
    (9) The level of security access required by the volunteer (any 
security clearance required by the position will be managed by the 
employing organization);
    (10) A provision that any publication(s) resulting from his/her 
work will be submitted to the ECBC Technical Director for review and 
approval;
    (11) A statement that he/she accepts accountability for loss or 
damage to Government property occasioned by his/her negligence or 
willful action;
    (12) A statement that his/her activities on the premises will 
conform to the regulations and requirements of the organization;
    (13) A statement that he/she will not release any sensitive or 
proprietary information without the written approval of the employing 
organization and further agrees to execute additional non-disclosure 
agreements as appropriate, if required, by the nature of the 
anticipated services; and,
    (14) A statement that he/she agrees to disclose any inventions made 
in the course of work performed at ECBC. The ECBC Technical Director 
has the option to obtain title to any such invention on behalf of the 
U.S. Government. Should the ECBC Technical Director elect not to take 
title, the ECBC shall at a minimum retain a non-exclusive, irrevocable, 
paid up, royalty-free license to practice or have practiced the 
invention worldwide on behalf of the U.S. Government.
    Exceptions to the provisions in this procedure may be granted by 
the ECBC Technical Director on a case-by-case basis.

E. Internal Placement

1. Promotion
    A promotion is the movement of an employee to a higher pay band in 
the same occupational family or to another pay band in a different 
occupational family, wherein the band in the new family has a higher 
maximum base pay than the band from which the employee is moving. The 
move from one band to another must result in an increase in the 
employee's base pay to be considered a promotion. Positions with known 
promotion potential to a specific band within an occupational family 
will be identified when they are filled. Not all positions in an 
occupational family will have promotion potential to the same band. 
Movement from one occupational family to another will depend upon 
individual competencies, qualifications and the needs of the 
organization. Supervisors may consider promoting employees at any time, 
since promotions are not tied to the pay-for-performance system. 
Progression within a pay band is based upon performance base pay 
increases; as such, these actions are not considered promotions and are 
not subject to the provisions of this section. Except as specified 
below, promotions will be processed under competitive procedures in 
accordance with Merit System Principles and requirements of the local 
merit promotion plan.
    To be promoted competitively or non-competitively from one band to 
the next, an employee must meet the minimum qualifications for the job 
and have a current performance rating of ``acceptable'' with a score of 
21 or better, or equivalent under a different performance appraisal 
system. If an employee does not have a current performance rating, the 
employee will be treated the same as an employee with an ``acceptable'' 
rating as long as there is no documented evidence of unacceptable 
performance.
2. Reassignment
    A reassignment is the movement of an employee from one position to 
a different position within the same occupational family and pay band 
or to another occupational family and pay band wherein the band in the 
new family has the same maximum base pay. The employee must meet the 
qualifications requirements for the occupational family and pay band.

[[Page 68953]]

3. Demotion or Placement in a Lower Pay Band
    A demotion is a placement of an employee into a lower pay band 
within the same occupational family or placement into a pay band in a 
different occupational family with a lower maximum base pay. Demotions 
may be for cause (performance or conduct) or for reasons other than 
cause (e.g., erosion of duties, reclassification of duties to a lower 
pay band, application under competitive announcements or at the 
employee's request, or placement actions resulting from RIF 
procedures).
4. Simplified Assignment Process
    Today's environment of downsizing and workforce fluctuations 
mandates that the organization have maximum flexibility to assign 
duties and responsibilities to individuals. Pay banding can be used to 
address this need, as it enables the organization to have maximum 
flexibility to assign an employee with no change in base pay, within 
broad descriptions, consistent with the needs of the organization and 
the individual's qualifications and level. Subsequent assignments to 
projects, tasks, or functions anywhere within the organization 
requiring the same level, area of expertise, and qualifications would 
not constitute an assignment outside the scope or coverage of the 
current position description. For instance, a technical expert could be 
assigned to any project, task, or function requiring similar technical 
expertise. Likewise, a manager could be assigned to manage any similar 
function or organization consistent with that individual's 
qualifications. This flexibility allows broader latitude in assignments 
and further streamlines the administrative process and system.
5. Details
    Under this plan employees may be detailed to a position in the same 
band (requiring a different level of expertise and qualifications) or 
lower pay band (or its equivalent in a different occupational family) 
for up to one year. Details may be implemented through an official 
personnel action to cover the one-year period. Details to a position in 
a higher pay band up to 180 days will be made non-competitively. Beyond 
180 days requires competitive procedures.
6. Exceptions to Competitive Procedures
    The following actions are excepted from competitive procedures:
    (1) Re-promotion to a position which is in the same pay band or GS 
equivalent and occupational family as the employee previously held on a 
permanent basis within the competitive service.
    (2) Promotion, reassignment, demotion, 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.
    (3) A position change permitted by reduction-in-force procedures.
    (4) Promotion without current competition when the employee was 
appointed through competitive procedures to a position with a 
documented career ladder.
    (5) A temporary promotion, or detail to a position in a higher pay 
band, of 180 days or less.
    (6) A promotion due to the reclassification of positions based on 
accretion (addition) of duties.
    (7) A promotion resulting from the correction of an initial 
classification error or the issuance of a new classification standard.
    (8) Consideration of a candidate who did not receive proper 
consideration in a competitive promotion action.
    (9) Impact of person in the job and Factor IV process (application 
of the Research Grade-Evaluation Guide, Equipment Development Grade 
Evaluation Guide, Part III, or similar guides) promotions.

F. Pay Setting

1. General
    Pay administration policies will be established by the Personnel 
Management Board. These policies will be exempt from Army Regulations 
or RDECOM local pay fixing policies but will conform to basic 
governmental pay fixing policy. Employees whose performance is 
acceptable will receive the full annual general pay increase and the 
full locality pay. ECBC may make full use of recruitment, retention and 
relocation payments as currently provided for by OPM.
    Pay band and pay retention will follow current law and regulations 
at 5 U.S.C. 5362, 5363, and 5 CFR 536, except as waived or modified in 
section IX, the waiver section of this plan. The ECBC Technical 
Director may also grant pay retention to employees who meet general 
eligibility requirements, but do not have specific entitlement by law, 
provided they are not specifically excluded.
2. Pay and Compensation Ceilings
    An employee's total monetary compensation paid in a calendar year 
may not exceed the base pay of Level I of the Executive Schedule 
consistent with 5 U.S.C. 5307 and 5 CFR part 530 subpart B. In 
addition, each pay band will have its own pay ceiling, just as grades 
do in the current system. Base pay rates for the various pay bands will 
be directly keyed to the GS rates, except as noted in III.A.3. for the 
Pay Band V of the Engineer and Scientist occupational family. Other 
than where retained rate applies, base pay will be limited to the 
maximum base pay payable for each pay band.
3. Pay Setting for Appointment
    Upon initial appointment, the individual's pay may be set at the 
lowest base pay in the pay band or anywhere within the band level 
consistent with the special qualifications of the individual and the 
unique requirements of the position. These special qualifications may 
be in the form of education, training, experience, or any combination 
thereof that is pertinent to the position in which the employee is 
being placed. Guidance on pay setting for new hires will be established 
by the Personnel Management Board.
    Highest Previous Rate (HPR) will be considered in placement actions 
authorized under rules similar to the HPR rules in 5 CFR 531.221. Use 
of HPR will be at the supervisor's discretion, but if used, HPR is 
subject to policies established by the Personnel Management Board.
4. Pay Setting for Promotion
    The minimum base pay increase upon promotion to a higher pay band 
will be six percent or the minimum base pay rate of the new pay band, 
whichever is greater. The maximum amount of a pay increase for a 
promotion will not exceed $10,000, or other such amount as established 
by the Personnel Management Board. The maximum base pay increase for 
promotion may be exceeded when necessary to allow for the minimum base 
pay increase. For employees assigned to occupational categories and 
geographic areas covered by special rates, the minimum base pay rate in 
the pay band to which promoted is the minimum base pay for the 
corresponding special rate or locality rate, whichever is greater. For 
employees covered by a staffing supplement, the demonstration staffing 
adjusted pay is considered base pay for promotion calculations. When a 
temporary promotion is terminated, the employee's pay entitlements will 
be re-determined based on the employee's position of record, with 
appropriate adjustments to reflect pay events during the temporary 
promotion, subject to the specific policies and rules established

[[Page 68954]]

by the Personnel Management Board. In no case may those adjustments 
increase the base pay for the position of record beyond the applicable 
pay range maximum base pay rate.
5. Pay Setting for Reassignment
    A reassignment may be effected without a change in base pay. 
However, a base pay increase may be granted where a reassignment 
significantly increases the complexity, responsibility, authority or 
for other compelling reasons. Such an increase is subject to the 
specific guidelines established by the Personnel Management Board.
6. Pay Setting for Demotion or Placement in a Lower Pay Band
    Employees demoted for cause (performance or conduct) are not 
entitled to pay retention and will receive a minimum of a five percent 
decrease in base pay. Employees demoted for reasons other than cause 
(e.g., erosion of duties, reclassification of duties to a lower pay 
band, application under competitive announcements or at the employee's 
request, or placement actions resulting from RIF procedures) may be 
entitled to pay retention in accordance with the provisions of 5 U.S.C. 
5363 and 5 CFR part 536, except as waived or modified in section IX of 
this plan.
    Employees who receive an unacceptable rating or who are on a PIP at 
the time pay determinations are made, do not receive performance 
payouts or the general pay increase. This action may result in a base 
pay that is identified in a lower pay band. This occurs because the 
minimum rate of base pay in a pay band increases as the result of the 
general pay increase (5 U.S.C. 5303). This situation (a reduction in 
band level with no reduction in pay) will not be considered an adverse 
performance based action, nor will band retention provisions apply.
7. Supervisory and Team Leader Pay Adjustments
    Supervisory and team leader pay adjustments may be approved by the 
ECBC Technical Director based on the recommendation of the Personnel 
Management Board to compensate employees with supervisory or team 
leader responsibilities. Only employees in supervisory or team leader 
positions as defined by the OPM GS Supervisory Guide or GS Leader Grade 
Evaluation Guide may be considered for the pay adjustment. These pay 
adjustments are funded separately from performance pay pools. These pay 
adjustments are increases to base pay, ranging up to ten percent of 
that pay rate for supervisors and for team leaders. Pay adjustments are 
subject to the constraint that the adjustment may not cause the 
employee's base pay to exceed the pay band maximum base pay. Criteria 
to be considered in determining the pay increase percentage include:
    (1) Needs of the organization to attract, retain, and motivate 
high-quality supervisors/team leaders;
    (2) Budgetary constraints;
    (3) Years and quality of related experience;
    (4) Relevant training;
    (5) Performance appraisals and experience as a supervisor/team 
leader;
    (6) Organizational level of position; and
    (7) Impact on the organization.

The pay adjustment will not apply to employees in Pay Band V of the E&S 
occupational family.
    After the date of conversion into the demonstration project, a pay 
adjustment may be considered under the following conditions:
    (1) New hires into supervisory/team leader positions will have 
their initial rate of base pay set at the supervisor's discretion 
within the pay range of the applicable pay band. This rate of pay may 
include a pay adjustment determined by using the ranges and criteria 
outlined above.
    (2) A career employee selected for a supervisory/team leader 
position that is within the employee's current pay band may also be 
considered for a base pay adjustment. If a supervisor/team leader is 
already authorized a base pay adjustment and is subsequently selected 
for another supervisor/team leader position within the same pay band, 
then the base pay adjustment will be re-determined.
    Upon initial conversion into the demonstration project into the 
same or substantially similar position, supervisors/team leaders will 
be converted at their existing base rate of pay and will not be 
eligible for a base pay adjustment.
    The supervisor/team leader pay adjustment will be reviewed 
annually, with possible increases or decreases based on the appraisal 
scores for the performance element, Team/Project Leadership or 
Supervision/EEO. The initial dollar amount of a base pay adjustment 
will be removed when the employee voluntarily leaves the position. The 
cancellation of the base pay adjustment under these circumstances is 
not an adverse action and is not subject to appeal. If an employee is 
removed from a supervisory/team leader position for personal cause 
(performance or conduct), the base pay adjustment will be removed under 
adverse action procedures. However, if an employee is removed from a 
non-probationary supervisory/team leader position for conditions other 
than voluntary or for personal cause, then grade and pay retention will 
follow current law and regulations at 5 U.S.C. 5362, 5363, and 5 CFR 
part 536, except as waived or modified in section IX.
8. Supervisory/Team Leader Pay Differentials
    Supervisory and team leader pay differentials may be used by the 
ECBC Technical Director to provide an incentive and reward supervisors 
and team leaders as defined by the OPM GS Supervisory Guide and GS 
Leader Grade Evaluation Guide. Pay differentials are not funded from 
performance pay pools. A pay differential is a cash incentive that may 
range up to ten percent of base pay for supervisors and for team 
leaders. It is paid on a pay period basis with a specified not-to-
exceed (NTE) of one year or less and is not included as part of the 
base pay. Criteria to be considered in determining the amount of the 
pay differential are the same as those identified for Supervisory/Team 
Leader Pay Adjustments. The pay differential will not apply to 
employees in Pay Band V of the E&S occupational family.
    The pay differential may be considered, either during conversion 
into or after initiation of the demonstration project, if the 
supervisor/team leader has subordinate employees in the same pay band. 
The differential must be terminated if the employee is removed from a 
supervisory/team leader position, regardless of cause.
    After initiation of the demonstration project, all personnel 
actions involving a supervisory/team leader differential will require a 
statement signed by the employee acknowledging that the differential 
may be terminated or reduced at the discretion of the ECBC Technical 
Director. The termination or reduction of the differential is not an 
adverse action and is not subject to appeal.
9. Staffing Supplements
    Employees assigned to occupational categories and geographic areas 
covered by special rates will be entitled to a staffing supplement if 
the maximum adjusted base pay for the banded GS grades (i.e., the 
maximum GS locality rate) to which assigned is a special rate that 
exceeds the maximum GS locality rate for the banded grades. The 
staffing supplement is added to the base pay, much like locality rates 
are added to base pay. For employees being

[[Page 68955]]

converted into the demonstration project, total pay immediately after 
conversion will be the same as immediately before (excluding the impact 
of any WGI buy-in), but a portion of the total pay will be in the form 
of a staffing supplement. Adverse action and pay retention provisions 
will not apply to the conversion process, as there will be no change in 
total pay .
    The staffing supplement is calculated as follows. Upon conversion, 
the demonstration base rate will be established by dividing the 
employee's former GS adjusted base pay rate (the higher of special rate 
or locality rate) by the staffing factor. The staffing factor will be 
determined by dividing the maximum special rate for the banded grades 
by the GS unadjusted rate corresponding to that special rate (step 10 
of the GS rate for the same grade as the special rate). The employee's 
demonstration staffing supplement is derived by multiplying the 
demonstration base pay rate by the staffing factor minus one. 
Therefore, the employee's final demonstration special staffing rate 
equals the demonstration base pay rate plus the staffing supplement. 
This amount will equal the employee's former GS adjusted base pay rate. 
Simplified, the formula is this:
[GRAPHIC] [TIFF OMITTED] TN29DE09.003

[GRAPHIC] [TIFF OMITTED] TN29DE09.004

    Staffing supplement = Demonstration base pay rate * (staffing 
factor-1)
    Pay upon conversion = Demonstration base pay rate + staffing 
supplement (sum will equal existing rate)
    If an employee is in a band where the maximum GS adjusted base pay 
rate for the banded grades is a locality rate, when the employee enters 
into the demonstration project, the demonstration base pay rate is 
derived by dividing the employee's former GS adjusted base pay rate 
(the higher of locality rate or special rate) by the applicable 
locality pay factor. The employee's demonstration locality-adjusted 
base pay rate will equal the employee's former GS adjusted base pay 
rate. Any GS or special rate schedule adjustment will require computing 
the staffing supplement again. Employees receiving a staffing 
supplement remain entitled to an underlying locality rate, which may 
over time supersede the need for a staffing supplement. If OPM 
discontinues or decreases a special rate schedule, pay retention 
provisions will be applied. Upon geographic movement, an employee who 
receives the staffing supplement will have the supplement recomputed. 
Any resulting reduction in pay will not be considered an adverse action 
or a basis for pay retention.
    Application of the staffing supplement is normally intended to 
maintain pay comparability for GS employees entering the demonstration 
project. However, the staffing supplement formulas must be compatible 
with non-Government employees entering the demonstration project and 
also be adaptable to the special circumstances of employees already in 
the demonstration project. The following principles will govern the 
modifications necessary to the staffing supplement calculations to 
apply the staffing supplement to circumstances other than a GS employee 
entering the demonstration project. No adjustment under these 
provisions will provide an increase greater than that provided by the 
special salary rate table. An increase provided under this authority is 
not an equivalent increase, as defined by 5 CFR 531.403. These 
principles are stated with the understanding that the necessary 
conditions exist that require the application of a staffing supplement:
    (1) If a non-Government employee is hired into the demonstration 
project, then the employee's adjusted base pay will be used for the 
term, ``former GS adjusted base pay rate'' to calculate the 
demonstration base pay rate.
    (2) If a current employee is covered by a new or modified special 
salary rate table, then the employee's current demonstration base pay 
rate is used to calculate the staffing supplement percentage. The 
employee's new demonstration adjusted base pay rate is the sum of the 
current demonstration base pay rate and the calculated staffing 
supplement.
    (3) If a current employee is in an occupational category that is 
covered by a special salary rate table and subsequently, the 
occupational category becomes covered by a different special salary 
rate table with a higher value, then the following steps must be 
applied to calculate a new demonstration base pay rate:
    Step 1. To obtain a relevance factor, divide the staffing factor 
that will become applicable to the employee by the staffing factor that 
would have applied to the employee.
    Step 2. Multiply the relevance factor resulting from step 1 by the 
employee's current demonstration adjusted base pay rate to determine a 
new demonstration adjusted base pay rate.
    Step 3. Divide the result from step 2 by the applicable staffing 
factor to derive a new demonstration base pay rate. This new 
demonstration base pay rate will be used to calculate the staffing 
supplement and the new demonstration adjusted base pay.
    (4) If, after the establishment of a new or adjusted special salary 
rate table, an employee enters the demonstration (whether converted/
hired from GS or hired from outside Government) prior to this 
intervention, then the employee's adjusted base pay is used for the 
term ``former GS adjusted base pay rate'' to calculate the 
demonstration base pay rate. This principle prevents double 
compensation due to the single event of a new or adjusted special 
salary rate table.
    (5) If an employee is in an occupational category covered by a new 
or modified special salary rate table, and the pay band to which 
assigned is not entitled to a staffing supplement, then the employee's 
adjusted base pay may be reviewed and adjusted to accommodate the rate 
increase provided by the special salary rate table. The

[[Page 68956]]

review may result in a one-time base pay increase if the employee's 
adjusted base pay equals or is less than the highest special salary 
grade and step that exceeds the comparable locality grade and step. 
Demonstration project operating procedures will identify the officials 
responsible to make such reviews and determinations. The applicable 
staffing supplement will be calculated by determining the percentage 
difference between the highest step 10 special salary rate and the 
comparable step 10 locality rate and applying this percentage to the 
demonstration base pay rate.
    An established base pay rate plus the staffing supplement will be 
considered adjusted base pay for the same purposes as a locality rate 
under 5 CFR 531.610, i.e., for purposes of retirement, life insurance, 
premium pay, severance pay, and advances in pay. It will also be used 
to compute worker's compensation payments and lump-sum payments for 
accrued and accumulated annual leave.

G. Employee Development

1. Expanded Developmental Opportunity Program
    The Expanded Developmental Opportunity Program will be available to 
all demonstration project employees. Expanded developmental 
opportunities complement existing developmental opportunities such as 
long-term training, rotational job assignments, developmental 
assignments to Army Materiel Command/Army/DoD, and self-directed study 
via correspondence courses and local colleges and universities. Each 
developmental opportunity must result in a product, service, report or 
study that will benefit the ECBC or customer organization as well as 
increase the employee's individual effectiveness. The developmental 
opportunity period will not result in loss of (or reduction) in base 
pay, leave to which the employee is otherwise entitled, or credit for 
service time. The positions of employees on expanded developmental 
opportunities may be back-filled (i.e., with temporarily assigned, 
detailed or promoted employees or with term employees). However, that 
position or its equivalent must be made available to the employee upon 
return from the developmental period. The Personnel Management Board 
will provide written guidance for employees on application procedures 
and develop a process that will be used to review and evaluate 
applicants for development opportunities.
    (a) Sabbaticals. The ECBC Technical Director has the authority to 
grant paid or unpaid sabbaticals to all career employees. The purpose 
of a sabbatical will be to permit employees to engage in study or 
uncompensated work experience that will benefit the organization and 
contribute to the employee's development and effectiveness. Each 
sabbatical must result in a product, service, report, or study that 
will benefit the ECBC mission as well as increase the employee's 
individual effectiveness. Various learning or developmental experiences 
may be considered, such as advanced academic teaching; research; self-
directed or guided study; and on-the-job work experience with public, 
private, commercial, or private non-profit organizations.
    One paid sabbatical of up to twelve months in duration or one 
unpaid sabbatical of up to six months in a calendar year may be granted 
to an employee in any seven-year period. Employees will be eligible to 
request a sabbatical after completion of seven years of Federal 
service. Employees approved for a paid sabbatical must sign a service 
obligation agreement to continue in service in the ECBC for a period of 
three times the length of the sabbatical. If an employee voluntarily 
leaves the ECBC organization before the service obligation is completed 
he/she is liable for repayment of expenses incurred by ECBC that are 
associated with training during the sabbatical. Expenses do not include 
salary costs. The ECBC Technical Director has the authority to waive 
this requirement. Criteria for such waivers will be addressed in the 
operating procedures.
    Specific procedures will be developed for processing sabbatical 
applications upon implementation of the demonstration project.
    (b) Critical Skills Training (Training for Degrees). The ECBC 
Director has the authority to approve academic degree training 
consistent with 5 U.S.C 4107. Training is an essential component of an 
organization that requires continuous acquisition of advanced and 
specialized knowledge. Degree training is also a critical tool for 
recruiting and retaining employees with or requiring critical skills.
    Academic degree training will ensure continuous acquisition of 
advanced specialized knowledge essential to the organization, and 
enhance our ability to recruit and retain personnel critical to the 
present and future requirements of the organization. Degree or 
certificate payment may not be authorized where it would result in a 
tax liability for the employee without the employee's express and 
written consent. Any variance from this policy must be rigorously 
determined and documented. Guidelines will be developed to ensure 
competitive approval of degree or certificate payment and that such 
decisions are fully documented. Employees approved for degree training 
must sign a service obligation agreement to continue in service in ECBC 
for a period of three times the length of the training period. If an 
employee voluntarily leaves ECBC before the service obligation is 
completed, he/she is liable for repayment of expenses incurred by ECBC 
that are related to the critical skills training. Expenses do not 
include salary costs. The ECBC Technical Director has the authority to 
waive this requirement. Criteria for such waivers will be addressed in 
the operating procedures.

H. Reduction-in-Force (RIF) Procedures

    RIF procedures will be used when an ECBC employee faces separation 
or downgrading due to lack of work, shortage of funds, reorganization, 
insufficient personnel ceiling, the exercise of re-employment or 
restoration rights, or furlough for more than 30 calendar days or more 
than 22 discontinuous days. The procedures in 5 CFR part 351 will be 
followed with slight modifications pertaining to the competitive areas, 
assignment rights, the calculation of adjusted service computation date 
and grade/pay band retention. Modified term appointment employees are 
in Tenure Group III for RIF purposes. RIF procedures are not required 
when separating these employees when their appointments expire.
1. Competitive Areas
    Separate competitive areas for RIF purposes will be established at 
each geographic location. Separate RIF competitive areas for 
demonstration and non-demonstration project employees will be 
established at each geographic location. Bumps and retreats will occur 
only within the same competitive area and only to positions for which 
the employee meets all qualification standards including medical and/or 
physical qualifications. Within each competitive area, competitive 
levels will be established based on the occupational family, pay band 
and series which are similar enough in duties and qualifications that 
employees can perform the duties and responsibilities of any other 
position in the competitive level upon assignment to it, without any 
loss of productivity beyond what is normally expected.

[[Page 68957]]

2. Assignment Rights
    An employee may displace another employee by bump or retreat to one 
band below the employee's existing band. A preference eligible with a 
compensable service-connected disability of 30 percent or more may 
retreat to positions two bands (or equivalent to five grades) below 
his/her current band.
3. Crediting Performance in RIF
    Reductions in force are accomplished using the existing procedures 
with the retention factors of: tenure, veterans' preference and length 
of service as adjusted by performance ratings, in that order. However, 
the additional RIF service credit for performance will be based on the 
last three total performance scores during the preceding four years and 
will be applied as follows:

------------------------------------------------------------------------
           Total performance scores = years of service credit
-------------------------------------------------------------------------
48-50 = 10
45-47 = 9
42-44 = 8
39-41 = 7
36-38 = 6
33-35 = 5
30-32 = 4
27-29 = 3
24-26 = 2
20-23 = 1
------------------------------------------------------------------------

    A score of below 20 adds no credit for RIF retention. (Note: The 
additional years of service credit are added, not averaged. Ratings 
given under non-demonstration systems will be converted to the 
demonstration-rating scheme and provided the equivalent rating credit.)
    Employees who have been rated under different patterns of summary 
rating levels will receive RIF appraisal credit based on the following:
    If there are any ratings to be credited for the RIF given under a 
rating system, which includes one or more levels above fully successful 
(Level 3), employee will receive:

10 years for Level 5
7 years for Level 4
3 years for Level 3
------------------------------------------------------------------------

    If an employee comes from a system with no levels above Fully 
Successful (Level 3), they will receive credit based on the 
demonstration project's modal score for the employee's competitive 
area.
    In some cases, an employee may not have three ratings of record. If 
an employee has fewer than three annual ratings of record, then for 
each missing rating, an average of the scores received for the past 
four years will be used. When the score is calculated to be a decimal, 
it should be rounded to the next higher whole number using the method 
described in paragraph III.C.4. For an employee who has no ratings of 
record, all credit will be based on the repeated use of a single modal 
rating from the most recently completed appraisal period on record.
    An employee who has received a written decision that their 
performance is unacceptable has no bump or retreat rights. An employee 
who has been demoted for unacceptable performance, and as of the date 
of the issuance of the RIF notice has not received a performance rating 
in the position to which demoted, will receive the same additional 
retention service credit granted for a level 3 rating of record. An 
employee who has received an acceptable rating following a PIP will 
have that rating considered as the current rating of record.
    An employee with a current unacceptable rating of record has 
assignment rights only to a position held by another employee who has 
an unacceptable rating of record.
4. Pay Band and Pay Retention
    Pay band and pay retention will follow current law and regulations 
at 5 U.S.C. 5362, 5363, and 5 CFR 536, except as waived or modified in 
section IX of this plan.

IV. Implementation Training

    Critical to the success of the demonstration project is the 
training developed to promote understanding of the broad concepts and 
finer details needed to implement and successfully execute this 
project. Pay banding, a new job classification and performance 
management system all represent significant cultural change to the 
organization. Training will be tailored to address employee concerns 
and to encourage comprehensive understanding of the demonstration 
project. Training will be required both prior to implementation and at 
various times during the life of the demonstration project.
    A training program will begin prior to implementation and will 
include modules tailored for employees, supervisors, senior managers, 
and administrative staff. Typical modules are:
    (1) An overview of the demonstration project personnel system.
    (2) How employees are converted into and out of the system.
    (3) Pay banding.
    (4) The pay-for-performance system.
    (5) Defining performance objectives.
    (6) How to assign weights.
    (7) Assessing performance--giving feedback.
    (8) New position descriptions.
    (9) Demonstration project administration and formal evaluation.
    Various types of training are being considered, including videos, 
on-line tutorials, and train-the-trainer concepts.

V. Conversion

A. Conversion to the Demonstration Project

    Conversion from current GS/GM grade and pay into the new pay band 
system will be accomplished during implementation of the demonstration 
project. Initial entry into the demonstration project will be 
accomplished through a full employee-protection approach that ensures 
each employee an initial place in the appropriate pay band without loss 
of pay on conversion.
    Employees serving under regular term appointments at the time of 
the implementation of the demonstration project will be converted to 
the modified term appointment if all requirements in III.D.4. 
(Revisions to Term Appointments) have been satisfied. Position 
announcements, etc., will not be required for these term appointments.
    Employees who enter the demonstration project later by lateral 
transfer, reassignment or realignment will be subject to the same pay 
conversion rules. If conversion into the demonstration project is 
accompanied by a geographic move, the employee's GS pay entitlements in 
the new geographic area must be determined before performing the pay 
conversion.
    Employees who are covered by special salary rates prior to entering 
the demonstration project will no longer be considered a special rate 
employee under the demonstration project. Special conversion rules 
apply to special salary rate employees, which are described in III.F.9. 
(Staffing Supplements). These employees will, therefore, be eligible 
for full locality pay or a staffing supplement. The adjusted base pay 
of these employees will not change. Rather, the employees will receive 
a new adjusted base pay rate computed under the staffing supplement 
rules in section III.F.9. Adverse action and pay retention provisions 
will not apply to the conversion process, as there will be no change in 
adjusted base pay.
    Employees who are on temporary promotions at the time of conversion 
will be converted to a pay band commensurate with the grade of the

[[Page 68958]]

position to which temporarily promoted. At the conclusion of the 
temporary promotion, the employee will revert to the grade or pay band 
that corresponds to the position of record. When a temporary promotion 
is terminated, pay will be determined based on the position of record, 
with appropriate adjustments to reflect pay events during the temporary 
promotion, subject to the specific policies and rules established by 
the Personnel Management Board. In no case may those adjustments 
increase the pay for the position of record beyond the applicable pay 
band maximum base pay. The only exception will be if the original 
competitive promotion announcement stipulated that the promotion could 
be made permanent; in these cases, actions to make the temporary 
promotion permanent will be considered, and if implemented, will be 
subject to all existing priority placement programs.
    During the first 12 months following conversion, employees will 
receive pay increases for non-competitive promotion equivalents when 
the grade level of the promotion is encompassed within the same pay 
band, the employee's performance warrants the promotion, and promotions 
would have otherwise occurred during that period. Employees who receive 
an in-level promotion at the time of conversion will not receive a 
prorated step increase equivalent as defined below.
    Under the GS pay structure, employees progress through their 
assigned grade in step increments. Since this system is being replaced 
under the demonstration project, employees will be awarded that portion 
of the next higher step they have completed up until the effective date 
of conversion. As under the current system, supervisors will be able to 
withhold these partial step increases if the employee's performance is 
below an acceptable level of competence.
    Rules governing WGIs will continue in effect until conversion. 
Adjustments to the employee's base salary for WGI equity will be 
computed as of the effective the date of conversion. WGI equity will be 
acknowledged by increasing base pay by a prorated share based upon the 
number of full weeks an employee has completed toward the next higher 
step. Payment will equal the value of the employee's next WGI times the 
proportion of the waiting period completed (weeks completed in waiting 
period/weeks in the waiting period) at the time of conversion. 
Employees at step 10, or receiving retained rates, on the day of 
implementation will not be eligible for WGI equity adjustments since 
they are already at or above the top of the step scale. Employees 
serving on retained grade will receive WGI equity adjustments provided 
they are not at step 10 or receiving a retained rate.
    Employees who enter the demonstration project after initial 
implementation by lateral transfer, reassignment, or realignment will 
be subject to the same pay conversion rules as above. Specifically, 
adjustments to the employee's base pay for a step increase and a non-
competitive career ladder promotion will be computed as a prorated 
share of the current value of the step or promotion increase based upon 
the number of full weeks an employee has completed toward the next 
higher step or grade at the time the employee moves into the project.

B. Conversion Out of the Demonstration Project

    If a demonstration project employee is moving to a GS position not 
under the demonstration project, or if the project ends and each 
project employee must be converted back to the GS system, the following 
procedures will be used to convert the employee's project pay band to a 
GS-equivalent grade and the employee's project rate of pay to the GS-
equivalent rate of pay. The converted GS grade and GS rate of pay must 
be determined before movement or conversion out of the demonstration 
project and any accompanying geographic movement, promotion, or other 
simultaneous action. For conversions upon termination of the project 
and for lateral reassignments, the converted GS grade and rate will 
become the employee's actual GS grade and rate after leaving the 
demonstration project (before any other action). For transfers, 
promotions, and other actions, the converted GS grade and rate will be 
used in applying any GS pay administration rules applicable in 
connection with the employee's movement out of the project (e.g., 
promotion rules, highest previous rate rules, pay retention rules), as 
if the GS converted grade and rate were actually in effect immediately 
before the employee left the demonstration project.
1. Grade-Setting Provisions
    An employee in a pay band corresponding to a single GS grade is 
converted to that grade. An employee in a pay band corresponding to two 
or more grades is converted to one of those grades according to the 
following rules:
    (1) The employee's adjusted base pay under the demonstration 
project (including any locality payment or staffing supplement) is 
compared with step 4 rates in the highest applicable GS rate range. For 
this purpose, a GS rate range includes a rate in:
    (a) The GS base schedule,
    (b) The locality rate schedule for the locality pay area in which 
the position is located, or
    (c) The appropriate special rate schedule for the employee's 
occupational series, as applicable.)
    If the series is a two-grade interval series, only odd-numbered 
grades are considered below GS-11.
    (2) If the employee's adjusted base pay under the demonstration 
project equals or exceeds the applicable step 4 adjusted base pay rate 
of the highest GS grade in the band, the employee is converted to that 
grade.
    (3) If the employee's adjusted base pay under the demonstration 
project is lower than the applicable step 4 adjusted base pay rate of 
the highest grade, the adjusted base pay under the demonstration 
project is compared with the step 4 adjusted base pay rate of the 
second highest grade in the employee's pay band. If the employee's 
adjusted base pay under the demonstration project equals or exceeds the 
step 4 adjusted base pay rate of the second highest grade, the employee 
is converted to that grade.
    (4) This process is repeated for each successively lower grade in 
the band until a grade is found in which the employee's adjusted base 
pay under the demonstration project equals or exceeds the applicable 
step 4 adjusted base pay rate of the grade. The employee is then 
converted at that grade. If the employee's adjusted base pay is below 
the step 4 adjusted base pay rate of the lowest grade in the band, the 
employee is converted to the lowest grade.
    (5) Exception: If the employee's adjusted base pay under the 
demonstration project exceeds the maximum adjusted base pay rate of the 
grade assigned under the above-described step 4 rule but fits in the 
adjusted base pay rate range for the next higher applicable grade 
(i.e., between step 1 and step 4), then the employee shall be converted 
to that next higher applicable grade.
    (6) Exception: An employee will not be converted to a lower grade 
than the grade held by the employee immediately preceding a conversion, 
lateral reassignment, or lateral transfer into the project, unless 
since that time the employee has undergone a reduction in band.
2. Pay-Setting Provisions
    An employee's pay within the converted GS grade is set by 
converting the employee's demonstration project

[[Page 68959]]

rates of pay to GS rates of pay in accordance with the following rules:
    (1) The pay conversion is done before any geographic movement or 
other pay-related action that coincides with the employee's movement or 
conversion out of the demonstration project.
    (2) An employee's adjusted base pay under the demonstration project 
(including any locality payment or staffing supplement) is converted to 
a GS-adjusted base pay rate on the highest applicable GS rate range for 
the converted GS grade. For this purpose, a GS rate range includes a 
rate range in:
    (a) The GS base schedule,
    (b) An applicable locality rate schedule, or
    (c) An applicable special rate schedule.
    (3) If the highest applicable GS rate range is a locality pay rate 
range, the employee's adjusted base pay under the demonstration project 
is converted to a GS locality rate of pay. If this rate falls between 
two steps in the locality-adjusted schedule, the rate must be set at 
the higher step. The converted GS unadjusted rate of base pay would be 
the GS base rate corresponding to the converted GS locality rate (i.e., 
same step position).
    (4) If the highest applicable GS rate range is a special rate 
range, the employee's adjusted base pay under the demonstration project 
is converted to a special rate. If this rate falls between two steps in 
the special rate schedule, the rate must be set at the higher step. The 
converted GS unadjusted rate of base pay will be the GS rate 
corresponding to the converted special rate (i.e., same step position).
    (5) E&S Pay Band V Employees: An employee in Pay Band V of the E&S 
occupational family will convert out of the demonstration project at 
the GS-15 level. Procedures will be developed to ensure that employees 
entering Pay Band V understand that if they leave the demonstration 
project and their adjusted base pay under the demonstration project 
exceeds the highest applicable GS-15, step 10 rate, there is no 
entitlement to retained pay. Their GS equivalent rate will be deemed to 
be the rate for GS-15, step 10. For those Pay Band V employees paid 
below the adjusted GS-15, step 10 rate, the converted rates will be set 
in accordance with paragraph 2.
    (6) Employees with Pay Retention: If an employee is receiving a 
retained rate under the demonstration project, the employee's GS-
equivalent grade is the highest grade encompassed in his or her band 
level. Demonstration project operating procedures will outline the 
methodology for determining the GS-equivalent pay rate for an employee 
retaining a rate under the demonstration project.
3. Within-Grade Increase--Equivalent Increase Determinations
    Service under the demonstration project is creditable for within-
grade increase purposes upon conversion back to the GS pay system. 
Performance pay increases (including a zero increase) under the 
demonstration project are equivalent increases for the purpose of 
determining the commencement of a within-grade increase waiting period 
under 5 CFR 531.405(b).

C. Personnel Administration

    All personnel laws, regulations, and guidelines not waived by this 
plan will remain in effect. Basic employee rights will be safeguarded 
and Merit System Principles will be maintained. Servicing CPACs will 
continue to process personnel-related actions and provide consultative 
and other appropriate services.

D. Automation

    ECBC will continue to use the Defense Civilian Personnel Data 
System (DCPDS) for the processing of personnel-related data. Payroll 
servicing will continue from the respective payroll offices.
    An automated tool will be used to support computation of 
performance related pay increases and awards and other personnel 
processes and systems associated with this project.

E. Experimentation and Revision

    Many aspects of a demonstration project are experimental. 
Modifications may be made from time to time as experience is gained, 
results are analyzed, and conclusions are reached on how the new system 
is working. DoDI 1400.37, July 28, 2009, provides instructions for 
adopting other STRL flexibilities, making minor changes to an existing 
demonstration project, and requesting new initiatives.

VI. Project Duration

    Public Law 103-337 removed any mandatory expiration date for this 
demonstration project. ECBC, DA and DoD will ensure this project is 
evaluated for the first five years after implementation in accordance 
with 5 U.S.C. 4703. Modifications to the original evaluation plan or 
any new evaluation will ensure the project is evaluated for its 
effectiveness, its impact on mission and any potential adverse impact 
on any employee groups. Major changes and modifications to the 
interventions would be made if formative evaluation data warranted and 
will be published in the Federal Register to the extent required. At 
the five-year point, the demonstration will be reexamined for permanent 
implementation, modification and additional testing, or termination of 
the entire demonstration project.

VII. Evaluation Plan

A. Overview

    Chapter 47 of 5 U.S.C. requires that an evaluation be performed to 
measure the effectiveness of the demonstration project, and its impact 
on improving public management. A comprehensive evaluation plan for the 
entire demonstration program, originally covering 24 DoD laboratories, 
was developed by a joint OPM/DoD Evaluation Committee in 1995. This 
plan was submitted to the Office of Defense Research & Engineering and 
was subsequently approved. The main purpose of the evaluation is to 
determine whether the waivers granted result in a more effective 
personnel system and improvements in ultimate outcomes (i.e., 
organizational effectiveness, mission accomplishment, and customer 
satisfaction).

B. Evaluation Model

    Appendix D shows an intervention model for the evaluation of the 
demonstration project. The model is designated to evaluate two levels 
of organizational performance: intermediate and ultimate outcomes. The 
intermediate outcomes are defined as the results from specific 
personnel system changes and the associated waivers of law and 
regulation expected to improve human resource (HR) management (i.e., 
cost, quality, timeliness). The ultimate outcomes are determined 
through improved organizational performance, mission accomplishment, 
and customer satisfaction. Although it is not possible to establish a 
direct causal link between changes in the HR management system and 
organizational effectiveness, it is hypothesized that the new HR system 
will contribute to improved organizational effectiveness.
    Organizational performance measures established by the organization 
will be used to evaluate the impact of a new HR system on the ultimate 
outcomes. The evaluation of the new HR system for any given 
organization will take into account the influence of three factors on 
organizational performance: context, degree of implementation, and 
support of implementation. The context factor refers to the impact 
which intervening variables (i.e., downsizing, changes in

[[Page 68960]]

mission, or the economy) can have on the effectiveness of the program. 
The degree of implementation considers:
    (1) The extent to which the HR changes are given a fair trial 
period;
    (2) The extent to which the changes are implemented; and
    (3) The extent to which the changes conform to the HR interventions 
as planned.
    The support of implementation factor accounts for the impact that 
factors such as training, internal regulations and automated support 
systems have on the support available for program implementation. The 
support for program implementation factor can also be affected by the 
personal characteristics (e.g., attitudes) of individuals who are 
implementing the program.
    The degree to which the project is implemented and operated will be 
tracked to ensure that the evaluation results reflect the project as it 
was intended. Data will be collected to measure changes in both 
intermediate and ultimate outcomes, as well as any unintended outcomes, 
which may happen as a result of any organizational change. In addition, 
the evaluation will track the impact of the project and its 
interventions on veterans and other protected groups, the Merit Systems 
Principles, and the Prohibited Personnel Practices. Additional measures 
may be added to the model in the event that changes or modifications 
are made to the demonstration plan.
    The intervention model at Appendix D will be used to measure the 
effectiveness of the personnel system interventions implemented. The 
intervention model specifies each personnel system change or 
``intervention'' that will be measured and shows:
    (1) The expected effects of the intervention,
    (2) The corresponding measures, and
    (3) The data sources for obtaining the measures.
    Although the model makes predictions about the outcomes of specific 
intervention, causal attributions about the full impact of specific 
interventions will not always be possible for several reasons. For 
example, many of the initiatives are expected to interact with each 
other and contribute to the same outcomes. In addition, the impact of 
changes in the HR system may be mitigated by context variables (e.g., 
the job market, legislation, and internal support systems) or support 
factors (e.g., training, automation support systems).

C. Evaluation

    A modified quasi-experimental design will be used for the 
evaluation of the STRL Personnel Demonstration Program. Because most of 
the eligible laboratories are participating in the program, a title 5 
U.S.C. comparison group will be compiled from the Civilian Personnel 
Data File (CPDF). This comparison group will consist of workforce data 
from Government-wide research organizations in civilian Federal 
agencies with missions and job series matching those in the DoD 
laboratories. This comparison group will be used primarily in the 
analysis of pay banding costs and turnover rates.

D. Method of Data Collection

    Data from several sources will be used in the evaluation. 
Information from existing management information systems and from 
personnel office records will be supplemented with perceptual survey 
data from employees to assess the effectiveness and perception of the 
project. The multiple sources of data collection will provide a more 
complete picture as to how the interventions are working. The 
information gathered from one source will serve to validate information 
obtained through another source. In so doing, the confidence of overall 
findings will be strengthened as the different collection methods 
substantiate each other.
    Both quantitative and qualitative data will be used when evaluating 
outcomes. The following data will be collected:
    (1) Workforce data;
    (2) Personnel office data;
    (3) Employee attitude surveys;
    (4) Focus group data;
    (5) Local site historian logs and implementation information;
    (6) Customer satisfaction surveys; and
    (7) Core measures of organizational performance.
    The evaluation effort will consist of two phases, formative and 
summative evaluation, covering at least five years to permit inter- and 
intra-organizational estimates of effectiveness. The formative 
evaluation phase will include baseline data collection and analysis, 
implementation evaluation, and interim assessments. The formal reports 
and interim assessments will provide information on the accuracy of 
project operation, and current information on impact of the project on 
veterans and protected groups, Merit System Principles, and Prohibited 
Personnel Practices. The summative evaluation will focus on an overall 
assessment of project outcomes after five years. The final report will 
provide information on how well the HR system changes achieved the 
desired goals, which interventions were most effective, and whether the 
results can be generalized to other Federal installations.

VIII. Demonstration Project Costs

A. Cost Discipline

    An objective of the demonstration project is to ensure in-house 
cost discipline. A baseline will be established at the start of the 
project and labor expenditures will be tracked yearly. Implementation 
costs (including project development, automation costs, step buy-in 
costs, and evaluation costs) are considered one-time costs and will not 
be included in the cost discipline.
    The Personnel Management Board will track personnel cost changes 
and recommend adjustments if required to achieve the objective of cost 
discipline.

B. Developmental Costs

    Costs associated with the development of the personnel 
demonstration project include software automation, training, and 
project evaluation. All funding will be provided through the 
organization's budget. The projected annual expenses are summarized in 
Table 1. Project evaluation costs are not expected to continue beyond 
the first five years unless the results warrant further evaluation.

                                     Table 1--Projected Developmental Costs
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                     FY09              FY10             FY11             FY12           FY13
----------------------------------------------------------------------------------------------------------------
Training.....................  0K..............  25K............  15K............  10K............  5K.
Project Evaluation...........  0K..............  0K.............  15K............  15K............  15K.
Automation...................  50K.............  50K............  40K............  40K............  40K.
                              ----------------------------------------------------------------------------------
    Totals...................  50K.............  75K............  70K............  65K............  60K.
----------------------------------------------------------------------------------------------------------------


[[Page 68961]]

IX. Required Waivers to Law and Regulation

    Public Law 106-398 gave the DoD the authority to experiment with 
several personnel management innovations. In addition to the 
authorities granted by the law, the following are waivers of law and 
regulation that will be necessary for implementation of the 
demonstration project. In due course, additional laws and regulations 
may be identified for waiver request.
    The following waivers and adaptations of certain title 5 U.S.C. 
provisions are required only to the extent that these statutory 
provisions limit or are inconsistent with the actions contemplated 
under this demonstration project. Nothing in this plan is intended to 
preclude the demonstration project from adopting or incorporating any 
law or regulation enacted, adopted, or amended after the effective date 
of this demonstration project.

A. Waivers to Title 5, U.S.C.

    Chapter 31, section 3111: Acceptance of Volunteer Service. Waived 
to allow for a Voluntary Emeritus Corps in addition to student 
volunteers.
    Chapter 31, section 3132: The Senior Executive Service: Definitions 
and Exclusions. Waived as necessary to allow for the Pay Band V of the 
E&S Occupational Family.
    Chapter 33, subchapter 1, section 3318(a): Competitive Service, 
Selection from Certificate. Waived to the extent necessary to eliminate 
the requirement for selection using the ``Rule of Three.''
    Chapter 33, section 3324: Appointments to Positions Classified 
Above GS-15. Waived the requirement for OPM approval of appointments to 
positions classified above GS-15.
    Chapter 33, section 3341: Details. Waived as necessary to extend 
the time limits for details.
    Chapter 41, section 4108(a)-(c): Employee Agreements; Service After 
Training. Waived to the extent necessary to require the employee to 
continue in the service of ECBC for the period of the required service 
and to the extent necessary to permit the Director, ECBC, to waive in 
whole or in part a right of recovery.
    Chapter 43, section 4302: Waived to the extent necessary to 
substitute ``pay band'' for ``grade.''
    Chapter 43, section 4303: Waived to the extent necessary to (1) 
substitute ``pay band'' for ``grade'' and (2) provide that moving to a 
lower pay band as a result of not receiving the general pay increase 
because of poor performance is not an action covered by the provisions 
of section 4303(a)-(d).
    Chapter 43, section 4304(b)(1) and (3): Responsibilities of the 
OPM. Waived in its entirety to remove the responsibilities of the OPM 
with respect to the performance appraisal system.
    Chapter 51, sections 5101-5112: Classification. Waived as necessary 
to allow for the demonstration project pay banding system.
    Chapter 53, sections 5301, 5302 (8) and (9), 5303 and 5304: Pay 
Comparability System. Sections 5301, 5302, and 5304 are waived to the 
extent necessary to allow (1) demonstration project employees to be 
treated as GS employees; (2) basic rates of pay under the demonstration 
project to be treated as scheduled rates of pay; and (3) employees in 
Pay Band V of the E&S occupational family to be treated as ST employees 
for the purposes of these provisions.
    Chapter 53, section 5305: Special Pay Authority. Waived to the 
extent necessary to allow for use of a staffing supplement in lieu of 
the special pay authority.
    Chapter 53, sections 5331-5336: General Schedule Pay Rates. Waived 
in its entirety to allow for the demonstration project's pay banding 
system and pay provisions.
    Chapter 53, sections 5361-5366: Grade and Pay Retention. Waived to 
the extent necessary to (1) replace ``grade'' with ``pay band;'' (2) 
allow demonstration project employees to be treated as GS employees; 
(3) provide that pay band retention provisions do not apply to 
conversions from GS special rates to demonstration project pay, as long 
as total pay is not reduced, to reductions in pay due solely to the 
removal of a supervisory pay adjustment upon voluntarily leaving a 
supervisory position; and to movements to a lower pay band as a result 
of not receiving the annual GPI due to a rating of record of 
``Unacceptable;'' (4) provide that an employee on pay retention whose 
rating of record is ``Unacceptable'' is not entitled to 50 percent of 
the amount of the increase in the maximum rate of base pay payable for 
the pay band of the employee's position; (5) provide that pay retention 
does not apply to reduction in base pay due solely to the reallocation 
of demonstration project pay rates in the implementation of a staffing 
supplement; and (6) ensure that for employees of Pay Band V of the E&S 
occupational family, pay retention provisions are modified so that no 
rate established under these provisions may exceed the rate of base pay 
for GS-15, step 10 (i.e., there is no entitlement to retained rate). 
This waiver applies to ST employees only if they move to a GS-
equivalent position within the demonstration project under conditions 
that trigger entitlement to pay retention.
    Chapter 55, section 5542(a)(1)-(2): Overtime rates; computation. 
Waived to the extent necessary to provide that the GS-10 minimum 
special rate (if any) for the special rate category to which a project 
employee belongs is deemed to be the ``applicable special rate'' in 
applying the pay cap provisions in 5 U.S.C. 5542.
    Chapter 55, section 5545(d): Hazardous duty differential. Waived to 
the extent necessary to allow demonstration project employees to be 
treated as GS employees. This waiver does not apply to employees in Pay 
Band V of the E&S occupational family.
    Chapter 55, section 5547 (a)-(b): Limitation on premium pay. Waived 
to the extent necessary to provide that the GS-15 maximum special rate 
(if any) for the special rate category to which a project employee 
belongs is deemed to be the ``applicable special rate'' in applying the 
pay cap provisions in 5 U.S.C. 5547.
    Chapter 57, section 5753, 5754, and 5755: Recruitment and 
relocation, bonuses, retention allowances and supervisory 
differentials. Waived to the extent necessary to allow (1) employees 
and positions under the demonstration project to be treated as 
employees and positions under the GS and (2) employees in Pay Band V of 
the E&S occupational family to be treated as ST employees.
    Chapter 59, section 5941: Allowances based on living costs and 
conditions of environment; employees stationed outside continental U.S. 
or Alaska. Waived to the extent necessary to provide that cost-of-
living allowances paid to employees under the demonstration project are 
paid in accordance with regulations prescribed by the President (as 
delegated to OPM).
    Chapter 75, sections 7501(1), 7511(a)(1)(A)(ii), and 
7511(a)(1)(C)(ii): Adverse Actions--Definitions. Waived to the extent 
necessary to allow for up to a three-year probationary period and to 
permit termination during the extended probationary period without 
using adverse action procedures for those employees serving a 
probationary period under an initial appointment except for those with 
veterans' preference.
    Chapter 75, section 7512(3): Adverse actions. Waived to the extent 
necessary to replace ``grade'' with ``pay band.''
    Chapter 75, section 7512(4): Adverse actions. Waived to the extent 
necessary to provide that adverse action provisions do not apply to (1) 
conversions from GS special rates to demonstration project pay, as long 
as

[[Page 68962]]

total pay is not reduced and (2) reductions in pay due to the removal 
of a supervisory or team leader pay adjustment upon voluntary movement 
to a non-supervisory or non-team leader position.

B. Waivers to Title 5, CFR

    Part 300, sections 300.601 through 605: Time-in-Grade restrictions. 
Waived to eliminate time-in-grade restrictions in the demonstration 
project.
    Part 308, sections 308.101 through 308.103: Volunteer service. 
Waived to allow for a Voluntary Emeritus Corps in addition to student 
volunteers.
    Part 315, section 315.801(a), 315.801(b)(1), (c), and (e) and 
315.802(a) and (b)(1): Probationary period and Length of probationary 
period. Waived to the extent necessary to allow for up to a three-year 
probationary period and to permit termination during the extended 
probationary period without using adverse action procedures for those 
employees serving a probationary period under an initial appointment 
except for those with veterans' preference.
    Part 315, section 315.901: Statutory requirement. Waived to the 
extent necessary to replace ``grade'' with ``pay band.''
    Part 316, section 316.301: Purpose and duration. Waived to the 
extent necessary to allow for term appointments for more than four 
years.
    Part 316, section 316.303: Tenure of term employees. Waived to the 
extent necessary to allow term employees to acquire competitive status.
    Part 332, section 332.404: Order of selection from certificates. 
Waived to the extent necessary to eliminate the requirement for 
selection using the ``Rule of Three.''
    Part 335, section 335.103: Agency promotion programs. Waived to the 
extent necessary to extend the length of details and temporary 
promotions without requiring competitive procedures.
    Part 337, section 337.101(a): Rating applicants. Waived to the 
extent necessary to allow referral without rating when there are 15 or 
fewer qualified candidates and no qualified preference eligibles.
    Part 351.402(b): Competitive area. Waived to the extent necessary 
to allow for separate competitive areas for demonstration project and 
non-demonstration project employees.
    Part 351.403: Competitive level. Waived to the extent necessary to 
replace ``grade'' with ``pay band.''
    Part 351, section 351.504: Credit for performance. Waived to the 
extent necessary to revise the method for adding years of service based 
on performance.
    Part 351, section 351.701: Assignment involving displacement. 
Waived to the extent that bump and retreat rights are limited to one 
pay band with the exception of 30 percent preference eligibles who are 
limited to two pay bands (or equivalent of five grades), and to limit 
the assignment rights of employees with an unacceptable current rating 
of record to a position held by another employee with an unacceptable 
rating of record.
    Part 410, section 410.309: Agreements to continue in service. 
Waived to the extent necessary to allow the ECBC Technical Director to 
determine requirements related to continued service agreements.
    Part 430, subpart B: Performance Appraisal for GS, Prevailing Rate, 
and Certain Other Employees. Waived to the extent necessary to be 
consistent with the demonstration project's pay-for-performance system.
    Part 432: Performance based reduction in grade and removal actions. 
Modified to the extent that an employee may be removed, reduced in pay 
band level with a reduction in pay, reduced in pay without a reduction 
in pay band level and reduced in pay band level without a reduction in 
pay based on unacceptable performance. Also, modified to delete 
reference to critical element. For employees who are reduced in pay 
band level without a reduction in pay, sections 432.105 and 432.106(a) 
do not apply.
    Part 432, section 432.102: Coverage. Waived to the extent that the 
term ``grade level'' is replaced with ``pay band.''
    Part 432, sections 432.104: Addressing unacceptable performance. 
References to ``critical elements'' are deleted as all elements are 
critical and adding that the employee may be ``reduced in pay band 
level, or pay, or removed'' if performance does not improve to an 
acceptable level during a reasonable opportunity period.
    Part 432, section 432.105(a) (2): Proposing and taking action based 
on unacceptable performance. Waive ``If an employee has performed 
acceptably for 1 year'' to allow for ``within two years from the 
beginning of a PIP.''
    Part 511, subpart A: General Provisions, and subpart B: Coverage of 
the GS. Waived to the extent necessary to allow for the demonstration 
project classification system and pay banding structure.
    Part 511, section 511.601: Applicability of regulations. 
Classification appeals modified to the extent that white collar 
positions established under the project plan, although specifically 
excluded from title 5, are covered by the classification appeal process 
outlined in this section, as amended below.
    Part 511, section 511.603(a): Right to appeal. Waived to the extent 
necessary to substitute ``pay band'' for ``grade.''
    Part 511, section 511.607(b): Non-Appealable Issues. Add to the 
list of issues that are neither appealable nor reviewable, the 
assignment of series under the project plan to appropriate occupational 
families and the demonstration project classification criteria.
    Part 530, subpart C: Special rate Schedules for Recruitment and 
Retention. Waived in its entirety to allow for staffing supplements.
    Part 531, subparts B: Determining Rate of Basic Pay. Waived to the 
extent necessary to allow for pay setting and pay-for-performance under 
the provisions of the demonstration project.
    Part 531, subparts D and E: Within-Grade Increases and Quality Step 
Increases. Waived in its entirety.
    Part 531, subpart F: Locality-Based Comparability Payments. Waived 
to the extent necessary to allow (1) demonstration project employees, 
except employees in Pay Band V of the E&S occupational family, to be 
treated as GS employees; (2) base rates of pay under the demonstration 
project to be treated as scheduled annual rates of pay; and (3) 
employees in Pay Band V of the E&S occupational family to be treated as 
ST employees for the purposes of these provisions.
    Part 536: Grade and Pay Retention: Waived to the extent necessary 
to (1) replace ``grade'' with ``pay band;'' (2) provide that pay 
retention provisions do not apply to conversions from GS special rates 
to demonstration project pay, as long as total pay is not reduced, and 
to reductions in pay due solely to the removal of a supervisory pay 
adjustment upon voluntarily leaving a supervisory position; (3) allow 
demonstration project employees to be treated as GS employees; (4) 
provide that pay retention provisions do not apply to movements to a 
lower pay band as a result of not receiving the general increase due to 
an annual performance rating of ``Unacceptable;'' (5) provide that an 
employee on pay retention whose rating of record is ``Unacceptable'' is 
not entitled to 50 percent of the amount of the increase in the maximum 
rate of base pay payable for the pay band of the employee's position; 
(6) ensure that for employees of Pay Band V in the E&S occupational 
family, pay retention provisions are

[[Page 68963]]

modified so that no rate established under these provisions may exceed 
the rate of base pay for GS-15, step 10
    (i.e., there is no entitlement to retained rate); and (7) provide 
that pay retention does not apply to reduction in base pay due solely 
to the reallocation of demonstration project pay rates in the
    implementation of a staffing supplement. This waiver applies to ST 
employees only if they move to a GS-equivalent position within the 
demonstration project under conditions that trigger entitlement to pay 
retention.
    Part 550, sections 550.105 and 550.106: Bi-weekly and annual 
maximum earnings limitations. Waived to the extent necessary to provide 
that the GS-15 maximum special rate (if any) for the special rate 
category to which a project employee belongs is deemed to be the 
``applicable special rate'' in applying the pay cap provisions in 5 
U.S.C. 5547.
    Part 550, section 550.703: Definitions. Waived to the extent 
necessary to modify the definition of ``reasonable offer'' by replacing 
``two grade or pay levels'' with ``one band level'' and ``grade or pay 
level'' with ``band level.''
    Part 550, section 550.902: Definitions. Waived to the extent 
necessary to allow demonstration project employees to be treated as GS 
employees. This waiver does not apply to employees in Pay Band V of the 
E&S occupational family.
    Part 575, subparts A, B, C, and D: Recruitment Incentives, 
Relocation Incentives, Retention Incentives and Supervisory 
Differentials. Waived to the extent necessary to allow (1) employees 
and positions under the demonstration project covered by pay banding to 
be treated as employees and positions under the GS and (2) employees in 
Pay Band V of the E&S occupational family to be treated as ST employees 
for the purposes of these provisions.
    Part 591, subpart B: Cost-of-Living Allowance and Post 
Differential--Non-foreign Areas. Waived to the extent necessary to 
allow (1) demonstration project employees to be treated as employees 
under the GS and (2) employees in Band V of the E&S occupational family 
to be treated as ST employees for the purposes of these provisions.
    Part 752, sections 752.101, 752.201, 752.301 and 752.401: Principal 
statutory requirements and Coverage. Waived to the extent necessary to 
allow for up to a three-year probationary period and to permit 
termination during the extended probationary period without using 
adverse action procedures for those employees serving a probationary 
period under an initial appointment except for those with veterans' 
preference.
    Part 752, section 752.401: Coverage. Waived to the extent necessary 
to replace ``grade'' with ``pay band,'' and to provide that a reduction 
in pay band level is not an adverse action if it results from the 
employee's rate of base pay being exceeded by the minimum rate of base 
pay for his/her pay band.
    Part 752, section 752.401(a)(4): Coverage. Waived to the extent 
necessary to provide that adverse action provisions do not apply to (1) 
conversions from GS special rates to demonstration project pay, as long 
as total pay is not reduced and (2) reductions in pay due to the 
removal of a supervisory or team leader pay adjustment upon voluntary 
movement to a non-supervisory or non-team leader position or decreases 
in the amount of a supervisory or team leader pay adjustment based on 
the annual review.

               Appendix A: ECBC Employees by Duty Location
            [Totals exclude SES, ST, DCIPS and FWS employees]
------------------------------------------------------------------------
        Duty Location            Employees    Servicing personnel office
------------------------------------------------------------------------
Aberdeen Proving Ground, MD.             969  NE Region.
Rock Island, IL.............              99  NC Region.
Pine Bluff, AK..............              23  NE Region.
Patrick AFB, FL.............               1  NE Region.
Anniston, AL................               1  NE Region.
                             ----------------
    Total All Employees.....            1093
------------------------------------------------------------------------

Appendix B: Occupational Series by Occupational Family

I. Engineering & Science

0401 General Natural Resources Management and Biological Sciences 
Series.
0403 Microbiology Series.
0413 Physiology Series.
0415 Toxicology Series.
0801 General Engineering Series.
0803 Safety Engineering Series.
0819 Environmental Engineering Series.
0830 Mechanical Engineering Series.
0850 Electrical Engineering Series.
0854 Computer Engineering Series.
0855 Electronics Engineering Series.
0858 Biomedical Engineering Series.
0861 Aerospace Engineering Series.
0893 Chemical Engineering Series.
0896 Industrial Engineering Series.
1301 General Physical Science Series.
1306 Health Physics Series.
1310 Physics Series.
1320 Chemistry Series.
1515 Operations Research Series.
1520 Mathematics Series.
1530 Statistics Series.
1550 Computer Science Series.

II. Business/Technical

0018 Safety and Occupational Health Management Series.
0028 Environmental Protection Specialist Series.
0080 Security Administration Series.
0110 Economist Series.
0301 Miscellaneous Administration and Program Series.
0340 Program Management Series.
0341 Administrative Officer Series.
0342 Support Services Administration Series.
0343 Management and Program Analysis Series.
0346 Logistics Management Series.
0404 Biological Science Technician Series.
0501 Financial Administration and Program Series.
0510 Accounting Series.
0560 Budget Analysis Series.
0640 Health Aid and Technician Series.
0690 Industrial Hygiene Series.
0802 Engineering Technician Series.
0856 Electronics Technician Series.
1001 General Arts and Information Series.
1060 Photography Series.
1071 Audiovisual Production Series.
1083 Technical Writing and Editing Series.
1084 Visual Information Series.
1102 Contracting Series.
1150 Industrial Specialist Series.
1311 Physical Science Technician Series.
1410 Librarian Series.
1412 Technical Information Services Series.
1670 Equipment Specialist Series.
1910 Quality Assurance Series.
2001 General Supply Series.
2032 Packaging Series.
2210 Information Technology Management Series.

III. General Support

0303 Miscellaneous Clerk and Assistant

[[Page 68964]]

Series.
0318 Secretary Series.
0335 Computer Clerk and Assistant Series.
0344 Management Clerical and Assistance Series.
0503 Financial Clerical and Technician Series.
0525 Accounting Technician Series.
0561 Budget Clerical and Assistance Series.
1411 Library Technician Series.
2005 Supply Clerical and Technician Series.

Appendix C: Performance Elements

    Each performance element is assigned a minimum weight. The total 
weight of all elements in a performance plan must equal 100. The 
supervisor assigns each element a weight represented as a percentage 
of the 100 in accordance with individual duties/responsibilities 
objectives and the organization's mission and goals. All employees 
will be rated against the first four performance elements listed 
below. Those employees whose duties require team leader 
responsibilities will be rated on element 5. All managers/
supervisors will be rated on element 6.

1. Technical Competence

    The extent to which an employee demonstrates: the technical 
knowledge, skills, abilities and initiative to produce the quality 
and quantity of work as defined in individual performance objectives 
and assigned tasks; innovation and improvement in addressing 
technical challenges; sound decisions and recommendations that get 
the desired results; the ability to solve technical problems; 
initiative to maintain/increase their technical skills through 
professional growth, training, and/or developmental/special 
assignments. Minimum Weight: 15%.

2. Interpersonal Skills

    The employee's demonstrated ability to: provide or exchange 
ideas and information; listen effectively so that resultant actions 
show complete comprehension; coordinate actions to include and 
inform appropriate personnel of decisions and actions; be an 
effective team player; be considerate of differing viewpoints; 
exhibit willingness to compromise on areas of difference for win-win 
solutions; exercise tact and diplomacy; maintain effective 
relationships both within and external to the organization; readily 
give assistance and show appropriate respect and courtesy. Minimum 
Weight: 10%.

3. Management of Time and Resources

    The extent to which an employee demonstrates ability to: meet 
schedules/milestones, prioritize/balance tasks; utilize and, where 
appropriate, properly control available resources (to include for 
supervisors: allocates/monitors resources and equitably distributes 
work to subordinates appropriately); execute contract management 
responsibilities; respond to changing requirements and re-direction; 
create/implement new ideas to improve work efficiencies. Minimum 
Weight: 15%.

4. Customer Satisfaction

    The extent to which an employee: achieves customer and mission 
goals/objectives; provides acceptable solutions/ideas in response to 
customer needs; understands and manages customers' expectations, 
constraints and sensitivities; demonstrates customer care through 
facilitating, responsive, courteous and reliable actions; promotes 
relationships of trust and respect; markets to potential customers/
develops new customers and programs within the scope of job 
responsibility. Minimum Weight: 10%.

5. Team/Project Leadership

    The extent to which a team/project leader: ensures that the 
organization's/project's strategic plan, mission, vision and values 
are communicated into the team/project plans, products and services; 
provides guidance/direction to organization/project personnel; leads 
the team to achieve project objectives; coordinates/balances 
workload among team/project personnel; informs the supervisor of 
team/project/individual work accomplishments, problems, and training 
needs; resolves simple, informal complaints, informs supervisor of 
performance management issues/problems. (Mandatory for non-
supervisory team leaders optional for project leaders and program 
managers.) Minimum Weight: 15%.

6. Supervision and EEO

    The extent to which a supervisor: leads, manages, plans, 
communicates and assures implementation of strategic/operational 
goals and objectives of the organization; develops individual 
performance objectives, evaluates performance, evaluates performance 
by defining expectations, gives feedback and provides recognition; 
initiates personnel actions to recruit, select, promote and/or 
reassign employees in a timely manner; develops subordinates using 
positive motivational techniques on job expectations, training 
needs, and attainment of career goals; recognizes and rewards 
quality performance; takes corrective action to resolve performance 
or conduct issues; applies EEO and Merit System Principles, and 
creates a positive, safe and challenging work environment; ensures 
appropriate internal controls to prevent fraud, waste or abuse and 
safeguards assigned property/resources. (Mandatory for managers//
supervisors). Minimum Weight: 25%.

                                         Appendix D--Intervention Model
----------------------------------------------------------------------------------------------------------------
             Intervention                  Expected Effects             Measures               Data Sources
----------------------------------------------------------------------------------------------------------------
1. Compensation:
    a. Paybanding....................  Increased                Perceived flexibility..  Attitude survey.
                                        organizational
                                        flexibility.
                                       Reduced administrative   Actual/perceived time    Personnel office data,
                                        workload, paperwork      savings.                 PME results, attitude
                                        reduction.                                        survey.
                                       Advanced in-hire rates.  Starting salaries of     Workforce data.
                                                                 banded v. non-banded
                                                                 employees.
                                       Slower pay progression   Progression of new       Workforce data.
                                        at entry levels.         hires over time by
                                                                 band, career path.
                                       Increased pay potential  Mean salaries by band,   Workforce data.
                                                                 group, demographics.
                                                                Total payroll costs....  Personnel office data.
                                       Increased satisfaction   Employee perceptions of  Attitude survey.
                                        with advancement.        advancement.
                                       Increased pay            Pay satisfaction,        Attitude survey.
                                        satisfaction.            internal/external
                                                                 equity.
                                       Improved recruitment...  Offer/acceptance         Personnel office data.
                                                                 ratios; Percent
                                                                 declinations.
    b. Conversion buy-in.............  Employee acceptance....  Employee perceptions of  Attitude survey.
                                                                 equity, fairness.
                                                                Cost as a percent of     Workforce data.
                                                                 payroll.
    c. Pay differentials/adjustments.  Increased incentive to   Perceived motivational   Attitude survey.
                                        accept supervisory/      power.
                                        team leader positions.
2. Performance Management:
    a. Cash awards/bonuses...........  Reward/motivate          Perceived motivational   Attitude survey.
                                        performance.             power.
                                       To support fair and      Amount and number of     Workforce data.
                                        appropriate              awards by group,
                                        distribution of awards.  demographics.
                                                                Perceived fairness of    Attitude survey.
                                                                 awards.

[[Page 68965]]

 
                                                                Satisfaction with        Attitude survey.
                                                                 monetary awards.
    b. Performance based pay           Increased pay-           Perceived pay-           Attitude survey.
     progression.                       performance link.        performance link.
                                                                Perceived fairness of    Attitude survey
                                                                 ratings.
                                       Improved performance     Satisfaction with        Attitude survey.
                                        feedback.                ratings.
                                                                Employee trust in        Attitude survey.
                                                                 supervisors.
                                                                Adequacy of performance  Attitude survey.
                                                                 feedback.
                                       Decreased turnover of    Turnover by performance  Workforce data.
                                        high performers/         rating scores.
                                        Increased turnover of
                                        low performers.
                                       Differential pay         Pay progression by       Workforce data.
                                        progression of high/     performance scores,
                                        low performers.          career path.
                                       Alignment of             Linkage of performance   Performance objectives,
                                        organizational and       objectives to            strategic plans.
                                        individual performance   strategic plans/goals.
                                        objectives and results.
                                       Increased employee       Perceived involvement..  Attitude survey/focus
                                        involvement in                                    groups.
                                        performance planning
                                        and assessment.
                                                                Performance management.  Personnel regulations.
    c. New appraisal process.........  Reduced administrative   Employee and supervisor  Attitude survey.
                                        burden.                  perceptions of revised
                                                                 procedures.
                                       Improved communication.  Perceived fairness of    Focus groups.
                                                                 process.
    d. Performance development.......  Better communication of  Feedback and coaching    Focus groups.
                                        performance              procedures used.
                                        expectations.
                                                                Time, funds spent on     Personnel office data
                                                                 training by             Training records.
                                                                 demographics.
                                       Improved satisfaction    Perceived workforce      Attitude survey.
                                        and quality of           quality.
                                        workforce.
3. ``White Collar'' Classification:
    a. Improved classification         Reduction in amount of   Time spent on            Personnel office data.
     systems with generic standards.    time and paperwork       classification
                                        spent on                 procedures.
                                        classification.
                                                                 Reduction of paperwork/ Personnel office data.
                                                                 number of personnel
                                                                 actions
                                                                 (classification/
                                                                 promotion).
                                       Ease of use............  Managers' perceptions    Attitude survey.
                                                                 of time savings, ease
                                                                 of use.
    b. Classification authority        Increased supervisory    Perceived authority....  Attitude survey.
     delegated to managers.             authority/
                                        accountability.
                                       Decreased conflict       Number of                Personnel records.
                                        between management and   classification
                                        personnel staff.         disputes/appeals pre/
                                                                 post.
                                                                Management satisfaction  Attitude survey.
                                                                 with service provided
                                                                 by personnel office.
                                       No negative impact on    Internal pay equity....  Attitude survey.
                                        internal pay equity.
    c. Dual career ladder............  Increased flexibility    Assignment flexibility.  Focus groups, surveys.
                                        to assign employees.
                                       Improved internal        Perceived internal       Attitude survey.
                                        mobility.                mobility.
                                       Increased pay equity...  Perceived pay equity...  Attitude survey.
                                       Flatter organization...  Supervisory/non-         Workforce data
                                                                 supervisory ratios.
                                                                                         Attitude survey.
                                       Improved quality of      Employee perceptions of  Attitude survey.
                                        supervisory staff.       quality or supervisory.
4. Modified RIF:
                                       Minimize loss of high    Separated employees by   Workforce data/Attitude
                                        performing employees     demographics,            survey/focus group.
                                        with needed skills.      performance scores.
                                       Contain cost and         Satisfaction with RIF    Attitude survey/focus
                                        disruption.              process.                 group.
                                                                Cost comparison of       Personnel office/budget
                                                                 traditional vs.          data.
                                                                 Modified RIF.
                                                                Time to conduct RIF-     Personnel office data.
                                                                 personnel office data.
                                                                Number of Appeals/       Personnel office data.
                                                                 reinstatements.
5. Hiring Authority:
    a. Delegated Examining...........  Improved ease and        Perceived flexibility    Attitude survey.
                                        timeliness of hiring     in authority to hire.
                                        process.
                                       Improved recruitment of  Offer/accept ratios....  Personnel office data.
                                        employees in shortage
                                        categories.
                                       .......................  Percent declinations...  Personnel office data.

[[Page 68966]]

 
                                       .......................  Timeliness of job        Personnel office data.
                                                                 offers.
                                       .......................  GPAs of new hires,       Personnel office data.
                                                                 educational levels.
                                       Reduced administrative   Actual/perceived skills  Attitude survey.
                                        workload/paperwork
                                        reduction.
    b. Term Appointment Authority....  Increased capability to  Number/percentage of     Workforce data.
                                        expand and contract      conversions from
                                        workforce.               modified term to
                                                                 permanent appointments.
                                                                                         Personnel office data.
    c. Flexible Probationary Period..  Expanded employee        Average conversion       Workforce data.
                                        assessment.              period to permanent     Personnel office data.
                                                                 status.
                                                                Number/percentage of     Workforce data.
                                                                 employees completing
                                                                 probationary period.
                                                                                         Personnel office data.
                                       .......................  Number of separations    Workforce data.
                                                                 during probationary
                                                                 period.
                                                                                         Personnel office data
6. Expanded Development
 Opportunities:
    a. Sabbaticals...................  Expanded range of        Number and type of       Workforce data.
                                        professional growth      opportunities taken.
                                        and development.
                                       Application of enhanced  Employee and supervisor  Attitude survey.
                                        knowledge and skills     perceptions.
                                        to work product.
    b. Critical Skills Training......  Improved organizational  Number and type of       Personnel office data.
                                        effectiveness.           training.               Personnel office data
                                                                Placement of employees,  Attitude survey.
                                                                 skills imbalances
                                                                 corrected.
                                                                Employee and supervisor  Attitude survey/focus
                                                                 perceptions.             group.
                                                                Application of
                                                                 knowledge gained from
                                                                 training.
7. Combination Of All Interventions:
    All..............................  Improved organizational  Combination of           All data sources.
                                        effectiveness.           personnel measures.
                                       Improved management of   Employee/Management job  Attitude survey.
                                        workforce.               satisfaction
                                                                 (intrinsic/extrinsic).
                                       Improved planning......  Planning procedures....  Strategic planning
                                                                                          documents.
                                                                Perceived effectiveness  Attitude survey.
                                                                 of planning procedures.
                                       Improved cross           Actual/perceived         Organizational charts.
                                        functional               coordination.
                                        coordination.
                                       Increased product        Customer satisfaction..  Customer satisfaction
                                        success.                                          surveys.
                                       Cost of innovation.....  Project training/        Demo project office
                                                                 development costs        records
                                                                 (staff salaries,        Contract documents.
                                                                 contract cost,
                                                                 training hours per
                                                                 employee).
8. Context:
    Regionalization..................  Reduced servicing        HR servicing ratios....  Personnel office data,
                                        ratios/costs.                                     workforce data.
                                                                Average cost per         Personnel office data,
                                                                 employee served.         workforce data.
                                       No negative impact on    Service quality,         Attitude survey/focus
                                        service quality.         timeliness.              groups.
----------------------------------------------------------------------------------------------------------------

[FR Doc. E9-30479 Filed 12-28-09; 8:45 am]
BILLING CODE 5001-06-P