[Federal Register Volume 75, Number 237 (Friday, December 10, 2010)]
[Notices]
[Pages 77380-77447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30876]



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Part V





Department of Defense





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Office of the Secretary



Science and Technology Reinvention Laboratory Personnel Management 
Demonstration Project, Department of Navy, Office of Naval Research; 
Notice

  Federal Register / Vol. 75 , No. 237 / Friday, December 10, 2010 / 
Notices  

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DEPARTMENT OF DEFENSE

Office of the Secretary


Science and Technology Reinvention Laboratory Personnel 
Management Demonstration Project, Department of Navy, Office of Naval 
Research

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

ACTION: Notice.

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SUMMARY: Section 342(b) of Public Law (Pub .L.) 103-337, as amended by 
section 1114 of Public Law 106-398, authorizes the Secretary of Defense 
(SECDEF) to conduct personnel management demonstration projects at 
Department of Defense (DoD) laboratories designated as Science and 
Technology Reinvention Laboratories (STRLs). Section 1107 of Public Law 
110-181, as amended by section 1109 of Public Law 110-417, requires the 
SECDEF to execute a process and plan to employ the Department's 
personnel management demonstration project authorities found in section 
4703 of title 5, United States Code (U.S.C.) at the STRLs enumerated in 
section 9902(c)(2) of title 5 U.S.C., as redesignated in section 1105 
of Public Law 111-84 and 73 Federal Register (FR) 73248, to enhance the 
performance of the missions of the laboratories. Section 1107 of Public 
Law 110-181 further authorizes in subsection 1107(c) that any 
flexibility available to any demonstration laboratory shall be 
available for use at any other laboratory as enumerated in section 
9902(c)(2) of title 5 U.S.C. The Office of Naval Research (ONR) is 
listed as one of the designated STRLs.
    This notice announces the approval of the final personnel 
demonstration project plan for the ONR. This includes adoption of 
existing demonstration project flexibilities in other STRL 
demonstration project plans and any necessary modifications thereto for 
better conformance to the ONR mission requirements and culture.

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

FOR FURTHER INFORMATION CONTACT: Office of Naval Research: Ms. Margaret 
J. Mitchell, Director, Human Resources Office, Office of Naval 
Research, 875 North Randolph Street, Code 01HR, Arlington, VA 22203; 
[email protected].
    DoD: Ms. Betty A. 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 department heads and/or directors.
    This demonstration project involves: (1) Streamlined delegated 
examining; (2) noncitizen hiring; (3) expanded detail authority; (4) 
extended probationary period for newly hired employees; (5) expanded 
temporary promotion; (6) voluntary emeritus program; (7) pay banding; 
(8) contribution-based compensation system; (9) performance-based 
reduction-in-pay or removal actions; and (10) reduction-in-force (RIF) 
procedures.

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 the flexibilities of the other laboratories listed 
in subsection 9902(c)(2), as redesignated in section 1105 of Public Law 
111-84. ONR is one of the three STRLs specified in this provision.
    Accordingly, ONR intends to build its demonstration project using 
flexibilities adopted from existing STRL demonstration projects 
(specifically the Naval Research Laboratory (NRL), Aviation Missile 
Research, Development and Engineering Center (AMRDEC), Medical Research 
and Materiel Command (MRMC), and Communications-Electronics Research, 
Development and Engineering Center (CERDEC)). Final plans for the NRL, 
AMRDEC, MRMC, CERDEC personnel management demonstration projects were 
published in Federal Registers as follows:
     Department of the Navy: NRL--64 FR 33970, June 24, 1999. 
No amendments have been published;
     Department of the Army: AMRDEC--62 FR 34876 and 62 FR 
34906, June 27, 1997; and amendments and/or corrections to final plans 
published--64 FR 11074, March 8, 1999; 64 FR 12216, March 11, 1999; 65 
FR 53142, August 31, 2000; and 67 FR 5716, February 6, 2002;
     Department of the Army: MRMC--63 FR 10439, March 3, 1998; 
and amendments and/or corrections to final plans published--64 FR 
30377, June 7, 1999; 64 FR 12216, March 11, 1999; 65 FR 53142, August 
31, 2000; and 67 FR 5716, February 6, 2002; and
     Department of the Army: CERDEC--66 FR 10439, October 30, 
2001.
    On May 28, 2010, DoD published the proposed ONR demonstration 
project plan in 75 FR 30918. During the public comment period ending 
June 28, 2010, DoD received comments from 22 individuals. All comments 
were carefully considered.
    The following summary addresses the comments received, provides 
responses, and notes resultant changes to the original proposed project 
plan. Most commenters addressed several topics which are counted 
separately. Thus, the total number of comments exceeds the number of 
individuals cited earlier.

A. General Project Comments

    (1) Comment: Five commenters addressed the necessity and wisdom of 
implementing a laboratory personnel demonstration project at ONR 
considering the recent repeal of the DoD National Security Personnel 
System (NSPS), and that the implementation of a demonstration project 
similar to NSPS could not improve overall performance of an above-
average organization and could only create controversial concerns for 
ONR's workforce.
    Response: Government studies have validated the need for 
establishing different personnel systems within STRLs. There are 
currently eight operating STRL Personnel Demonstration Projects with 
another seven STRL personnel demonstration projects pending expected 
implementation between December 2010 and April 2011. These seven STRLs 
were mandated to implement a demonstration project within eighteen 
months of enactment of NDAA for FY 2010 (Public Law 111-84) by section 
1105 of that law. Regarding the similarity to NSPS, ONR's demonstration 
project does have foundational similarities, but its rating and payout 
structures differ from NSPS.

[[Page 77381]]

    (2) Comment: One commenter wanted to know what the reasons are 
behind ONR's decision to implement a demonstration project.
    Response: Section 1105 of Public Law 111-84 requires all STRLs 
named therein to implement a demonstration project within 18 months of 
the enactment of the law. Regardless of the legal mandate to implement 
a demonstration project, ONR has displayed a continued interest in 
having a demonstration project since 2001. Since that time, ONR 
leadership has believed that a personnel demonstration project will 
enable greater overall organizational effectiveness, enable ONR to 
sustain a quality workforce, improve overall employee satisfaction, and 
ultimately improve ONR's ability to achieve its mission.
    (3) Comment: One commenter felt that the implementation of a 
demonstration project performance management system will be overly 
cumbersome, elaborate, and time consuming.
    Response: The performance management system to be carried out under 
the demonstration project will require more attention from employees 
and supervisors when compared to the General Schedule's performance 
management system. The demonstration project places a greater emphasis 
on performance management by utilizing the concepts of cascading, line-
of-sight goals and on-going performance communications. Organizations 
employing such techniques in their performance management systems 
experience increased productivity and customer satisfaction. A primary 
goal of the performance management system under ONR's demonstration 
project is to facilitate a decrease in misdirected work activities, and 
as a result, provide meaning and distinguishing value to the employee's 
work and contributions.
    (4) Comment: Three commenters questioned ONR's decision to adopt 
the Naval Research Laboratory's demonstration project, as they do not 
see a similarity between NRL's and ONR's operation, location, and 
workforce structure.
    Response: Although there are some important differences between 
work performed by NRL and ONR, there are close similarities between the 
workforces. Just like NRL, ONR has a highly educated and experienced 
workforce, with expertise in science, engineering, acquisition/
contracting, finance, and other professional areas. The demonstration 
project programs that were designed to attract, motivate, reward, and 
retain the NRL workforce have been carefully reviewed by ONR management 
to be sure they are right for the ONR workforce. Where needed, some 
modifications to NRL's programs have been made to better suit ONR's 
workforce needs and culture. The demonstration project programs are not 
dependent on where the employees are physically working, but rather 
they make up a new system for the Command to manage and reward all 
employees' work and contributions consistently and fairly.
    (5) Comment: Two commenters inquired about the possibility of 
conducting a pilot demonstration project at ONR Headquarters to test 
the demonstration project programs prior to implementation at the 
regional or global offices.
    Response: As established by section 1105 of Public Law 111-84, ONR 
must implement a demonstration project before the end of April 2011 for 
all eligible employees, regardless of the location of their official 
duty station. Due to the deadline of this mandate, there is not 
sufficient time to design, implement, and test a small pilot before 
activating the demonstration project for all eligible ONR employees.
    (6) Comment: One commenter believed that the WIGI buy-in 
calculation is flawed for OCONUS employees because the formula assumes 
everyone receives locality pay. This was specifically in reference to 
paragraph 5 on page 30217 stating that special salary employees will be 
eligible to receive full locality pay and OCONUS employees do not 
receive locality pay.
    Response: The determination of basic pay (not including locality 
pay or a special salary rate) is the foundation of the formula for both 
the WIGI buy-in and the recalculation of pay for an employee on a 
special salary rate. Once the new basic pay is determined in either 
situation, any WIGI buy-in is added to the new basic pay and the sum is 
multiplied by a locality pay percentage, if appropriate. If the new 
basic pay exceeds the maximum for the current pay band, the employee 
will be granted maintained pay.
    (7) Comment: One commenter asked how Living Quarters Allowance 
(LQA) and post allowance levels established by the Department of State 
Standardized Regulations (DSSR) would be determined under Lab Demo.
    Response: Typically, personnel demonstration projects determine a 
General Schedule grade equivalency using their conversion out of the 
demonstration project schema to determine entitlements to such items as 
Living Quarters Allowance, training, base housing, etc. The equivalent 
General Schedule grade is then used to compare with the entitlement 
requirements. For example, the demo General Schedule equivalency grade 
would be compared to the LQA matrix chart containing GS grades in 
section 135.2 of the DSSR to determine comparable LQA entitlements.
    (8) Comment: One commenter asked how the Global offices will be 
supported when there is a large time-zone difference and ONR's Human 
Resource (HR) department is not opened 24 hours a day.
    Response: ONR's Global offices will continue to receive the same 
high level of support under the demonstration project as they do 
currently under the General Schedule. Based on the experience of other 
previously implemented personnel demonstration projects, ONR does not 
anticipate any issues associated with the demonstration project that 
would require routine around-the-clock access to the Headquarters HR 
Department. ONR HR will endeavor to respond to any concern within 24 
hours on demo issues and make accommodations for their Global customers 
to ensure continued enhanced customer satisfaction.
    (9) Comment: One commenter noted that ONR has primarily adopted 
NRL's STRL personnel demonstration project, and used in its FRN the 
language from NRL's original FRN. A proposed amendment has since been 
written by NRL and the commenter recommended that ONR review NRL's 
proposed amendment and adopt the suggested changes as appropriate. The 
commenter also recommended ONR review the minor changes that NRL made 
as well and include those where appropriate.
    Response: ONR agrees with the commenter and has carefully reviewed 
NRL's amendment and list of minor changes. ONR has modified the FRN in 
a number of places as a result of this review and those changes are 
listed in the subsequent summary of substantive changes.

B. CCS Appraisal Process

    (1) Comment: One commenter expressed concern that employees will be 
told verbally by their supervisors to expect a certain Overall 
Contribution Score (OCS) and payout but the actual payout amount 
received would be less than what the employee was led to expect by 
their supervisor.
    Response: Under ONR's demonstration project, standard operating 
procedures and policies will be such that employees receive 
notification of their OCS and adjusted basic pay including locality 
only after a final decision has been rendered by the Pay Pool Panel. 
Employees are not to be

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made aware of their initial suggested score provided by their 
supervisor or potential adjusted basic pay prior to the Pay Pool 
Manager's approval of the Pay Pool Panel's final decision.
    (2) Comments: Fairness: Six commenters stated concerns about the 
equitable application of the evaluations made under the Contribution-
based Compensation System (CCS). Two commenters thought the system was 
too subjective and favoritism would drive the process. One commenter 
expressed concern that more credit would be given to scientific than 
support personnel. One commenter felt that the CCS system would only 
reward supervisors for outcomes and ultimately create a negative 
working environment for their subordinates. Two commenters discussed 
the need for a 360-degree performance evaluation plan for supervisors 
to ensure accountability for their performance management duties.
    Response: To promote fairness and reduce favoritism, the CCS 
process provides for review of employee assessments by a group of 
supervisory officials who are in the same pay pool. In the pay pool 
panel process, scores assigned by individual supervisors are reviewed 
by other supervisors in the same pay pool. The supervisors work to 
apply the CCS level descriptors consistently within their pay pool, and 
to identify and correct any inappropriately inflated or deflated 
scores. The pay pool manager provides an additional level of review and 
is the ultimate approval level. CCS contains various mechanisms to 
ensure employees receive proper credit under the generic contribution 
elements, descriptors, and discriminators. Contribution elements may be 
weighted, expectations and results to be achieved for the work assigned 
may be described in supplemental criteria, and discriminators may be 
considered either separately or in a more integrated manner for groups 
of employees. Meaningful assessment demands consideration of quality, 
value, customer service, and other criteria can be established early in 
the cycle and described in supplemental information to the CCS factors. 
Flexibility was deemed necessary for individual divisions to tailor the 
system to their special needs. Supervisors will continue to determine 
the value of employees' accomplishments when assessing their 
contributions. Work valued under the current system will continue to be 
valued under CCS. In addition, supervisors and employees will be 
encouraged to communicate throughout the appraisal period to avoid 
misunderstandings at the end of the year.
    The primary benefit expected from Lab Demo is greater 
organizational effectiveness through increased supervisor and employee 
interaction leading to enhanced employee involvement, communication, 
understanding, satisfaction, and productivity. Lab Demo training, 
targeting the CCS process and goals, has been rolled out across the 
Command to ensure a synonymous understanding of performance management 
practices for both employees and supervisors, and to ensure that proper 
performance management techniques will occur under CCS. The CCS 
performance management process is designed to help supervisors create a 
performance culture in which the performance and contributions of the 
workforce are linked to the ONR mission. This in turn will add meaning 
to the employee's job and contributions.
    Supervisors will be held accountable for their performance 
management duties under CCS. The CCS contribution elements and level 
descriptors specifically include expectations regarding performance 
management and workforce development to recognize the importance of 
this value at ONR.
    The managers/second-line supervisors have always been free to 
solicit feedback from subordinate employees and other customers to 
consider in assessing and appraising the supervisory effectiveness of 
their direct subordinates and their employees. This will continue to be 
an option under CCS. However, a formal program providing for 360-degree 
evaluations for supervisors has not currently been implemented. ONR has 
also provided mandatory hands-on training for supervisors that 
emphasized supervisory responsibilities and how to engage employees in 
the performance management process. In addition, supervisor performance 
will be evaluated as an enhancement of the normal pay pool process.
    (3) Comment: One commenter questioned the use of the CCS terms 
Overcompensated and Undercompensated. The commenter felt that both 
terms have a negative connotation and will not be received well by the 
workforce.
    Response: ONR agrees these terms could have a potential negative 
connotation to some employees. However, because ONR is adopting the CCS 
automated system from NRL where these terms are hosted, ONR has decided 
to adopt these terms as well in order to make efficient use of 
available resources. Other demos have used and are using these terms, 
including NRL which has not experienced any difficulties as a result of 
this terminology. It is important to note that the over- and 
undercompensated nomenclature do not reflect employees' work ethic and/
or the value of their work.
    (4) Comment: One commenter stated that the grouping of different 
General Schedule (GS) grades in the same pay band and pay pool will not 
incentivize the workforce to take on supervisory/team lead positions; 
instead, it will inhibit one's decision to take on a leadership role 
since, for example, a GS-14 could potentially make the same amount as a 
GS-15 without taking on the added leadership responsibilities.
    Response: This commenter may have misunderstood the purpose and 
intent behind pay banding (grouping GS grades into one pay band). One 
of the goals of ONR's demonstration project is to provide a 
compensation system that will provide more flexibility to enable ONR to 
compensate its employees equitably at a rate that is commensurate with 
their levels of responsibility and contribution, and is more 
competitive with those found in the labor market. Although the General 
Schedule system did allow an organization to distinguish levels of 
performance and provide different levels of rewards, the demonstration 
project will provide more authority and flexibility for ONR to utilize 
a wider variety of recognition. By implementing pay banding, ONR will 
have the opportunity to provide a more direct link between levels of 
individual contribution and the compensation received. ONR will be able 
to compensate their workforce in a manner that is appropriate to their 
contribution. Basic pay increases will no longer be automatic under Lab 
Demo. Therefore, the workforce should have increased motivation to take 
on leadership and/or supervisory roles in order to have a higher 
contribution, thus having eligibility for a larger payout. In addition, 
ONR has decided to adopt a Supervisory Pay Adjustment and Differential 
flexibility providing even additional incentive for the workforce to 
take on supervisory/team lead positions.
    (5) Comment: One commenter noted that the Contribution Elements had 
not yet been finalized by leadership and still needed to be reviewed 
and possibly modified.
    Response: This commenter is correct and ONR's leadership has 
reviewed and modified the Contribution Elements as needed. The revised 
Contribution Elements are included in this version of the FRN.
    (6) Comment: One commenter noted that OCSs against normal pay range

[[Page 77383]]

would actually not be available until January; therefore, any reference 
to providing them at the beginning of the performance assessment cycle 
was incorrect.
    Response: ONR agrees and has modified the FRN to reflect that OCSs 
applicable to an employee's normal pay range for each appraisal period 
will be available when pay actions are effected in January.

C. Compensation

    (1) Comment: Two commenters had questions pertaining to those 
individuals who are at the top of their pay band and questioned how 
under the new system those employees would receive any benefit; whether 
these individuals could receive additional compensation, and how the 
system specifically would benefit, those that were assigned to a pay 
band that hosted only one GS grade.
    Response: If an employee's basic pay is at the top of the pay band, 
s/he can receive a pay increase that is commensurate with the general 
increase designated by Congress for that year. An employee whose basic 
pay is at the maximum of her/his pay band may receive recognition 
through a contribution award, Time-off Award, or a combination of both. 
For those employees entering into a pay band that hosts only a single 
grade, they will only be eligible for basic pay assigned to that pay 
band. However, the employee may have the opportunity to advance to a 
pay band with a higher maximum basic pay through a CCS promotion, if 
appropriate.
    (2) Comment: One commenter expressed concern over the possibility 
of the science and engineering professionals' pay pool receiving 
disproportionate funding over the other pay pools in order to provide 
greater benefit to those in the Science and Engineering Career Track 
with greater bonuses and basic pay increases over others at ONR.
    Response: The pay pool funding normally will be set percentages of 
the total basic pay of all eligible employees in a specific pay pool. 
The pay pool funding percentages are the same for all pay pools. The 
percentage of basic pay allotted for basic pay increases for employees 
in the ONR pay pools will be the same for each pay pool, and the 
percentage of basic pay allotted for contribution bonuses will also be 
the same for each pay pool. For example, if the total basic pay of the 
employees in Pay Pool A is $1,000,000 and the total basic pay of the 
employees in Pay Pool B is $2,000,000, then the pay pool funding for 
performance-based contribution awards (using ONR's historical 
percentage of 1.5% for contribution-based bonuses) would be $15,000 for 
Pay Pool A and $30,000 for Pay Pool B to be distributed among their 
respective members based on contribution.
    (3) Comment: Four commenters suggested for ONR to adopt a 
flexibility for Supervisory Pay Differentials and Adjustments to 
compensate supervisors for their additional performance management 
responsibilities and workload.
    Response: ONR agrees with the commenters and has adopted CERDEC's 
flexibility for a Supervisory Pay Differential and Adjustment.
    (4) Comment: One commenter expressed concern that a decision could 
be made by the pay pool panel to decrease an employee's compensation.
    Response: Under CCS, as with the General Schedule, an employee's 
salary can only decrease as a result of an adverse or performance-based 
action. This requirement currently operates under the General Schedule 
and will be retained by the demonstration project to preserve an 
emphasis on employee performance and conduct under a contribution-based 
compensation system. The CCS rating system by itself does not implement 
any mechanism to decrease an employee's basic pay. During the actual 
CCS rating process and pay pool panel deliberations an employee's basic 
pay will not be decreased. If based on the OCS and current salary an 
employee is assessed to be in the Overcompensated category then that 
employee would not be eligible for a merit increase or contribution 
award, and may or may not receive a general increase. They would still 
receive locality pay.
    (5) Comment: One commenter noted the adjusted minimum basic rate of 
pay for the S&E Professional Level V needs to be adjusted to be 120% of 
the GS-15, step 1, basic pay rate for 2010, or $119,554.
    Response: ONR agrees and has made the change where applicable in 
the FRN.

D. Accessions and Internal Placements

    (1) Comment: One Commenter expressed the need for ONR to have Lab 
Demo training required for all new hires.
    Response: ONR agrees and will make Lab Demo training mandatory for 
all new employees and new supervisors.
    (2) Comment: One commenter questioned if veterans' preference still 
applied under the demonstration project and if ONR's demonstration 
project complied with laws protecting veterans and disabled veterans.
    Response: All statutes and regulations covering veterans' 
preference will be observed under all lab demonstration programs.

E. Technology

    (1) Comment: One commenter expressed the concern that the RIF 
Support Systems (RIFSS) could not accommodate NRL's need and ONR should 
reconsider if they will still use this system or adopt another.
    Response: ONR agrees and prior to committing specifically to RIFSS 
will look closely at the system's availability and capacity.
    (2) Comment: One commenter pointed out that DCPDS is no longer a 
legacy system.
    Response: ONR agrees and the language in Section X.B. has been 
modified accordingly.
    (3) Comment: One commenter noted that ONR does not intend to use 
the COREDOC application to generate RDs.
    Response: The commenter is correct and ONR will be using RDWriter 
instead. The language in Section X.C. has been updated to reflect the 
correct tool intended to be used.

F. Classification

    (1) Comment: Three commenters did not believe that some of the 
occupational series were correctly aligned with the proper career 
tracks; one stated that 0335, Computer Clerk series, was listed under 
both Administrative Support and Administrative Specialist and 
Professional and only belonged in the Administrative Support Career 
Track; the second stated that 0110, Economist series, should be moved 
to the S&E Professional Career Track because of the similarities to the 
education requirements and other social science professions included in 
that Career Track; and a third stated that 0802, Engineering Technician 
series, should not be in the Science and Engineering Professional 
Career Track but rather in the Administrative Specialist and 
Professional Career Track.
    Response: ONR management agrees with the reasoning of the first 
commenter. Therefore, occupational series 0335 will only be aligned 
with the Administrative Support Career Track. Based on the work being 
done, the qualifications required, and how other STRLs, such as the Air 
Force Research Laboratory, have classified 0110, ONR management 
disagrees with the second commenter and occupational series 0110 will 
remain in the Administrative Specialist & Professional Career Track. In 
the case of the third commenter, ONR management agrees and since ONR 
does

[[Page 77384]]

not have a technical career track, the proper classification for 0802 
is the Administrative Specialist and Professional Career Track.
    (2) Comment: Seven commenters felt that the construction of the pay 
band levels for the Administrative Specialist and Professional Career 
Track is either unfair or biased. One commenter specifically noted pay 
band IV in the Administrative Specialist and Professional career track 
sets an unfair barrier for those employees who are currently a GS-13, 
and in turn signals that their work is of less importance and therefore 
is not mixed with higher GS grades. Six commenters specifically 
questioned why the Administrative Specialists and Professionals Career 
Track does not have an Above 15 Pay Band the same way the S&E 
Professionals Career Track does and feel it unfairly elevates the 
importance of the S&E group over the Administrative Specialist and 
Professionals.
    Response: In accordance with DoD Instruction 1400.37, pages 73248 
to 73252 of volume 73, ONR's demonstration project was modeled after 
the demonstration project implemented at NRL. During the initial review 
of ONR's demonstration project, ONR leadership learned that any change 
to the NRL pay band structure would have created a year's delay in 
implementing ONR's demonstration project, due to additional approval 
and IT system modification requirements. Given the NDAA requirement 
that ONR be under a Lab Demo before the end of April 2011, an 
additional year to implement was not an option. ONR leadership 
evaluated NRL's pay bands and concluded that the NRL structure would 
work with ONR's current career paths and GS breakdown of the workforce. 
ONR leadership decided to move forward with the NRL pay band structure. 
Operational procedures and guidelines will address any unintended 
limitations that this structure would impose on the career progression 
of ONR employees. For example, there will be procedures for non-
competitive promotion between bands (if in a career ladder position or 
if warranted by level of work and value of contributions).
    ONR made the decision to participate in the DoD initiative to 
implement an Above 15 Pay Band for scientific and engineering 
professionals in order to take advantage of an opportunity to correct a 
critical void in classification standards and guidance for civilian 
senior executive Scientific and Professional (ST) and Senior Executive 
Service (SES) positions. This void impacted an organization's ability 
to advance scientific and engineering positions which surpass the GS-15 
classification criteria because of the combination of excellent 
scientific and/or engineering expertise and performance of high-level 
science and technology (S&T) research and development work with 
significant technical supervisory and managerial responsibilities 
comprising 25 percent or more of the position's time. These positions 
were not considered to be appropriately classified as STs because of 
the degree of supervisory and managerial responsibilities. Conversely, 
these positions were not appropriately classified as SES positions 
because of their requirement for highly specialized scientific or 
engineering expertise and because the positions were not at the level 
of general managerial authority and impact required for an SES 
position.
    (3) Comment: Two commenters questioned ONR's proposed pay band 
grade composition and if it was the most suitable structure for ONR. 
One commenter suggested that both the S&E Professional and 
Administrative Specialist and Professional Career Tracks should be 
modified to have GS-5 through GS-13 in one pay band. Another commenter 
suggested that a specific position could be more easily/appropriately 
filled if the Administrative Support Career Track pay bands were 
modified to include at least up to a GS-12 level.
    Response: As stated in the response to previous comments, ONR 
leadership evaluated NRL's pay bands and concluded that the NRL 
structure would work with ONR's current career paths and GS breakdown 
of the workforce. The different pay band structures in the Career 
Tracks support the various levels of duties, qualifications, and types 
and scope of work encompassed by ONR's position management structure. 
Therefore, ONR management considers the NRL pay banding scheme 
appropriate at this time. Since 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.
    (4) Comment: One commenter questioned the approval process 
designated for promotions under ONR's demonstration project. The 
commenter felt that including the CNR's approval for certain promotions 
(laid out in section IV.C.8) would slow down the promotion process and 
actual create a more inflexible system for promotions.
    Response: ONR agrees with the commenter's concern and has made the 
appropriate change under section IV.C.8. It is not ONR's intent to make 
the promotion process less flexible under the demonstration project. 
Thus, all individuals covered under the demonstration project who are 
eligible for a promotion will need a promotion nomination by their 
supervisor, endorsement from the pay pool panel, and final approval by 
the pay pool manager. CCS Promotions under the demonstration project 
will not need approval beyond the pay pool manager.
    (5) Comment: One commenter stated that the Career Promotion 
Eligibility clause needed to be expanded to include those employees who 
may be eligible for an established career ladder promotion to a grade 
encompassed in the next higher pay band during the first 12 months of 
the demonstration project and as a result would advance into a higher 
pay band.
    Response: ONR agrees with the commenter's point and the Career 
Promotion Eligibility clause in the FRN has been modified to also cover 
previously established career ladders which would contain a career 
promotion that would be into a higher pay band within the first 12 
months of the demonstration project if recommended and the employee 
meets all requirements. The FRN language has been edited to make this 
clause clearer.

G. Formatting and Language

    (1) Comment: Eight commenters made note of various places in the 
FRN where language was inconsistently used or information was not 
consistent; the term pay band should be used in places where the term 
career level was used instead; score ranges and basic pay information 
listed in the appendices was in some instances different than what was 
listed in the main part of the document; in various places footnotes do 
not show up in the correct place or are non-existent; in the normal pay 
range graph in the appendix it should read mid-rail and not med-rail; 
and Figure 4 is missing the word `review' for Administrative Support 
Career Track pay band III.
    Response: ONR agrees and has made these appropriate changes and 
corrections to formatting and the text.
    (2) Comment: Three commenters noted places where language was vague 
and needed to be clarified; the language in section VI.A.4 was noted to 
be unclear; the language in section IV.C.2 and 3 is unclear if there 
will only be one pay pool manager; and section VI.A.3 the language was 
noted as not being clear if this was a prorated portion.
    Response: ONR agrees and in each of the sections listed above the 
language has been edited for clarification.

[[Page 77385]]

3. Demonstration Project Notice Changes

    The following is a summary of substantive changes and 
clarifications which have been made to the project proposal.
    A. Supplementary Information, Overview. Added MRMC and CERDEC to 
the list of existing STRL demonstration projects from which ONR is 
using flexibilities to build its demonstration project.
    B. III.H.2. Internal Actions. Added a flexibility for Supervisory 
Pay Adjustments and Supervisory Pay Differentials.
    C. IV.A.1.d. Fair Labor Standards Act. Corrected Figure 4 by 
including the word `review' for Pay Band III of the Administrative 
Support career track.
    D. IV.C.4. Annual CCS Appraisal Process. The current FRN states 
that employees will be notified of the Overall Contribution Scores 
(OCSs) which correspond to each employee's Normal Pay Range (NPR) at 
the beginning of the appraisal period. This is corrected to state that 
OCSs which correspond to each employee's NPR will be available after 
pay adjustments have been processed, normally early-to-mid January.
    E. IV.C.4 and 5. Annual CCS Appraisal Process and Exceptions. 
Provision added that requires employees who serve less than 90 days 
during an appraisal cycle to receive a presumptive rating of 
acceptable.
    F. IV.C.4. Annual CCS Appraisal Process. In order to ensure 
compliance with state bar rules a provision was added that prohibits 
the pay pool panel from changing CCS scores on ONR attorneys provided 
by the ONR Counsel.
    G. IV.C.4 and 5. Exceptions. Clarified the conditions for which 
employees who would normally be exempted from the CCS process may still 
be given a CCS score.
    H. IV.C.8.b. Career Movements based on CCS. Corrected to state that 
it is the ONR Executive Director and not the CNR which must approve 
certain promotions.
    I. IV.C.9. Grievance Process. Modified to clarify the process; 
prevent the need for the ONR Executive Director from possibly deciding 
the same grievance twice; inform employees that the contents of the CCS 
Plans are nongrievable as were the contents of performance plans in the 
traditional performance management system; and ensure compliance with 
state bar rules.
    J. VI.A.3. WGI Buy-in. Added clarifying language to state that 
employees will be provided a prorated portion.
    K. VI.A.4. Career Promotion Eligibility. Modified to state that an 
exception will also be made for employees who become eligible for a 
career ladder promotion during the first 12 months after conversion if 
their promotion would cause them to move to a higher pay band. Examples 
included providing greater clarity to the entire section.
    L. VI.D. New Hires. Modified to add that mandatory demonstration 
project training will be provided to new employees and new supervisors.
    M. VI.D.3. New Hires. Provided clarification for Federal employees 
who are on retained pay or who are receiving special salary rates and 
are moving into the ONR demonstration project.
    N. VI.E.1.Grade Determination. Clarified conversion-out rules when 
there are more than two GS grade levels in a career field.
    O. X. Automation. Clarified that DCPDS is not a legacy system, that 
RD Writer will be used instead of COREDOC, and that the automated tool 
RIFSS will not specifically be used.
    P. Appendix A. Updated chart based on the addition of the 
supervisory pay adjustment and differential flexibility, and added the 
MRMC Career Promotion flexibility which had mistakenly been left out 
previously.
    Q. Appendix B. Added required waivers for; the Supervisory Pay 
Adjustment and Differential Flexibility; the presumptive rating of 
acceptable for employees who serve less than 90 days, and the Voluntary 
Emeritus Program (which were erroneously left out previously).
    R. Appendix D. Corrected 0335, Computer Clerk series, to be listed 
only under the Administrative Support career track and moved the 0802 
series to the Administrative Specialist and Professional Career Track.
    S. Appendix E. Science & Engineering Professional contribution 
elements were updated to provide additional clarification of the 
discriminators.
    T. Appendix F. Integrated pay chart was updated to reflect the 
minimum basic pay for S&E pay band V as $119,554.

4. Access to Flexibilities of Other STRLs

    Flexibilities published in this Federal Register shall be available 
for use by the STRLs previously enumerated in section 9902(c)(2) of 
title 5 United States Code, which are now designated in section 1105 of 
the NDAA for FY 2010, Public Law 111-84, 123 Stat. 2486, October 28, 
2009, 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 2, 2010.
Patricia Toppings,
OSD Federal Register Liaison Officer, Department of Defense.

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems with the Current System
    C. Waivers Required
    D. Expected Benefits
    E. Participating Organizations and Employees
    F. Project Design
III. Accessions and Internal Placements
    A. Hiring Authority
    1. Background
    2. Delegated Examining
    B. Legal Authority
    C. Determining Employee and Applicant Qualifications
    D. Noncitizen Hiring
    E. Expanded Detail Authority
    F. Extended Probationary Period
    G. Definitions
    1. Basic Pay
    2. Maintained Pay
    3. Promotion
    4. Reassignment
    5. Change to Lower Pay Band
    6. Pay Adjustment
    7. Detail
    8. Highest Previous Rate
    9. Approving Manager
    H. Pay Setting Determinations Outside the CCS
    1. External New Hires
    2. Internal Actions
    a. Promotion.
    b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to 
Lower Pay Band (except RIF).
    c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to 
Lower Pay Band Due to Adverse or Performance-based Action.
    d. Involuntary Change to Lower Pay Band or Reassignment to a 
Career Track with a Lower Salary Range, Other than Adverse or 
Performance-based.
    e. RIF Action (including employees who are offered and accept a 
vacancy at a lower pay band or in a different career track).
    f. Upward Mobility or Other Formal Training Program Selection.
    g. Return to Limited or Light Duty From a Disability as a Result 
of Occupational Injury to a Position in a Lower Pay Band or to a 
Career Track With Lower Basic Pay Potential Than Held Prior to the 
Injury.
    h. Restoration to Duty
    i. Reassignment
    j. Student Educational Employment Program
    k. Hazard Pay or Pay for Duty Involving Physical Hardship
    l. Supervisory Pay Adjustments
    m. Supervisory Pay Differentials
    I. Priority Placement Program (PPP)
    J. Expanded Temporary Promotion

[[Page 77386]]

    K. Voluntary Emeritus Program
IV. Sustainment
    A. Position Classification
    1. Career Tracks and Pay Bands
    a. Target Pay Band
    b. Occupational Series and Position Titling
    c. Classification Standards
    d. Fair Labor Standards Act (FLSA)
    (1) Guidelines for FLSA Determinations
    (2) Nonsupervisory and Leader Positions
    (3) Supervisory Positions
    2. Requirements Document (RD)
    3. Delegation of Classification Authority
    a. Delegated Authority
    b. Position Classification Accountability
    B. Integrated Pay Schedule
    1. Annual Pay Action
    2. Overtime Pay
    3. Classification Appeals
    4. Above GS-15 Positions
    5. Distinguished Contributions Allowance (DCA)
    a. Eligibility
    b. Nomination
    c. Reduction or Termination of a DCA
    d. Lump-Sum DCA Payments
    e. DCA Budget Allocation
    f. Concurrent Monetary Payments
    C. Contribution-Based Compensation System (CCS)
    1. General
    2. CCS Process
    3. Pay Pool Annual Planning
    a. Element Weights and Applicability
    b. Supplemental Criteria
    4. Annual CCS Appraisal Process (See Figure 7)
    5. Exceptions
    6. Normal Pay Range (NPR)--Basic Pay Versus Contribution
    7. Compensation
    a. General Increases
    b. Merit Increases
    c. Locality Increases
    d. Contribution Awards
    8. Career Movement Based on CCS
    a. Advancements in Pay Band Which May Be Approved by the Pay 
Pool Manager
    b. Advancements in Pay Band Which Must Be Approved by the 
Executive Director
    c. Advancement To Pay Band V of the Science and Engineering 
(S&E) Professional Career Track
    d. Regression to Lower Pay Band (See Figure 8, ``Employee A'')
    9. CCS Grievance Procedures
V. Separations
    A. Performance-Based Reduction-in-Pay or Removal Actions
    B. Reduction-in-Force (RIF) Procedures
    1. RIF Authority
    2. RIF Definitions
    a. Competition in RIF
    b. Competitive Area
    c. Competitive Level
    d. Service Computation Date (SCD)
    (1) Federal SCD
    (2) CCS Process Results
    (3) Credit From Other Rating Systems
    (4) RIF Cutoff Date
    3. Displacement Rights
    a. Displacement Process
    b. Retention Standing
    c. Vacant Positions
    d. Ineligible for Displacement Rights
    e. Change to Lower Pay Band Due to an Adverse or Performance-
Based Action
    4. Notice Period
    5. RIF Appeals
    6. Separation Incentives
    7. Severance Pay
    8. Outplacement Assistance
VI. Demonstration Project Transition
    A. Initial Conversion or Movement to the Demonstration Project
    1. Placement Into Career Tracks and Pay Bands
    3. WGI Buy-In
    4. Career Promotion Eligibility
    5. Conversion of Special Salary Rate Employees
    6. Conversion of Employees on Temporary Promotions
    7. Non-Competitive Movement Into the Demonstration Project
    B. CCS Start-Up
    C. Training
    1. Types of Training
    a. Employees
    b. Supervisors and Managers
    c. Support Personnel
    D. New Hires Into the Demonstration Project
    E. Conversion or Movement From Demonstration Project
    1. Grade Determination
    2. Pay Setting
    3. Employees in Positions Classified Above GS-15
    4. Determining Date of Last Equivalent Increase
    F. Personnel Administration
    G. Automation
    H. Experimentation and Revision
VII. Demonstration Project Duration
VIII. Demonstration Project Evaluation Plan
    A. Overview
    B. Evaluation Model
IX. Demonstration Project Costs
    A. Cost Discipline
    B. Implementation Costs
X. Automation Support
    A. General
    B. Defense Civilian Personnel Data System (DCPDS)
    C. Requirements Document Writer (RDWriter)
    D. RIF Support System (RIFSS)
    E. Contribution-Based Compensation System Data System (CCSDC)
Appendix A. Summary of Demonstration Project Features Adopted by ONR
Appendix B: Required Waivers to Laws and Regulations
Appendix C: Definitions of Career Tracks and Pay Bands
Appendix D: Table of Occupational Series Within Career Tracks
Appendix E: Classification and CCS Elements
Administrative Support
Appendix F: Computation of the IPS and the NPR

I. Executive Summary

    This project adopts with some modifications the STRL personnel 
management demonstration project designed by NRL and additional 
flexibilities from the AMRDEC, MRMC, and CERDEC personnel management 
demonstration projects. The modified design of the demonstration 
project described herein was developed by ONR with the participation of 
and review by the DON, the DoD, and incorporation of the knowledge and 
design of other STRL demonstration projects.
    The Office of Naval Research (ONR) coordinates, executes, and 
promotes the science and technology programs of the United States Navy 
and Marine Corps. ONR's directorates balance a robust science and 
technology portfolio, allocating funds to meet the warfighter's 
requirements, focusing efforts on all three major phases of development 
funding: Basic research, applied research and advanced technology 
development. ONR's six science and technology departments coordinate 
and execute research in the areas of:
    1. Expeditionary Maneuver Warfare and Combating Terrorism
    2. Command, Control, Communications, Intelligence, Surveillance, 
and Reconnaissance
    3. Ocean Battlespace Sensing
    4. Sea Warfare and Weapons
    5. Warfighter Performance
    6. Naval Air Warfare and Weapons
    In order to sustain these unique capabilities, ONR 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 ONR workforce through improvements in the 
efficiency and effectiveness of the human resource system. The project 
flexibilities will strive to achieve the best workforce for the ONR 
mission, adjust the workforce for change, and improve organizational 
efficiency. 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,

[[Page 77387]]

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 DUSD (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 Current 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. Basic 
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 ONR 
must be able to recruit and retain scientific, engineering, acquisition 
support and other professionals and skilled technicians. ONR 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.

C. Waivers Required

    ONR proposes changes in the following broad areas to address its 
problems in human resources management: Accessions and internal 
placements, sustainment, and separations. Appendix B lists the laws, 
rules, and regulations requiring waivers to enable ONR to implement the 
proposed systems. All personnel laws, rules, and regulations not waived 
by this plan will remain in effect. Basic employee rights will be 
safeguarded and Merit System Principles will be maintained.

D. 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 ONR 
workforce will facilitate:
    (1) Sustainment of ONR's quality scientific and business management 
workforces in today's competitive environment;
    (2) Improved employee satisfaction with pay setting and adjustment, 
recognition, and career advancement opportunities;
    (3) Human Resources (HR) flexibilities needed to staff and shape a 
quality workforce of the next 10-20 years;
    (4) Increased retention of high-level contributors; and
    (5) Simpler and more cost effective HR management processes.
    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.

E. Participating Organizations and Employees

    ONR is comprised of the ONR Headquarters in Arlington, Virginia, 
and ONR employees geographically dispersed at the locations shown in 
Figure 1. It should be noted that some sites currently have fewer than 
ten people and that the sites may change should ONR reorganize or 
realign. Successor organizations will continue coverage in the 
demonstration project.
    The demonstration project will cover approximately 450 ONR civilian 
employees under title 5, U.S.C. in the occupations listed in Appendix 
D. The project plan does not cover members of the Senior Executive 
Service (SES), Senior Level (SL), Scientific and Professional (ST), 
expert and consultant employees (EH), or Administratively Determined 
(AD) pay plans. However, SES, SL, and ST employees, after leaving 
Federal government service, may participate in the Voluntary Emeritus 
Program. There are no labor unions representing ONR employees.

[[Page 77388]]

[GRAPHIC] [TIFF OMITTED] TN10DE10.095

F. Project Design

    In response to the initial authority granted by Congress to develop 
a demonstration project, ONR chartered a design team to develop the 
project plan. The team was led by a senior ONR manager from outside the 
Human Resources Office (HRO) and was responsible for developing project 
proposals. The team was composed of 20 employees of different grade 
levels and in different occupations. There was a mix of managers, 
supervisors, and non-supervisors from offices throughout ONR. The team 
had the assistance of HR personnel from ONR and from NRL. It also 
received information and advice from OPM, the Office of the DUSD (CPP), 
and a number of organizations with on-going demonstration projects. 
Information and suggestions were solicited from ONR employees and 
managers through interviews, briefings, small-group meetings, and a 
suggestion program established specifically for the design effort. This 
plan was submitted to DUSD (CPP) in 2001. Work on this plan was 
postponed pending the outcome of several Departmental HR initiatives 
addressing new personnel systems.
    Following enactment of Public Law 110-181, ONR undertook an effort 
to review and resubmit the demonstration project plan. Upon extensive 
review and discussion with internal and external stakeholders, ONR 
leadership decided to adopt existing flexibilities according to 
subsection 1107(c) of Public Law 110-181 and DoDI 1400.37. 
Specifically, ONR proposes to adopt the NRL demonstration project plus 
additional flexibilities from the AMRDEC and MRMC demonstration 
projects. Appendix A summarizes the modifications proposed for each of 
the adopted project flexibilities and administrative procedures. 
Modifications to existing flexibilities are made when necessary to 
address ONR's specific organizational, workforce, and approval needs; 
technical modifications to conform to changes in the law and governing 
Office of Personnel Management (OPM) regulations, which are not being 
waived, that were effected after the publication of the NRL personnel 
demonstration project plan. Further changes to the project plan may be 
made in response to comments received during the 30-day comment period 
following publication of this notice.

III. Accessions and Internal Placements

A. Hiring Authority

1. Background
    Private industry and academia are the principal recruiting sources 
for scientists and engineers at ONR. It is extremely difficult to make 
timely offers of employment to hard-to-find scientists and engineers. 
Even when a candidate is identified, he or she often finds another job 
opportunity before the lengthy recruitment process can be completed.
2. Delegated Examining
    a. Competitive service positions within the ONR Demonstration 
Project will be filled through Merit Staffing or under Delegated 
Examining.
    b. The ``Rule of Three'' will be eliminated. When there are no more 
than 15 qualified applicants and no preference eligibles, all eligible 
applicants are immediately referred to the selecting official without 
rating and ranking. Rating and ranking will be required only when the 
number of qualified candidates exceeds 15 or there is a mix of 
preference and nonpreference applicants. Statutes and regulations 
covering veterans'

[[Page 77389]]

preference will be observed in the selection process and when rating 
and ranking are required. If the candidates are rated and ranked, a 
random number selection method using the application control number 
will be used to determine which applicants will be referred when scores 
are tied after the rating process. Veterans will be referred ahead of 
non-veterans with the same score.

B. Legal Authority

    For actions taken under the auspices of the ONR Demonstration 
Project, the legal authority, Public Law 103-337, will be used. For all 
other actions, ONR will continue to use the nature of action codes and 
legal authority codes prescribed by OPM, DoD, or DON.

C. Determining Employee and Applicant Qualifications

    Figure 2 displays the minimum General Schedule (GS) qualifications 
requirements for each career path and pay band. Special DON or DoD 
requirements not covered by the OPM Qualification Standards Operating 
Manual for GS Positions, such as Defense Acquisition Workforce 
Improvement Act (DAWIA) qualification requirements for acquisition 
positions, physical performance requirements for sea duty, work on 
board aircraft, etc., must be met.
[GRAPHIC] [TIFF OMITTED] TN10DE10.096

D. Noncitizen Hiring

    Where Executive Orders or other regulations limit hiring 
noncitizens, ONR will have the authority to approve the hiring of 
noncitizens into competitive service positions when qualified U.S. 
citizens are not available. Under the demonstration project, as with 
the current system, a noncitizen may be appointed only if it has been 
determined there are no qualified U.S. citizens. In order to make this 
determination, the position will be advertised extensively throughout 
the nation using paid advertisements in

[[Page 77390]]

major newspapers or scientific journals, etc., as well as the 
``normal'' recruiting methods. If a noncitizen is the only qualified 
candidate for the position, the candidate may be appointed. The 
selection is subject to approval by the Department Head or Director of 
the hiring organization. The demonstration project constitutes a 
delegated examining agreement from OPM for the purposes of 5 CFR 
213.3102(bb).

E. Expanded Detail Authority

    Under the demonstration project, ONR's approving manager would have 
the authority:
    (1) To effect details up to one year to demonstration project 
positions without the current 120-day renewal requirement; and
    (2) To effect details to a higher level position in the 
demonstration project up to one year within a 24-month period without 
competition.
    Details beyond the one-year require the approval of the Chief of 
Naval Research or designee and are not subject to the 120-day renewal 
requirement.

F. Extended Probationary Period

    All current laws and regulations for the current probationary 
period are retained except that nonstatus candidates hired under the 
demonstration project in occupations where the nature of the work 
requires the manager to have more than one year to assess the 
employee's job performance will serve a three-year probationary period. 
Employees with veterans' preference will maintain their rights under 
current law and regulation.

G. Definitions

1. Basic Pay
    The total amount of pay received at the rate fixed through CCS 
adjustment for the position held by an employee including any merit 
increase but before any deductions and exclusive of additional pay of 
any other kind.
2. Maintained Pay
    An employee may be entitled to maintain his or her rate of basic 
pay if that rate exceeds the maximum rate of basic pay for his or her 
pay band as a result of certain personnel actions (as described in this 
plan). An employee's initial maintained pay rate is equal to the lesser 
of (1) the basic pay held by the employee at the time an action is 
taken which entitles the employee to maintain his or her pay or (2) 150 
percent of the maximum rate of basic pay of the pay band to which 
assigned. The employee is entitled to maintained pay for 2 years or 
until the employee's basic pay is equal to or more than the employee's 
maintained pay, whichever occurs first. Exceptions to the 2-year limit 
include employees on grade and pay retention ``grandfathered'' in upon 
initial conversion into the demonstration project, former special rate 
employees receiving maintained pay as a result of conversion into the 
project, and employees placed through the priority placement programs. 
Employees will receive half of the across-the-board GS percentage 
increase in basic pay and the full locality pay increase while on 
maintained pay. Upon termination of maintained pay, the employee's 
basic pay will be adjusted according to the CCS appraisal process. If 
the employee's basic pay exceeds the maximum basic pay of his or her 
pay band upon expiration of the 2-year period, the employee's pay will 
not be reduced; the employee will be in the overcompensated range of 
basic pay category for CCS pay increase purposes, see Figure 9.
    Maintained pay shall cease to apply to an employee who: (1) Has a 
break in service of 1 workday or more; or (2) is demoted for personal 
cause or at the employee's request. The employee's maintained rate of 
pay is basic pay for purposes of locality pay (locality pay is basic 
pay for purposes of retirement, life insurance, premium pay, severance 
pay, advances in pay, workers' compensation, and lump-sum payments for 
annual leave but not for computing promotion increases). Employees 
promoted while on maintained pay may have their basic pay (excluding 
locality pay) set up to 20 percent greater than the maximum basic pay 
for their current pay band or retain their ``maintained pay,'' 
whichever is greater.
3. Promotion
    The movement of an employee to a higher pay band within the same 
career track or to a different career track and pay band in which the 
new pay band has a higher maximum basic salary rate than the pay band 
from which the employee is leaving.
4. Reassignment
    The movement of an employee from one position to another position 
within the same pay band in the same career track or to a position in 
another career track and pay band in which the new pay band has the 
same maximum basic salary rate as the pay band from which the employee 
is leaving.
5. Change to Lower Pay Band
    The movement of an employee to a lower pay band within the same 
career track or to a different career track and pay band in which the 
new pay band has a lower maximum basic pay range than the pay band from 
which the employee is leaving.
6. Pay Adjustment
    Any increase or decrease in an employee's rate of basic pay where 
there is no change in the employee's position. Termination of 
maintained pay is also a pay adjustment.
7. Detail
    The temporary assignment of an employee to a different 
demonstration project position for a specified period when the employee 
is expected to return to his or her regular duties at the end of the 
assignment. (An employee who is on detail is considered for pay and 
strength purposes to be permanently occupying his or her regular 
position.)
8. Highest Previous Rate
    ONR will establish maximum payable rate rules that parallel the 
rules in 5 CFR 531.202 and 531.203(c) and (d).
9. Approving Manager
    Managers at the directorate, division head, division 
superintendent, or directorate-level staff offices who have budget 
allocation/execution; position management; position classification; 
recruitment; and staffing authorities for their organization.

H. Pay Setting Determinations Outside the CCS

1. External New Hires
    a. This includes reinstatements. Initial basic pay for new 
appointees into the demonstration project may be set at any point 
within the basic pay range for the career track, occupation, and pay 
band to which appointed that is consistent with the special 
qualifications of the individual and the unique requirements of the 
position. These special qualifications may be consideration of 
education, training, experience, scarcity of qualified applicants, 
labor market considerations, programmatic urgency, or any combination 
thereof which is pertinent to the position to which appointed. Highest 
previous rate may be used to set the pay of new appointees into the 
demonstration project. (The approving manager authorizes the basic 
pay.)
    b. Transfers from within DoD and other Federal agencies will have 
their pay set using pay setting policy for internal actions based on 
the type of pay action.
    c. A recruitment or relocation bonus may be paid using the same 
provisions available for GS employees under 5 U.S.C. 5753. Employees 
placed through

[[Page 77391]]

the DoD Priority Placement Program (PPP), the DON Reemployment Priority 
List (RPL), or the Federal Interagency Career Transition Assistance 
Plan are entitled to the last earned rate if they have been separated.
2. Internal Actions
    These actions cover employees within the demonstration project, 
including demonstration project employees who apply and are selected 
for a position within the project.
    a. Promotion.
    When an employee is promoted, the basic pay after promotion may be 
up to 20 percent greater than the employee's current basic pay. 
However, if the minimum rate of the new pay band is more than 20 
percent greater than the employee's current basic pay, then the minimum 
rate of the new pay band is the new basic pay. The employee's basic pay 
may not exceed the basic pay range of the new pay band. Highest 
previous rate may be applied, if appropriate. (The approving manager 
authorizes the basic pay.) Note: Most target pay band promotions will 
be accomplished through the CCS appraisal and pay adjustment process 
(see section IV.C.8).
    b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to 
Lower Pay Band (except RIF).
    When an employee accepts a voluntary change to lower pay or lower 
pay band, basic pay may be set at any point within the pay band to 
which appointed, except that the new basic pay will not exceed the 
employee's current basic pay or the maximum basic pay of the pay band 
to which assigned, whichever is lower. Highest previous rate may be 
applied, if appropriate. (The approving manager authorizes the basic 
pay.)
    (1) Examples of Voluntary Change to a Lower Pay Band. An employee 
in an Administrative Specialist and Professional Career Track, Pay Band 
III, position may decide he or she would prefer a Pay Band II position 
in the Administrative Support Career Track because it offers a 
different work schedule or duty station. An employee in Pay Band IV of 
the Administrative Specialist and Professional Career Track who has a 
family member with a serious medical problem and wants to be relieved 
of supervisory responsibilities may request a change to Pay Band III.
    (2) Example of Pay Adjustment (Voluntary Change to Lower Pay) or 
change to a Lower Pay Band. An employee may accept a change to lower 
pay or to a lower pay band through a settlement agreement. A Research 
Physicist, who is in Pay Band III and is being paid near the top of Pay 
Band III, is rated unacceptable in the contribution element Research 
and Development (R&D) Business Management. In settlement of a proposal 
to remove this employee for unacceptable performance, an agreement is 
reached which reduces the employee's pay to a rate near the beginning 
of Pay Band III.
    c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to 
Lower Pay Band Due to Adverse or Performance-based Action.
    When an employee is changed to a lower pay band, or receives a 
change to lower pay due to an adverse or performance-based action, the 
employee's basic pay will be reduced by at least 6 percent, but will be 
set at a rate within the rate range for the pay band to which assigned. 
(The approving manager authorizes the basic pay.) Such employees will 
be afforded appeal rights as provided by 5 U.S.C. 4303 or 7512.
    d. Involuntary Change to Lower Pay Band or Reassignment to a Career 
Track with a Lower Salary Range, Other than Adverse or Performance-
based.
    If the change is not a result of an adverse or performance-based 
action, the basic pay will be preserved to the extent possible within 
the basic pay range of the new pay band. If the pay cannot be set 
within the rate range of the new pay band, it will be set at the 
maximum rate of the new pay band and the employee's pay will be 
reduced. If the change is a result of a position reclassification 
resulting in the employee being assigned to a lower pay band or 
reassigned to a different career track with a lower maximum basic 
salary range, the employee is entitled to maintained pay if the 
employee's current salary exceeds the maximum rate for the new band.
    e. RIF Action (including employees who are offered and accept a 
vacancy at a lower pay band or in a different career track).
    The employee is entitled to maintained pay, if the employee's 
current salary exceeds the maximum rate for the new band.
    f. Upward Mobility or Other Formal Training Program Selection.
    The employee is entitled to maintained pay, if the employee's 
current salary exceeds the maximum rate for the new band.
    g. Return to Limited or Light Duty from a Disability as a Result of 
Occupational Injury to a Position in a Lower Pay Band or to a Career 
Track with Lower Basic Pay Potential than Held Prior to the Injury.
    The employee is entitled indefinitely to the basic pay held prior 
to the injury and will receive full general and locality pay increases. 
If upon reemployment, an employee was not given the higher basic pay 
(basic pay received at the time of the injury), any retirement annuity 
or severance pay computation would be based on his or her lower basic 
pay (salary based on placement in a lower pay band). Even though the 
Department of Labor (DOL) would make up the difference between the 
lower basic pay and the higher basic pay earned at the time of injury, 
the DOL portion is not considered in the retirement or severance pay 
computation.
    h. Restoration to Duty.
    Employees returning from the uniformed services following an 
absence of more than 30 days must be restored as soon as possible after 
making application, but not later than 30 days after receipt of 
application. If the employee's uniformed service was for less than 91 
days the employee will be placed in the position that he or she would 
have attained if continuously employed. If not qualified for this 
position, employee will be placed in the position he or she left. For 
service of 91 days or more, the employee may also be placed in a 
position of like seniority, status, and pay. In the case of an employee 
with a disability incurred in or aggravated during uniformed service, 
and after reasonable efforts to accommodate the disability is entitled 
to be placed in another position for which qualified that will provide 
the employee with the same seniority, status, and pay, or the nearest 
approximation.
    i. Reassignment.
    The basic pay normally remains the same. Highest previous rate may 
be applied, if appropriate. (The approving manager authorizes the basic 
pay.)
    j. Student Educational Employment Program.
    The Student Educational Employment Program consists of two 
components: the Student Temporary Employment Program and the Student 
Career Experience Program. Initial basic pay for students in either of 
these programs may be set at any point within the basic pay range for 
the career track, occupation, and pay band to which appointed. Basic 
pay may be increased upon return to duty (RTD) or conversion to 
temporary appointment, in consideration of the student's additional 
education and experience at the time of the action. Students who work 
under a parallel work study program may have their basic pay increased 
in consideration of additional education and/or experience. Basic pay 
for students may be increased based on their CCS appraisal. (The 
approving manager authorizes the basic pay.)

[[Page 77392]]

    k. Hazard Pay or Pay for Duty Involving Physical Hardship.
    Employees under the demonstration project will be paid hazardous 
duty pay under the provisions of 5 CFR part 550, subpart I.
    l. Supervisory Pay Adjustments.
    (1) Supervisory pay adjustments may be approved by the ONR 
Executive Director based on the recommendation of the Talent Management 
Board to compensate employees with supervisory responsibilities. Only 
employees in supervisory positions as defined by the OPM GS Supervisory 
Guide may be considered for the pay adjustment. These pay adjustments 
are funded separately from performance pay pools. These pay adjustments 
are increases to basic pay, ranging up to ten percent of that pay rate 
for supervisors. Pay adjustments are subject to the constraint that the 
adjustment may not cause the employee's basic pay to exceed the pay 
band maximum basic pay. Criteria to be considered in determining the 
basic pay increase percentage include:
    i. Needs of the organization to attract, retain, and motivate high 
quality supervisors;
    ii. Budgetary constraints;
    iii. Years and quality of related experience;
    iv. Relevant training;
    v. Performance appraisals and experience as a supervisor;
    vi. Organizational level of position; and
    vii. Impact on the organization.
    (2) The pay adjustment will not apply to employees in Pay Band V of 
the S&E Professional Career Track.
    (3) After the date of conversion into the demonstration project, a 
pay adjustment may be considered under the following conditions:
    i. New hires into supervisory positions will have their initial 
rate of basic 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.
    ii. An employee selected for a supervisory position that is within 
the employee's current pay band may also be considered for a basic pay 
adjustment. If a supervisor is already authorized a basic pay 
adjustment and is subsequently selected for another supervisor position 
within the same pay band, then the basic pay adjustment will be re-
determined.
    iii. Existing supervisors will be converted at their existing rate 
of basic pay and may be eligible for a basic pay adjustment upon review 
of the Talent Management Board following the conversion.
    (4) The supervisor pay adjustment will be reviewed annually, with 
possible increases or decreases based on the appraisal scores for the 
performance elements Cooperation & Supervision or Supervision & 
Resources Management. The initial dollar amount of a basic pay 
adjustment will be removed when the employee voluntarily leaves the 
position. The cancellation of the adjustment under these circumstances 
is not an adverse action and is not subject to appeal. If an employee 
is involuntarily removed from a non-probationary supervisory position 
for unacceptable performance or conduct, the basic pay adjustment will 
be removed under adverse action procedures. However, if an employee is 
involuntarily removed from a non-probationary supervisory position for 
conditions other than unacceptable performance or conduct, then pay 
retention will follow current law and regulations at 5 U.S.C. 5362 and 
5363 and 5 CFR part 536, except as waived or modified in section IX.
    m. Supervisory Pay Differentials.
    Supervisory pay differentials may be used by the ONR Executive 
Director to provide an incentive and to reward supervisors as defined 
by the OPM GS Supervisory 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 basic pay for supervisors. It is paid on a 
pay-period basis for a specified period of time not to exceed (NTE) one 
year and is not included as part of the basic pay. Criteria to be 
considered in determining the amount of the pay differential are the 
same as those identified for Supervisory Pay Adjustments. The pay 
differential will not apply to employees in Pay Band V of the S&E 
Professional Career Track.
    The pay differential may be considered, either during conversion 
into or after initiation of the demonstration project. The differential 
must be terminated if the employee is removed from a supervisory 
position, regardless of cause.
    After initiation of the demonstration project, all personnel 
actions involving a supervisory differential will require a statement 
signed by the employee acknowledging that the differential may be 
terminated or reduced at the discretion of the ONR Executive Director. 
The termination or reduction of the differential is not an adverse 
action and is not subject to appeal.

I. Priority Placement Program (PPP)

    Current PPP procedures apply to new hires and internal actions.

J. Expanded Temporary Promotion

    Current regulations require that temporary promotions for more than 
120 days to a higher level position than previously held must be made 
competitively. Under the demonstration project, ONR would be able to 
effect temporary promotions of not more than one year within a 24-month 
period without competition to positions within the demonstration 
project.

K. Voluntary Emeritus Program

    The ONR Voluntary Emeritus Program is similar to the Voluntary 
Emeritus Program presented in the AMRDEC demonstration project FRN, 
section III.D.5., page 34890. Under the ONR program, the CNR will have 
the authority to offer retired or separated individuals voluntary 
assignments at ONR. This authority will include individuals who have 
retired or separated from Federal service. Voluntary Emeritus Program 
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 Voluntary 
Emeritus Program will ensure continued quality research while reducing 
the overall salary line by allowing higher paid individuals to accept 
retirement incentives with the opportunity to retain a presence in the 
scientific community. The program will be of most benefit during 
manpower reductions as senior employees could accept retirement and 
return to provide valuable on-the-job training or mentoring to less 
experienced employees. Voluntary service will not be used to replace 
any employee or interfere with career opportunities of employees.
    To be accepted into the emeritus program, a volunteer must be 
recommended by ONR managers to the CNR or designee. Everyone who 
applies is not entitled to a voluntary assignment. The approving 
official must clearly document the decision process for each applicant 
(whether accepted or rejected) and retain the documentation throughout 
the assignment. Documentation of rejections will be maintained for two 
years.
    To ensure success and encourage participation, the volunteer's 
Federal retirement pay (whether military or

[[Page 77393]]

civilian) will not be affected while serving in a voluntary capacity. 
Retired or separated Federal employees may accept an emeritus position 
without a break or mandatory waiting period.
    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 same rules that currently 
apply to source selection members will apply to volunteers.
    An agreement will be established between the volunteer, the CNR or 
designee and the HRO Director. The agreement will be reviewed by the 
local Legal Office for ethics determinations under the Joint Ethics 
Regulation. 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 and is without compensation, and 
any and all claims against the Government (because of the voluntary 
assignment) are waived by the volunteer;
    (2) A statement that the volunteer will be considered a federal 
employee for the purpose of injury compensation;
    (3) 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 ONR (travel, administrative, office 
space, supplies);
    (6) A one page Statement of Duties and Experience;
    (7) A provision that states 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 member of the Voluntary Emeritus 
Program;
    (8) A provision allowing either party to void the agreement with 10 
working days written notice; and
    (9) The level of security access required (any security clearance 
required by the assignment will be managed by the ONR while the 
volunteer is a member of the Voluntary Emeritus Program).

IV. Sustainment

A. Position Classification

    The position classification changes are intended to streamline and 
simplify the process of identifying and categorizing the work done at 
ONR. ONR will establish an Integrated Pay Schedule (IPS) for all 
demonstration project positions in covered occupations. The IPS will 
replace the current GS and extend the pay schedule equivalent to the 
basic pay range of the Government's Senior Level Pay System to 
accommodate positions classified above the GS-15 level under a proposed 
new STRL demonstration project initiative being developed by DoD.
1. Career Tracks and Pay Bands
    Within the IPS, occupations with similar characteristics will be 
grouped together into three career tracks. Each career track consists 
of a number of pay bands, representing the phases of career progression 
that are typical for the respective career track. The pay bands within 
each career track are shown in Figure 3, along with their GS 
equivalents. The equivalents are based on the levels of responsibility 
as defined in 5 U.S.C. 5104 and not on current basic pay schedules. 
Appendix C provides definitions for each of the career tracks and the 
pay bands within them. The career tracks and pay bands were developed 
based upon administrative, organizational, and position management 
considerations at ONR. They are designed to enhance pay equity and 
enable a more seamless career progression to the target pay band for an 
individual position or category of positions. This combination of 
career tracks and pay bands allows for competitive recruitment of 
quality candidates at differing rates of compensation within the 
appropriate career track, occupation, and pay band. It will also 
facilitate movement and placement based upon contribution, in 
conjunction with the CCS described in paragraph IV.C. Other benefits of 
this arrangement include a dual career track for S&E employees and 
greater competitiveness with academia and private industry for 
recruitment. Appendix D identifies the occupational series currently 
within each of the three career tracks.
[GRAPHIC] [TIFF OMITTED] TN10DE10.097

    a. Target Pay Band.
    Each position will have a designated target pay band under the 
demonstration project. This target pay band will be identified as the 
pay band to which an incumbent may be advanced without further 
competition within a career track. These target pay bands will be based 
upon present full performance levels. Target pay bands may vary based 
upon occupation or career track. Employees' basic pay will

[[Page 77394]]

be capped at the target pay band until other appropriate conditions 
(e.g., competition, position management approval, increase in or 
acquisition of higher level duties, and approval of an accretion of 
duties promotion) have been met, and the employee has been promoted 
into the next higher level.
    b. Occupational Series and Position Titling.
    Presently, ONR positions are identified by occupational groups and 
series of classes in accordance with OPM position classification 
standards. Under the demonstration project, ONR will continue to use 
occupational series designators consistent with those currently 
authorized by OPM to identify positions. This will facilitate related 
personnel management requirements, such as movement into and out of the 
demonstration project. Other occupational series may be added or 
deleted as needed to support the demonstration project. 
Interdisciplinary positions will be accommodated within the system 
based upon the qualifications of the individual hired.
    Titling practices consistent with those established by OPM 
classification standards will be used to determine the official title. 
Such practice will facilitate other personnel management requirements, 
such as the following: Movement into and out of the demonstration 
project, reduction in force, external reporting requirements, and 
recruitment. CCS pay band descriptors and Requirements Document (RD) 
(see paragraph IV.A.2) information will be used for specific career 
track, pay band, and titling determinations.
    c. Classification Standards.
    Under the proposed demonstration project, the number of 
classification standards would be reduced to three (see Figure 3.) Each 
standard would align with one of the three career tracks and would 
cover all positions within that career track. Each career track has two 
or three elements that are considered in both classifying a position 
and in judging an individual's contributions for pay setting purposes. 
Each element has generic descriptors for every pay band. These 
descriptors explain the type of work, degree of responsibility, and 
scope of contributions that need to be ultimately accomplished to reach 
the highest basic pay potential within each pay band. (See Appendix E.) 
To classify a position, a manager would select the pay band which is 
most indicative overall of the type of duties to be performed and the 
contributions needed. For example: A supervisor needs a secretarial 
position for a branch. In reading the elements and descriptors for the 
Administrative Support Career Track, the supervisor determines that the 
Pay Band II descriptors illustrate the type of work and contributions 
needed. Therefore, the position would be classified as a Secretary, Pay 
Band II.
    d. Fair Labor Standards Act (FLSA).
    Demonstration project positions will be covered under the FLSA and 
5 CFR part 551. Determination of their status (exempt or nonexempt) 
will be made based on the criteria contained in 5 CFR part 551. The 
status of each new position under the demonstration project will be 
determined using computer assisted analysis as part of an automated 
process for preparing the RD. Those positions for which the computer is 
unable to make the final FLSA determination will be ``flagged'' for 
referral to a human resources specialist for determination.
    (1) Guidelines for FLSA Determinations.
    i. Supervisory Information: Provided through an automated system in 
a checklist format; results of this checklist have an impact on FLSA 
determination.
    ii. FLSA Information: Provided through an automated system in a 
checklist format; results of this checklist in conjunction with the 
supervisory information provide a basis for the FLSA determination.
    iii. If required, the section entitled ``Purpose of Position'' will 
be used to assist in FLSA determination.
    iv. RD's requiring additional review before being finalized will be 
forwarded to a human resources specialist to review the FLSA 
determination.
    (2) Nonsupervisory and Leader Positions.
    Figure 4 shows the exempt or nonexempt status applicable to 
nonsupervisory and leader positions in the indicated career track and 
pay band. In those cases where ``Review'' is indicated, the FLSA status 
must be determined based on the specific duties and responsibilities of 
the subject position.
[GRAPHIC] [TIFF OMITTED] TN10DE10.098


[[Page 77395]]


    (3) Supervisory Positions.
    FLSA determination for supervisory positions must be made based on 
the duties and responsibilities of the particular position involved. As 
a rule, if a position requires supervision of employees who are exempt 
under FLSA, the supervisory position is likely to be exempt also.
2. Requirements Document (RD)
    An RD will replace the Optional Form 8 and position description 
used under the current classification system. The RD will be prepared 
by managers using a menu-driven, automated system. The automated system 
will enable managers to classify and establish many positions without 
intervention by a human resources specialist. The abbreviated RD will 
combine the position information, staffing requirements, and 
contribution expectations into a 1- or 2-page document.
3. Delegation of Classification Authority
    Classification authority will be delegated to managers as a means 
of increasing managerial effectiveness and expediting the 
classification function. This will be accomplished as follows:
    a. Delegated Authority.
    i. The Chief of Naval Research will delegate classification 
authority to the Human Resources Office (HRO) Director. The HRO 
Director may further delegate authority to Department Heads and 
Directors of the immediate organization of the position being 
classified.
    ii. The classification approval must be at least one level above 
the first-level supervisor of the position.
    iii. First-line supervisors at any level will provide 
classification recommendations.
    iv. HRO support will be available for guidance and recommendations 
concerning the classification process. (Any dispute over the proper 
classification between a manager and the HRO will be resolved by the 
CNR or designee.)
    b. Position Classification Accountability.
    Those to whom authority is delegated are accountable to the CNR. 
The CNR is accountable to the CO. Those with delegated authority are 
expected to comply with demonstration project guidelines on 
classification and position management, observe the principle of equal 
pay for equal work, and ensure that RD's are current. First-line 
supervisors will develop positions using the automated system. All 
positions must be approved through the proper chain of command.

B. Integrated Pay Schedule

    Under the demonstration project, an IPS will be established which 
will cover all demonstration project positions at ONR. This IPS, which 
does not include locality pay, will initially extend from the basic pay 
for GS-1, step 1 to the basic pay for GS-15, step 10. The adjusted 
basic pay cap, which does include locality pay, is Executive Level IV, 
currently $155,500. The salary range for the S&E pay band V pay band is 
expected to be established under the new STRL demonstration project 
initiative being developed for positions classified above GS-15.
1. Annual Pay Action
    ONR will eliminate separate pay actions for within-grade increases, 
general and locality pay increases, performance awards, quality step 
increases, and most career promotions, and replace them with a single 
annual pay action (including either permanent or bonus pay or both) 
linked to the CCS. This will eliminate the paperwork and processing 
associated with multiple pay actions which average three per employee 
per year.
2. Overtime Pay
    Overtime will be paid in accordance with 5 CFR part 550, subpart A. 
All nonexempt employees will be paid overtime based upon their ``hourly 
regular rate of pay,'' as defined in existing regulation (5 CFR part 
551).
3. Classification Appeals
    An employee may appeal the occupational series, title, career 
track, or pay band of his or her position at any time. An employee must 
formally raise the area of concern to supervisors in the immediate 
chain of command, either verbally or in writing. If an employee is not 
satisfied with the supervisory response, he or she may then appeal to 
the DoD appellate level. If an employee is not satisfied with the DoD 
response, he or she may then appeal to the OPM only after DoD has 
rendered a decision under the provisions of this demonstration project. 
Since OPM does not accept classification appeals on positions which 
exceed the equivalent of a GS-15 level, appeal decisions involving Pay 
Band V for Advanced Research Scientists and Engineers (ARSAE) will be 
rendered by DoD and will be final. Appellate decisions from OPM are 
final and binding on all administrative, certifying, payroll, 
disbursing, and accounting officials of the Government. Time periods 
for case processing under 5 CFR subpart F, sections 511.603, 511.604, 
and 511.605 apply.
    An employee may not appeal the accuracy of the RD, the 
demonstration project classification criteria, or the pay-setting 
criteria; the propriety of a basic pay schedule; the assignment of 
occupational series to the occupational family; or matters grievable 
under an administrative or negotiated grievance procedure or an 
alternative dispute resolution procedure.
    The evaluation of classification appeals under this demonstration 
project is based upon the demonstration project classification 
criteria. Case files will be forwarded for adjudication through the HRO 
and will include copies of appropriate demonstration project criteria.
4. Above GS-15 Positions
    The pay banding plan for the Scientific and Engineering 
occupational family includes a pay band V to provide the ability to 
accommodate positions with duties and responsibilities that exceed the 
General Schedule GS-15 classification criteria. This pay band is based 
on the Above GS-15 Position concept found in other STRL personnel 
management demonstration projects that was created to solve a critical 
classification problem. The STRLs have positions warranting 
classification above GS-15 because of their technical expertise 
requirements including inherent supervisory and managerial 
responsibilities. However, these positions are not considered to be 
appropriately classified as Scientific and Professional Positions (STs) 
because of the degree of supervision and level of managerial 
responsibilities. Neither are these positions appropriately classified 
as Senior Executive Service (SES) positions because of their 
requirement for advanced specialized scientific or engineering 
expertise and because the positions are not at the level of general 
managerial authority and impact required for an SES position.
    The original Above GS-15 Position concept was to be tested for a 
five-year period. The number of trial positions was set at 40 with 
periodic reviews to determine appropriate position requirements. The 
Above GS-15 Position concept is currently being evaluated by DoD 
management for its effectiveness; continued applicability to the 
current STRL scientific, engineering and technology workforce needs; 
and appropriate allocation of billets based on mission requirements. 
The degree to which the laboratory plans to participate in this concept 
and develop classification, compensation and performance management 
policy, guidance, and implementation

[[Page 77396]]

processes will be based on the final outcome of the DoD evaluation.
5. Distinguished Contributions Allowance (DCA)
    The DCA is a temporary monetary allowance up to 25 percent of basic 
pay (which, when added to an employee's rate of basic pay, may not 
exceed the rate of basic pay for Executive Level IV) paid on either a 
bi-weekly basis (concurrent with normal pay days) or as a lump sum 
following completion of a designated contribution period(s), or 
combination of these, at the discretion of ONR. It is not basic pay for 
any purpose, i.e., retirement, life insurance, severance pay, 
promotion, or any other payment or benefit calculated as a percentage 
of basic pay. The DCA will be available to certain employees at the top 
of their target pay bands, whose present contributions are worthy of 
scores found at a higher pay band, whose level of contribution is 
expected to continue at the higher pay band for at least 1 year, and 
current market conditions require additional compensation.
    Assignment of the DCA rather than a change to a higher pay band 
will generally be appropriate for such employees under the following 
circumstances: Employees have reached the top of their target pay bands 
and (1) when it is not certain that the higher level contributions will 
continue indefinitely (e.g., a special project expected to be of 1- up 
to 5-year duration), or (2) when no further promotion or compensation 
opportunities are available or externally imposed limits (such as high-
grade restrictions) make changes to higher pay bands unavailable, and 
in either situation, current market conditions compensate similar 
contributions at a greater rate in like positions in private industry 
and academia and there is a history of significant recruitment and 
retention difficulties associated with such positions.
    a. Eligibility.
    (1) Employees in Pay Bands III and IV of the S&E Professional 
Career Track and those in Pay Bands III, IV, and V of the 
Administrative Specialist and Professional Career Track are eligible 
for the DCA if they have reached the top CCS score for their target pay 
band with recommendations for a higher Overall Contribution Score (OCS) 
for their contributions; they have reached the maximum rate of basic 
pay available for their target pay band; there are externally imposed 
limits to higher pay bands or the higher level contributions are not 
expected to last indefinitely; and market conditions require greater 
compensation for these contributions.
    (2) Employees may receive a DCA for up to three years. The DCA 
authorization will be reviewed and reauthorized as necessary, but at 
least annually at the time of the CCS appraisal through nomination by 
the pay pool manager and approval by the CNR. Employees in the S&E 
Professional Career Track may receive an extension of up to two 
additional years (for a total of five years). The DCA extension 
authorization will be reviewed and reauthorized as necessary, but at 
least on an annual basis at the time of the CCS appraisal through 
nomination by the pay pool manager and approval by the CNR.
    (3) Monetary payment may be up to 25 percent of basic pay.
    (4) Nominees would be required to sign a memorandum of 
understanding or a statement indicating they understand that the DCA is 
a temporary allowance; it is not a part of basic pay for any purpose; 
it would be subject to review at any time, but at least on an annual 
basis, and the reduction or termination of the DCA is not appealable or 
grievable.
    b. Nomination.
    In connection with the annual CCS appraisal process, pay pool 
managers may nominate eligible employees who meet the criteria for the 
DCA. Packages containing the recommended amount and method of payment 
of the DCA and a justification for the allowance will be forwarded 
through the supervisory chain to the CNR. Details regarding this 
process will be addressed in standard operating procedures. These 
details will include time frames for nomination and consideration, 
payout scheme, justification content and format, budget authority, 
guidelines for selecting employees for the allowance and for 
determining the appropriate amount, and documentation required by the 
employee acknowledging he or she understands the criteria and temporary 
nature of the DCA.
    c. Reduction or Termination of a DCA.
    (1) A DCA may be reduced or terminated at any time the ONR deems 
appropriate (e.g., when the special project upon which the DCA was 
based ends; if performance or contributions decrease significantly; or 
if labor market conditions change, etc.). The reduction or termination 
of a DCA is not appealable or grievable.
    (2) If an employee voluntarily separates from ONR before the 
expiration of the DCA, an employee may be denied DCA payment. Authority 
to establish conditions and/or penalties will be spelled out in the 
written authorization of an individual's DCA.
    d. Lump-Sum DCA Payments.
    (1) When ONR chooses to pay part or all of an employee's DCA as a 
lump sum payable at the end of a designated period, the employee will 
accrue entitlement to a growing lump-sum balance each pay period. The 
percentage rate established for the lump-sum DCA will be multiplied by 
the employee's biweekly amount of basic pay to determine the lump sum 
accrual for any pay period. This lump-sum percentage rate is included 
in applying the 25-percent limitation.
    (2) If an employee covered under a lump-sum DCA authorization 
separates, or the DCA is terminated (see paragraph c), before the end 
of that designated period, the employee may be entitled to payment of 
the accrued and unpaid balance under the conditions established by ONR. 
ONR may establish conditions governing lump-sum payments (including 
penalties in cases such as voluntary separation or separation for 
personal cause) in general plan policies or in the individual 
employee's DCA authorization.
    e. DCA Budget Allocation.
    The CNR may establish a total DCA budget allocation that is never 
greater than 10 percent of the basic salaries of the employees 
currently at the cap in the S&E Professional Career Track, Pay Bands 
III and IV, and the Administrative Specialist and Professional Career 
Track, Pay Bands III, IV, and V.
    f. Concurrent Monetary Payments.
    Employees eligible for a DCA may be authorized to receive a DCA and 
a retention allowance at the same time, up to a combined total of 25 
percent of basic pay. A merit increase which raises an employee's pay 
to the top rate for his or her target pay band (thus making the 
employee eligible for the DCA) may be granted concurrent with the DCA. 
Receipt of the DCA does not preclude an employee from being granted any 
award (including a contribution award) for which he or she is otherwise 
eligible.

C. Contribution-Based Compensation System (CCS)

1. General
    The purpose of the CCS is to provide an effective means for 
evaluating and compensating the ONR workforce. It provides management, 
at the lowest practical level, the authority, control, and flexibility 
needed to develop a highly competent, motivated, and productive 
workforce. CCS will promote increased fairness and consistency in the 
appraisal process, facilitate natural career progression for employees, 
and

[[Page 77397]]

provide an understandable basis for career progression by linking 
contribution to basic pay determinations.
    CCS combines performance appraisal and job classification into one 
annual process. At the end of each CCS appraisal period, basic pay 
adjustment decisions are made based on each employee's actual 
contribution to the organization's mission during the period. A 
separate function of the process includes comparison of performance in 
contribution elements to acceptable standards to identify unacceptable 
performance that may warrant corrective action in accordance with 5 CFR 
part 432. Supervisory officials determine scores to reflect each 
employee's contribution, considering both how well and at what level 
the employee is performing. Often the two considerations are 
inseparable. For example, an employee whose written documents need to 
be returned for rework more often than those of his or her peers also 
likely requires a closer level of oversight, an important factor when 
considering level of pay.
    The performance planning and rating portions of the demonstration 
project's appraisal process constitute a performance appraisal program 
which complies with 5 CFR part 430 and the DoD Performance Management 
System, except where waivers have been approved. Performance-related 
actions initiated prior to implementation of the demonstration project 
(under DON performance management regulations) shall continue to be 
processed in accordance with the provisions of the appropriate system.
2. CCS Process
    CCS measures employee contributions by breaking down the jobs in 
each career track using a common set of ``elements.'' The elements for 
each career track shown in Figure 5 and described in detail in Appendix 
E have been initially identified for evaluating the contributions of 
ONR personnel covered by this initiative. They are designed to capture 
the highest level of the primary content of the jobs in each pay band 
of each career track. Within specific parameters, elements may be 
weighted or even determined to be not applicable for certain categories 
of positions. All elements applicable to the position are critical as 
defined by 5 CFR part 430.
[GRAPHIC] [TIFF OMITTED] TN10DE10.099

    For each element, ``Discriminators'' and ``Descriptors'' are 
provided to assist in distinguishing low to high contributions. The 
discriminators (two to four for each element) break down aspects of 
work to be measured within the element. The descriptors (one for each 
pay band for each discriminator) define the expected level of 
contribution at the top of the related pay band for that element.
    Scores currently range between 0 and 92; specific relationships 
between scores and pay bands are different for each career track. (See 
Figure 6.) Basic pay adjustments are based on a comparison of the 
employee's level of contribution to the normal pay range for that 
contribution and the employee's present rate of basic pay.

[[Page 77398]]

[GRAPHIC] [TIFF OMITTED] TN10DE10.100

    Supervisors and pay pool panels determine an employee's 
contribution level for each element considering the discriminators as 
appropriate to the position. A contribution score, available to that 
level, is assigned accordingly. For example, a scientist whose 
contribution in the Technical Problem Solving element for S&E 
Professionals is determined to be at Pay Band II may be assigned a 
score of 18 to 47. Eighteen reflects the lowest level of 
responsibility, exercise of independent judgment, and scope of 
contribution; and 47 reflects the highest. For Pay Band III 
contributions, a value of 44 to 66 may be assigned. Each higher pay 
band equates to a higher range of values with the total points 
available to S&E Professionals to be determined based on the salary 
range for pay band V under the proposed DoD above GS-15 position 
initiative. Each element is judged separately and level of work may 
vary for different elements. The scores for each element are then 
averaged to determine the Overall Contribution Score (OCS).
    The CCS process will be carried out within pay pools made up of 
combined ONR organizations. The organizations in each pay pool will be 
combined based on criteria such as similarity of work and chain of 
command. To facilitate equity and consistency, element weights and 
applicability and CCS score adjustments are determined by a pay pool 
panel, rather than by individual supervisors. Basic pay adjustments, 
contribution awards, and DCA's may be recommended by the pay pool panel 
or by individual supervisors. Pay pool panels will consist of 
Department heads and Directors, or other individuals who are familiar 
with the organization's work and the contributions of its employees. 
The Executive Director, or designee, will function as the pay pool 
manager, with final authority to decide weights, scores, basic pay 
adjustments, and awards.
3. Pay Pool Annual Planning
    Prior to the beginning of each annual appraisal period, the pay 
pool manager and panel will review pay pool-wide expectations in the 
areas described below.
    a. Element Weights and Applicability.
    As written, all elements are weighted equally. If the pay pool 
manager and panels decide that some elements are more important than 
others or that some do not apply at all to the effective accomplishment 
of the organization's mission, they may establish element weights 
including a weight of zero which renders the element not applicable. 
Element weights are not intended for application to individual 
employees. Instead, they may be established only for subcategories of

[[Page 77399]]

positions, not to exceed a maximum of five subcategories in each career 
track. Subcategories for S&E Professionals might be: Supervisor, 
Program Manager, and Support S&E. Subcategories should include a 
minimum of five positions, when possible. Weights must be consistent 
within the subcategory.
    b. Supplemental Criteria.
    The CCS Pay Band descriptors are designed to be general so that 
they may be applied to all employees in the career track. Supervisors 
and pay pool panels may establish supplemental criteria to further 
inform employees of expected contributions. This may include (but is 
not limited to) examples of contributions which reflect work at each 
level for each element, taskings, objectives, and/or standards.
4. Annual CCS Appraisal Process (See Figure 7.)
[GRAPHIC] [TIFF OMITTED] TN10DE10.101

    The ONR appraisal period will normally be one year, with a minimum 
appraisal period of 90 days. Employees who serve less than 90 days 
during an appraisal cycle will receive a presumptive performance rating 
of acceptable. At the beginning of the appraisal period, or upon an 
employee's arrival at ONR or into a new position, the following 
information will be communicated to employees so that they are informed 
of the basis on which their performance and contributions will be 
assessed: their career track and pay band; applicable elements, 
descriptors and discriminators; element weights; any established 
supplemental criteria and basic acceptable performance standards. 
OCS's, which correspond to each employee's NPR (see section IV.C.6), 
will be available after pay adjustments have been processed, normally 
early-to-mid January. All employees will be provided this information; 
however, employees in some situations may not receive CCS scores. These 
situations are described in section IV.C.5, Exceptions. The 
communication of information described by this paragraph constitutes 
performance planning as required by 5 CFR 430.206(b).
    Supervisor and employee discussion of organizational objectives, 
specific work assignments, and individual performance expectations (as 
needed), should be conducted on an ongoing basis. Either the supervisor 
or the employee may request a formal review during the appraisal 
period; otherwise, a documented review is required only at the end of 
the appraisal period.
    At the end of the appraisal period, employees will provide input 
describing their contributions by preparing a Yearly Accomplishment 
Report (YAR). Pay pool managers may exempt groups of positions from the 
requirement to submit YARs; in cases where YARs are not required, 
employees may submit them at their own discretion. Standard operating 
procedures will provide guidance for pay pools and employees on the 
content and format of YARs, and on other types of information about 
employee contributions which should be developed and considered by

[[Page 77400]]

supervisors. This will include procedures for capturing contribution 
information regarding employees who serve on details, who change 
positions during the appraisal period, who are new to ONR, and other 
such circumstances.
    Supervisors will review the employee's YAR and other available 
information about the employee's contributions during the appraisal 
period and determine an initial CCS score for each element considering 
the discriminators as appropriate to the position. In addition, 
supervisors will determine whether the employee's performance was 
acceptable or unacceptable in each element when compared against the 
basic acceptable performance standards. The rating of the elements (all 
that are applicable are designated critical as defined by 5 CFR part 
430) will serve as the basis for assignment of a summary level of 
Acceptable or Unacceptable. If any element is rated unacceptable, the 
summary level will be Unacceptable; otherwise the summary level will be 
Acceptable. Unacceptable ratings must be reviewed and approved by a 
higher level than the first-level supervisor.
    If an employee changes positions during the last 90 days of the 
appraisal period, the losing supervisor will conduct a performance 
rating (i.e., rate each element Acceptable or Unacceptable and 
determine the summary level) at the time the employee moves to the new 
position. This will serve as the employee's rating of record. For 
employees who report to ONR during the last 90 days of the appraisal 
period, any close-out rating of Acceptable (or its equivalent) or 
better from another Government agency will serve as the employee's 
rating of record (the employee will be rated Acceptable). The 
determination of CCS scores and application of related pay adjustments 
for such employees is set forth in section IV.C.5, ``Exceptions.''
    The pay pool panel will meet to compare scores, make appropriate 
adjustments, and determine the final OCS for each employee. Final 
approval of CCS scores and element and summary ratings will rest with 
the pay pool manager (unless higher level approval is requested or 
deemed necessary). To avoid conflict with state bar rules, the pay pool 
panel may not alter the CCS element scores or the Overall Contribution 
Score that ONR Counsel assigns to an attorney; however, the pay pool 
panel may make independent judgments, such as pay adjustments, after 
considering that score. Supervisors will communicate the element 
scores, ratings, summary level, and OCS to each employee, and discuss 
the results and plans for continuing growth. Employees rated 
Unacceptable will be provided assistance to improve their performance 
(see paragraph V.A.). The CCS process will be facilitated by an 
automated system, the Contribution-based Compensation System Data 
System (CCSDS). During the appraisal process, all scores and 
supervisory comments will be entered into the CCSDS. The CCSDS will 
provide supervisors, pay pool panel members, and pay pool managers with 
background information (e.g., YARS, employees' prior year scores and 
current basic pay) and spreadsheets to assist them in comparing 
contributions and determining scores. Records of employee appraisals 
will be maintained in the CCSDS, and the system will be able to produce 
a hard copy document for each employee which reflects his or her final 
approved score.
5. Exceptions
    All employees who have worked 90 days or more by the end of the 
appraisal period will receive a performance rating of record. Those 
employees who have performed less than 90 days will receive a 
presumptive performance rating of Acceptable. However, in certain 
situations ONR does not consider the actual determination of CCS scores 
to be necessary. In other situations, it may not be feasible to 
determine a meaningful CCS score. Therefore, the determination of CCS 
scores will not be required for the following types of employees: (a) 
Employees on intermittent work schedules; (b) Those on temporary 
appointments of one year or less; (c) Those who work less than six 
months in an appraisal period (e.g., on extended absence due to 
illness); (d) Those on long-term training for all or much of the 
appraisal period; (e) Employees who have reported to ONR or to a new 
position during the 90 days prior to the end of the appraisal period; 
and (f) Student Educational Employment Program employees.
    If supervisors believe that the nature of such an employee's 
contributions provide a meaningful basis to determine a CCS score, they 
may appraise employees in the categories listed above, provided that 
the employee has worked at least 90 days in an ONR position by the time 
the pay pool manager forwards final decisions. The employee will be 
retroactively assessed as of 30 September.
    Those employees mentioned above who are not appraised under CCS 
will not be eligible for merit increases or contribution awards. (This 
will affect the calculation of service credit for RIF (see section 
V.C.)). All employees listed above will be given full general and 
locality increases (as described in sections IV.C.7.a, ``General 
Increases,'' and IV.C.7.c, ``Locality Increases''). All employees are 
eligible for awards under ONR's Incentive Awards Program, such as ``On-
the-Spot'' and Special Act Awards, as appropriate.
6. Normal Pay Range (NPR)--Basic Pay Versus Contribution
    The CCS assumes a relationship between the assessed contribution of 
the employee and a normal range of pay. For all possible contribution 
scores available to employees, the NPR spans a basic pay range of 12 
percent. Employees who are compensated below the NPR for their assessed 
score are considered ``undercompensated,'' while employees compensated 
above the NPR are considered ``overcompensated.''
    The lower boundary of the NPR is initially established by fixing 
the basic pay equivalent to GS-1, step 1, (without locality pay), with 
a CCS score of zero. The upper boundary is fixed at the basic pay 
equivalent to GS-15, step 10, (without locality pay), with a CCS score 
of 80. The distance between these upper and lower boundaries for a 
given overall contribution score is 12 percent of basic pay for all 
available CCS scores. Using these constraints, the interval between 
scores is approximately 2.37 percent through the entire range of pay. 
The lines will be extended using the same interval so that the upper 
boundary of the normal range of basic pay accommodates the basic pay 
needed for the S&E Professional career track pay band V. (The actual 
end point will vary depending on any pay adjustment factors, e.g., 
general increase.) The formula used to derive the NPR may be adjusted 
in future years of the demonstration project. See Appendix F for 
further details regarding the formulation of the NPR.
    Each year the boundaries for the NPR plus the minimum and maximum 
rate of basic pay for each pay band will be adjusted by the amount of 
the across-the-board GS percentage increase granted to the Federal 
workforce. At the end of each annual appraisal period, employees' 
contribution scores will be determined by the CCS process described 
above, then their overall contribution scores and current rates of 
basic pay will be plotted as a point on a graph along with the NPR. The 
position of the point relative to the NPR gives a relative measure of 
the degree of over- or undercompensation of the employee, as shown in 
Figure 8. Points which fall below the NPR indicate

[[Page 77401]]

undercompensation; points which fall above the NPR indicate 
overcompensation.
[GRAPHIC] [TIFF OMITTED] TN10DE10.102

7. Compensation
    Presently, employee pay is established, adjusted, and/or augmented 
in a variety of ways, including general pay increases, locality pay 
increases, special rate adjustments, within-grade increases (WGI's), 
quality step increases (QSI's), performance awards, and promotions. 
Multiple pay changes in any given year (averaging three per employee) 
are costly to process and do not consider comprehensively the 
employee's contributions to the organization. Under the demonstration 
project, ONR will distribute the budget authority from the sources 
listed above into four pay categories: (1) General increase, (2) 
locality increase, (3) merit increase, and (4) contribution awards. 
From these pay categories, a single annual pay action would be 
authorized based primarily on employees' contributions. Competitive 
promotions will still be processed under a separate pay action; most 
career promotions will be processed under the CCS.
    In general, the goal of CCS is to pay in a manner consistent with 
employee contribution or, in other words, migrate employees' basic pay 
closer to the NPR. One result may be a wider distribution of pay among 
employees for a given level of duties.
    After the CCS appraisal process has been completed and the 
employees' standing relative to the NPR has been determined, the pay 
pool manager, in consultation with the pay pool panel or other pay pool 
supervisory and staff officials, will determine the appropriate basic 
pay change and contribution award, if appropriate, for each employee. 
Standard operating procedures will provide guidance, including market 
salary reference data, to assist pay pool managers in making pay 
determinations. In most cases, the pay pool manager will approve basic 
pay changes and awards. In some cases, however, approval of a higher 
level official will be required. Figure 9 summarizes the eligibility 
criteria and applicable limits for each pay category.

[[Page 77402]]

[GRAPHIC] [TIFF OMITTED] TN10DE10.103

    The CCSDS will calculate each employee's OCS and his or her 
standing in relation to the NPR. The system will provide a framework to 
assist pay pool officials in selecting and implementing a payout 
scheme. It will alert management to certain formal limits in granting 
pay increases; e.g., an employee may not receive a permanent increase 
above the maximum rate of basic pay for his or her pay band until a 
corresponding level change has been effected. Once basic pay and award 
decisions have been finalized and approved, the CCSDS will prepare the 
data file for processing the pay actions, and maintain a consolidated 
record of CCS pay actions for all ONR demonstration project employees.
    a. General Increases. General increase budget authority will be 
available to pay pools as a straight percentage of employee salaries, 
as derived under 5 U.S.C. 5303 or similar authority. Pay pool panels or 
managers may reduce or deny general pay increases for employees whose 
contributions are in the overcompensated category. (See Figure 9.) Such 
reduction or denial may not place an employee in the undercompensated 
category. An employee receiving maintained pay (except one receiving 
maintained pay for an occupational injury who receives a full general 
pay increase) will receive half of the across-the-board GS percentage 
increase in basic pay until the employee's basic pay is within the 
basic pay range assigned for their current position or for two years, 
whichever is less. ONR employees on pay retention at the time of 
demonstration project implementation or as a result of placement 
through the DON RPL, DoD PPP or the Federal Interagency Career 
Transition Assistance Plan will receive half of the across-the-board GS 
percentage increase until the employee's maintained pay is exceeded by 
the maximum rate for the employee's pay band or the maintained pay is 
ended due to a promotion. General increase authority not expended is 
available to either the merit increase or contribution award pay 
categories or both.
    b. Merit Increases.
    Merit increases will be calculated after the determination of 
employees' general increases. Merit increases may be granted to 
employees whose contribution places them in the ``normal'' or 
``undercompensated'' categories. (See Figure 9.) In general, the higher 
the range in which the employee is contributing compared to his or her 
basic pay, the higher the merit increase should be. However, the 
following limitations apply: A merit increase may not place any 
employee's basic pay (1) in the ``overcompensated'' category (as 
established by the NPR for the upcoming year, which has been adjusted 
by the amount of the new general increase); (2) in excess of 
established basic pay caps; (3) in excess of the maximum rate of basic 
pay for the individual's pay band (unless the employee is being 
concurrently advanced to the higher pay band); or (4) above any 
outside-imposed dollar limit. Merit increases for employees in the NPR 
will be limited to six percent of basic pay, not to exceed the upper 
limit of the NPR for the employee's score. In addition, merit increases 
for employees in the undercompensated range may not exceed six percent 
above the lower rail of the NPR, or 20 percent of basic pay without CNR 
or designee approval.
    The size of ONR's continuing pay fund is based on appropriate 
factors, including the following: (1) Historical spending for within-
grade increases, quality step increases, and in-level career promotions 
(with dynamic adjustments to account for changes in law or in staffing 
factors, e.g., average starting salaries and the distribution of 
employees among job categories and pay bands); (2) Labor market 
conditions and the need to recruit and retain a skilled workforce to 
meet the business needs of the organization; and (3) The fiscal 
condition of the organization. ONR will periodically review or will 
review every two to three years its continuing pay fund to determine if 
any adjustments are necessary.
    The amount of budget authority available to each pay pool will be 
determined annually by the CNR. Factors to be considered by the CNR in 
determining annual budget authority may include market salaries, 
mission priorities, and organizational growth. Because statistical 
variations will occur in year-to-year personnel growth, any unexpended 
merit increase authorities may be transferred to the Contribution 
Awards category.
    c. Locality Increases.
    All employees will be entitled to the locality pay increase 
authorized by law and regulation for their official duty station and/or 
position.
    d. Contribution Awards.
    Authority to pay contribution awards (lump-sum payments recognizing 
significant contributions) will be initially available to pay pools as 
a straight 1.5 percent of employees' basic pay (similar to the amount 
currently available for performance awards). The percentage rate may be 
adjusted in

[[Page 77403]]

future years of the demonstration project. In addition, unexpended 
general increase and merit increase budget authorities may be used to 
augment the award category. Contribution awards may be granted to those 
employees whose contributions place them in the ``normal'' or 
``undercompensated'' category, and to employees in the 
``overcompensated'' category who are on maintained pay. Standard 
operating procedures will provide guidance to pay pool managers in 
establishing and applying criteria to determine significant 
contributions which warrant awards. An award exceeding $10,000 requires 
CNR approval. (See Figure 9.) Pay pools may also grant time-off as a 
contribution award, in lieu of or in addition to cash.
8. Career Movement Based on CCS
    Movement through the pay bands will be determined by contribution 
and basic pay at the time of the annual CCS appraisal process.
    The ONR demonstration project is an integrated system that links 
level of work to be accomplished (as defined by a career track and pay 
band) with individual achievement of that work (as defined by an OCS) 
to establish the rate of appropriate compensation (as defined by the 
career track pay schedule), and to determine progression through the 
career track. This section addresses only changes in level which relate 
directly to the CCS determination.
    When an employee's OCS falls within three scores of the top score 
available to his or her current pay band, supervisors should consider 
whether it is appropriate to advance the employee to the next higher 
pay band (refer to IV.A.1.a for other criteria). If progression to the 
next higher level is deemed warranted, supporting documentation would 
be included with the CCS appraisal and forwarded through the 
appropriate channels for approval. If advancement is not considered 
appropriate at this time, the employee would remain in his or her 
current pay band. Future basic pay raises would be capped by the top of 
the employee's current pay band unless the employee progresses to the 
next higher pay band through a CCS-related promotion, an accretion of 
duties promotion, or a competitive promotion.
    a. Advancements in Pay Band Which May be Approved by the Pay Pool 
Manager.
    Advancements to all pay bands except Pay Band V of the S&E 
Professional Career Track may be approved by the pay pool manager.
    b. Advancements in Pay Band Which Must be Approved by the Executive 
Director.
    Advancement to (1) pay bands outside target pay bands or 
established position management criteria; (2) Pay Band IV and V of the 
S&E Professional Career Track; and (3) Pay Bands IV and V of the 
Administrative Specialist and Professional Career Track require 
approval by the Executive Director or his or her designee. Details 
regarding the process for nomination and consideration, format, 
selection criteria, and other aspects of this process will be addressed 
in the standard operating procedures.
    c. Advancement to Pay Band V of the Science and Engineering (S&E) 
Professional Career Track.
    Vacancies in this pay band will be filled in accordance with 
guidance issued by DoD.
    d. Regression to Lower Pay Band. (See Figure 8, ``Employee A'').
    If an employee is contributing less than expected for the level at 
which he or she is being paid, the individual may regress into a lower 
pay band through reduction or denial of general increases and 
ineligibility for merit increases. (This is possible because the NPR 
plus the minimum and maximum pay rates for each pay band will be 
adjusted upwards each year by the across-the-board GS percentage 
increase in basic pay.) If the employee's basic pay regresses to a 
point below the pay overlap area between his or her current pay band 
and the next lower pay band, it will no longer be appropriate to 
designate him or her as being in the higher level. Therefore, the 
employee will be formally changed to the lower pay band. The employee 
will be informed of this change in writing, but procedural and appeal 
rights provided by 5 U.S.C. 4303 and 7512 (and related OPM regulations) 
will not apply (except in the case of employees who have veterans' 
preference). ONR is providing for waivers of the statute and 
regulations for such actions. Further, because a change to lower pay 
band under such circumstances is not discretionary, the change may not 
be grieved under ONR's administrative grievance procedures.
9. CCS Grievance Procedures
    An employee may grieve the appraisal received under CCS using 
procedures specifically designed for CCS appraisals. Under these 
procedures, the employee's grievance will first be considered by the 
pay pool panel, which will recommend a decision to the pay pool 
manager. Any panel member's grievance will be considered by the pay 
pool manager, without reference to the panel. If the employee is not 
satisfied with the pay pool manager's decision, he/she may file a 
formal grievance under the provisions of the ONR's formal grievance 
procedures, unless the employee's pay pool manager is the CNR, in which 
case the first-step decision will be final. A CCS grievance from an ONR 
attorney will be handled in accordance with the Office of General 
Counsel's grievance procedures after ONR Counsel and the pay pool panel 
recommend a resolution.
    The following are not grievable: Pay actions resulting from CCS 
(receipt, non-receipt or amount of general increase, merit increase, 
DCA, or contribution award); reductions in pay band without reduction 
in pay due to regression (see section IV.C.8.d); contents of CCS Plans, 
(element weights, descriptors/discriminators, performance standards and 
supplemental criteria); or any action for which another appeal or 
complaint process exists.

V. Separations

A. Performance-based Reduction-in-Pay or Removal Actions

    This section applies to reduction in pay or removal of 
demonstration project employees based solely on unacceptable 
performance. Adverse action procedures under 5 CFR part 752 remain 
unchanged.
    When a supervisor determines during or at the end of the appraisal 
period that the employee is not completing work assignments 
satisfactorily, the supervisor must make a determination as to whether 
the employee is performing unacceptably in one or more of the 
contribution elements. All CCS elements applicable to the employee's 
position are critical as defined by 5 CFR part 430.
    Unacceptable performance determinations must be made by comparing 
the employee's performance to the acceptable performance standards 
established for elements. At any time during or at the end of the 
appraisal period that an employee's performance is determined to be 
unacceptable in one or more contribution elements, the employee will be 
provided assistance in improving his or her performance. This will 
normally include clarifying (or further clarifying) the meaning of 
terms used in the acceptable performance standards (e.g., ``timely'' 
``thorough research,'' and ``overall high quality'') as they relate to 
the employee's specific responsibilities and assignments. An employee 
whose performance is unacceptable after he or she has been

[[Page 77404]]

given a reasonable opportunity to improve may be removed or reduced in 
grade or pay band, in accordance with the provisions of 5 U.S.C. 4303 
and related OPM regulations. Employees may also be removed or reduced 
in grade or pay band based on unacceptable performance under the 
provisions of 5 U.S.C. 7512. All procedural and appeal rights set forth 
in the applicable statute and related OPM regulations will be afforded 
to demonstration project employees removed or reduced in grade or pay 
band for unacceptable performance.

B. Reduction-in-Force (RIF) Procedures

1. RIF Authority
    Under the demonstration project, ONR would be delegated authority 
to approve RIF as defined in Secretary of the Navy Instruction 12351.5F 
and the use of separation pay incentives.
2. RIF Definitions
    a. Competition in RIF.
    When positions are abolished, employees are released from their 
retention levels in inverse order of their retention standing, 
beginning with the employee having the lowest standing. If an employee 
is reached for release from a retention level, he/she could have a 
right to be assigned to another position within their same career track 
and pay band or they could have a right to retreat to a position 
previously held.
    b. Competitive Area.
    A separate competitive area will be established by geographic 
location for all personnel included in the demonstration project.
    c. Competitive Level.
    Positions in the same occupational pay band, which are similar 
enough in duties and qualifications that employees can perform the 
duties and responsibilities including the selective placement factor, 
if any, of any other position in the competitive level upon assignment 
to it, without any loss of productivity beyond what is normally 
expected.
    d. Service Computation Date (SCD).
    The employee's basic Federal SCD would be adjusted for CCS results 
credit.
    (1). Federal SCD.
    An employee's basic Federal SCD may be credited with up to 20 years 
credit based on the results of the CCS process. The CCS RIF Assessment 
Category would be used to determine the number of RIF years credited. 
The CCS RIF Assessment Category is the combination of the employee's 
standing under the CCS relative to the NPR and any merit increase, DCA, 
contribution award or promotion. Figure 10 shows the RIF years 
available for each CCS RIF Assessment Category [proposed revisions to 
the RIF Assessment Category are depicted].
[GRAPHIC] [TIFF OMITTED] TN10DE10.104

    (2). CCS Process Results.
    If an employee has fewer than three CCS process results, the value 
(RIF years available) of the actual number of process results on record 
will be divided by the number of actual process results on record. In 
cases where an employee has no actual CCS process results, the employee 
will be given the additional RIF CCS process results credit for the 
most common, or ``modal'' ONR demonstration project CCS RIF Assessment 
Category for the most recent CCS appraisal period.
    (3). Credit from Other Rating Systems.
    Employees who have been rated under different patterns of summary 
rating levels will receive RIF appraisal credit as follows:
    --If there are any ratings to be credited for the RIF given under a 
rating system which includes one or more levels above fully successful 
(Level 3), employees will receive credit as follows: 12 years for Level 
3, 16 years for Level 4, or 20 years for Level 5; or
    --If an employee comes from a system with no levels above Fully 
Successful (Level 3), they will receive credit based on the 
demonstration project's modal CCS RIF assessment category.
    (4). RIF Cutoff Date.
    To provide adequate time to properly determine employee retention 
standing, the cutoff date for use of new CCS

[[Page 77405]]

process results is set at 30 days prior to the date of issuance of RIF 
notices.
    3. Displacement Rights
    a. Displacement Process.
    Once the position to be abolished has been identified, the 
incumbent of that position may displace another employee within the 
incumbent's current career track and pay band when the incumbent has a 
higher retention standing and is fully qualified for the position 
occupied by an employee with a lower standing. If there are no 
displacement rights within the incumbent's current career track and pay 
band, the incumbent may exercise his or her displacement rights to any 
position previously held in the next lower pay band, regardless of 
career track, when the position is held by an employee with a lower 
retention standing. In the case of all preference eligibles, they may 
displace up to the equivalent of three grades or intervals below the 
highest equivalent grade of their current pay band in the same or a 
different career track regardless of whether they previously held the 
position provided they are fully qualified for the position and the 
position is occupied by an employee with a lower retention standing. 
Preference eligibles with a compensable service connected disability of 
30 percent or more may displace an additional two GS grades or 
intervals (total of five grades) below the highest equivalent grade of 
their current pay band provided they have previously held the position 
and the position is occupied by an employee in the same subgroup with a 
later RIF service computation date.
    b. Retention Standing.
    Retention is based on tenure, veteran preference, length of 
service, and CCS process results. Competing employees are listed on a 
retention register in the following order: Tenure I (career employees), 
Tenure II (career-conditional employees), and Tenure III (contingent 
employees). Each tenure group has three subgroups (30% or higher 
compensable veterans, other veterans, and non-veterans) and employees 
appear on the retention register in that order. Within each subgroup, 
employees are in order of years of service adjusted to include CCS 
process results.
    c. Vacant Positions.
    Assignment may be made to any available vacant position including 
those with promotion potential in the competitive area.
    d. Ineligible for Displacement Rights.
    Employees who have been notified in writing that their performance 
is considered to be unacceptable are ineligible for displacement 
rights.
    e. Change to Lower Pay Band due to an Adverse or Performance-based 
Action.
    An employee who has received a written decision to change him or 
her to a lower pay band level due to an adverse or performance-based 
action will compete from the position to which he or she will be or has 
been demoted.
4. Notice Period
    The notice period and procedures in 5 CFR subpart H, section 
351.801 will be followed.
5. RIF Appeals
    Under the demonstration project, employees affected by a RIF 
action, other than a reassignment, maintain their right to appeal to 
the Merit Systems Protection Board if they feel the reason for the RIF 
is not valid or if they think the process or procedures were not 
properly applied.
6. Separation Incentives
    ONR will have delegated authority to approve separation incentives 
and will use the current calculation methodology of a lump sum payment 
equal to an employee's severance pay calculation or $25,000, whichever 
is less.
7. Severance Pay
    Employees will be covered by the severance pay rules in 5 CFR part 
550, subpart G, except that ONR will establish rules for determining a 
``reasonable offer'' according to the provisions of 5 CFR 536.104.
8. Outplacement Assistance
    All outplacement assistance currently available would be continued 
under the demonstration project.

VI. Demonstration Project Transition

A. Initial Conversion or Movement to the Demonstration Project

1. Placement Into Career Tracks and Pay Bands
    Conversion or movement of GS employees into the demonstration 
project will be into the career track and pay band which corresponds to 
the employee's current GS grade and basic pay. If conversion into the 
demonstration project is accompanied by a simultaneous change in the 
geographic location of the employee's duty station, the employee's 
overall GS pay entitlements (including locality rate) in the new area 
will be determined before converting the employee's pay to the 
demonstration project pay system. Employees will be assured of 
placement within the new system without loss in total pay. Once under 
the demonstration project, employee progression through the career 
tracks and pay bands up to their target pay band is dependent upon 
contribution score, not upon previous methods (e.g., WGI's, QSI's, or 
career promotions as previously defined).
    ONR proposes the addition of language to clarify procedures for 
non-competitive placements into the demonstration project. 
Specifically, employees who enter the demonstration project after 
initial implementation by lateral transfer, reassignment, or 
realignment will be subject to the same pay conversion rules.
 2. Conversion of Retained Grade and Pay Employees
    ONR's workforce will be grouped into career tracks and associated 
pay band with designated pay ranges rather than the traditional grade 
and step. Therefore, grade and pay retention will be eliminated. ONR 
will grant ``maintained pay'' (as defined in section III.G.2, 
``Maintained Pay''), which is related to the current meaning of 
``retained pay'' but does not provide for indefinite retention of pay 
except in certain situations. Employees' currently on grade or pay 
retention will be immediately placed on maintained pay at their current 
rate of basic pay if this rate exceeds the maximum rate for their pay 
band and ``grandfathered'' in the appropriate pay band. Employees on 
grade retention will be placed in the pay band encompassing the grade 
of their current position. Employees will receive half of the across-
the-board GS percentage increase in basic pay and the full locality pay 
increase until their basic pay is within the appropriate basic pay 
range for their current position without time limitation.
3. WGI Buy-In
    The participation of all covered ONR employees in the demonstration 
project is mandatory. However, acceptance of the system by ONR 
employees is essential to the success of the demonstration project. 
Therefore, on the date that employees are converted to the project pay 
plans, they will be given a prorated permanent increase in pay equal to 
the earned (time spent in step) portion of their next WGI based on the 
value of the WGI at the time of conversion so that they will not feel 
they are losing a pay entitlement accrued under the GS system. 
Employees will not be eligible for this basic pay increase if their 
current rating of record is unacceptable at the time of conversion. 
There will be no prorated payment for employees who are at step 10 or 
receiving a retained rate at the

[[Page 77406]]

time of conversion into the demonstration project.
4. Career Promotion Eligibility
    ONR proposes to adopt MRMC's provisions for compensating employees 
who would have become eligible for career promotions during the first 
12 months of the demonstration project but for conversion to the 
demonstration project pay bands. Employees who qualify under this 
provision will receive pay increases for noncompetitive promotion 
equivalents when the grade level of the promotion is encompassed within 
the same pay band or another, the employee's performance warrants the 
promotion, and the promotion would have otherwise occurred during that 
period. Employees who receive an in-level promotion at the time of 
conversion will not receive a WGI Buy-In equivalent as defined above. 
For example if a GS-11 employee converts in to the demonstration 
project at a Pay Band III within the Administrative Specialists and 
Professional Career Track and would have become eligible for promotion 
to GS-12 within the next 12 months, that employee will receive a pay 
increase equivalent to the GS-12 but still remain in Pay Band III.
    During the first 12 months of the demonstration project an 
exception will also be made for employees whose target career promotion 
would place them in a different pay band from their initial pay band 
level at conversion. If the employee's performance warrants it and the 
promotion would have occurred otherwise except for the demonstration 
project, the non-competitive target career promotion can happen outside 
the CCS process. For example if an employee's career ladder position 
has a full performance level of GS-13 and the employee is a GS-12 at 
conversion, the employee would initially convert in to the 
demonstration project at a Pay Band III but may be eligible for a non-
competitive promotion into Pay Band IV within the first 12 months of 
the demonstration project if all requirements are met and the promotion 
is recommended by their supervisor.
5. Conversion of Special Salary Rate Employees
    Employees who are in positions covered by a special salary rate 
prior to entering the demonstration project will no longer be 
considered special salary rate employees under the demonstration 
project. These employees will, therefore, be eligible for full locality 
pay. The adjusted salaries of these employees will not change. Rather, 
the employees will receive a new basic rate of pay computed by dividing 
their basic adjusted pay (higher of special salary rate or locality 
rate) by the locality pay factor for their area. A full locality 
adjustment will then be added to the new basic pay rate. Adverse action 
will not apply to the conversion process as there will be no change in 
total salary. However, if an employee's new basic pay rate after 
conversion to the demonstration project pay schedule exceeds the 
maximum basic pay authorized for the pay band, the employee will be 
granted maintained pay under paragraph III.G.2 until the employee's 
salary is within the range of the pay band. For example, an Electronics 
Engineer, GS-855-9, step 5, is paid $59,568 per annum in accordance 
with special GS salary rates as of January 2010 per Table Number: 0422. 
The employee is located in the locality area of Washington-Baltimore, 
DC-MD-VA-WV. Under the demonstration project, the computation of the 
engineer's new basic rate of pay with a full locality adjustment and 
WGI buy-in is computed as follows:
    a. Basic adjusted pay divided by locality pay factor = new basic 
rate of pay.
    b. New basic rate of pay multiplied by the full locality adjustment 
for current area = full locality adjustment amount for special rate 
employees.
    c. New basic rate of pay + WGI buy-in amount x locality pay factor 
= demonstration special rate for conversion.
6. Conversion of Employees on Temporary Promotions
    Employees who are on temporary promotions at the time of conversion 
will be returned to their grade and step of record prior to conversion. 
These employees will be converted to a pay band following the 
procedures described in Section IV.A.1. After conversion, the temporary 
promotion may be reinstated for the remainder of the original 120-day 
timeframe. If the grade of the temporary position is associated with a 
higher pay band, the employee will be temporarily placed in the 
appropriate higher band while on the temporary promotion, following the 
procedures described in Section II.A.5.b.i. After the temporary 
promotion has ended, the employee will be returned to the salary and 
pay band established upon conversion, following the procedures 
described in Section II.A.5.b.iv.
7. Non-Competitive Movement Into the Demonstration Project
    Employees who enter the demonstration project after initial 
implementation by lateral transfer, reassignment, or realignment will 
be subject to the same pay conversion rules and will, therefore, be 
eligible for full locality pay. Specifically, adjustments to the 
employee's basic pay for a step increase or 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. CCS Start-Up

    ONR expects to place employees on CCS elements, descriptors, 
discriminators, and standards around October 2010 with conversion to 
demonstration project pay plans before the end of April 2011. The CCS 
process will be used to appraise ONR employees at the end of the 2010-
2011 cycle which would occur on September 30, 2011. ONR expects the 
first CCS payout to occur at the beginning of the first full pay period 
in January 2012.

C. Training

    An extensive training program is planned for everyone in the 
demonstration project including the supervisors, managers, and 
administrative staff. Training will be tailored, as discussed below, to 
fit the requirements of every employee included in the demonstration 
project and will address employee concerns and as well as the benefits 
to employees. In addition, leadership training will be provided, as 
needed, to managers and supervisors as the new system places more 
responsibility and decision making authority on them. ONR training 
personnel will provide local coordination and facilities, supplemented 
by contractor support as needed. Training will be provided at the 
appropriate stage of the implementation process.
1. Types of Training
    Training packages will be developed to encompass all aspects of the 
project and validated prior to training the workforce. Specifically, 
training packages will be developed for the following groups of 
employees:
    a. Employees.
    ONR demonstration project employees will be provided an overview of 
the demonstration project and employee processes and responsibilities.
    b. Supervisors and Managers.
    Supervisors and managers under the demonstration project will be 
provided training in supervisory and managerial

[[Page 77407]]

processes and responsibilities under the demonstration project.
    c. Support Personnel.
    Administrative support personnel, HRO personnel, financial 
management personnel, and Management Information Systems Staff will be 
provided training on administrative processes and responsibilities 
under the demonstration project.

D. New Hires Into the Demonstration Project

    The following steps will be followed to place employees (new hires) 
entering the system:
    1. The career track and pay band will be determined based upon the 
employee's education and experience in relation to the duties and 
responsibilities of the position in which he or she is being placed, 
consistent with OPM qualification standards.
    2. Basic pay will be set based upon available labor market 
considerations relative to special qualifications requirements, 
scarcity of qualified candidates, programmatic urgency, and education 
and experience of the new candidate.
    3. Employees placed through the DOD Reemployment Priority List 
(RPL), or DOD Priority Placement Program (PPP), or the Interagency 
Career Transition Assistance Plan (ICTAP) who are eligible for 
maintained pay will receive one half of the across-the-board GS 
percentage increase in basic pay and the full locality pay increase 
until the employee's basic pay is within the basic pay range of the 
career track and pay band to which assigned. Federal employees on 
retained pay and Federal employees on special salary rates hired into 
the Demonstration Project by promotion or reassignment are eligible for 
maintained pay and will receive one half of the across-the-board GS 
percentage increase in basic pay and the full locality pay increase 
until the employee's basic pay is within the basic pay range of the 
career track and pay band to which assigned. Employees are eligible for 
maintained pay as long as there is no break in service and if the 
employee's rate of pay exceeds the maximum rate of his or her pay band.
    4. New employees will be provided training and an overview of the 
demonstration project outlining the CCS process and their 
responsibilities. If the employee is a manager, training will also 
include supervisory and managerial responsibilities under the 
demonstration project.

E. Conversion or Movement From Demonstration Project

    In the event the demonstration project is terminated or employees 
leave the demonstration project through promotion, change to lower 
grade, reassignment or transfer, conversion back to the GS system may 
be necessary. The converted GS grade and GS rate of pay must be 
determined before movement or conversion out of the demonstration 
project and any accompanying geographic movement, promotion, or other 
simultaneous action. An employee will not be converted at a level which 
is lower than the GS grade held immediately prior to entering the 
demonstration project; unless, since that time, the employee has 
undergone a reduction in pay band. The converted GS grade and rate will 
become the employee's actual GS grade and rate after leaving the 
demonstration project and will be used to determine the pay action and 
GS pay administration rules for employees who leave the project to 
accept a position in the traditional Civil Service system. The 
following procedures will be used to convert the employee's 
demonstration project pay band to a GS equivalent grade and the 
employee's demonstration project rate of pay to the GS equivalent rate 
of pay.
1. Grade Determination
    Employees will be converted to a GS grade based on a comparison of 
the employee's current adjusted rate of basic pay to the highest GS 
applicable rate range considering only those grade levels that are 
included in the employee's current pay band. The highest GS applicable 
rate range includes GS basic rates, locality rates, and special salary 
rates. 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 using the following 
procedures identified in a-f below:
    a. Identify the highest GS grade within the current pay band that 
accommodates the employee's adjusted rate of basic pay (including any 
locality payment).
    b. If the employee's adjusted rate of basic pay equals or exceeds 
the applicable step 4 rate of the identified highest GS grade, the 
employee is converted to that grade.
    c. If the employee's adjusted rate of basic pay is lower than the 
applicable step 4 of the highest grade and there are only two GS grades 
in the pay band, the employee is converted to the next lower grade. If 
there are more than two GS grades in the pay band, this process is used 
for each successively lower grade in the pay band until a grade is 
found in which the employee's adjusted rate of basic pay equals or 
exceeds the applicable step 4 of the grade. If the step 4 cannot be 
matched at any of the GS grades, the employee will be converted to the 
lowest GS grade in the pay band.
    d. If under the above-described ``step 4'' rule, the employee's 
adjusted project rate exceeds the maximum rate of the grade assigned 
but fits in the rate range for the next higher applicable grade (i.e., 
between step 1 and step 4), then the employee shall be converted to the 
next higher applicable grade.
    e. For two-grade interval occupations, conversion should not be 
made to an intervening (even) grade level below GS-11.
    f. Employees in Level IV of the Administrative Specialist and 
Professional Career Track will convert to the GS-13 level.
2. Pay Setting
    Pay conversion will be done before any geographic movement or other 
pay-related action that coincides with the employee's movement or 
conversion out of the demonstration project. The employee's pay within 
the converted GS grade is set by converting the employee's 
demonstration project rate of pay to a GS rate of pay as follows:
    a. The employee's demonstration project adjusted rate of pay 
(including locality) is converted to a rate on the highest applicable 
adjusted rate range for the converted GS grade. For example, if the 
highest applicable GS rate range for the employee is a special salary 
rate range, the applicable special rate salary table is used to convert 
the employee's pay.
    b. When converting an employee's pay, if the rate of pay falls 
between two steps of the conversion grade, the rate must be set at the 
higher step.
    c. Employees whose basic pay exceeds the maximum basic pay of the 
highest GS grade for their pay band will be converted to the highest 
grade and step in their pay band. Upon conversion, the maximum basic 
pay will be at the step 10 level with no provision for retained pay.
3. Employees in Positions Classified Above GS-15
    Conversion and pay retention instructions for employees and 
positions in Pay Band V of the S&E Professional Career Track will be 
contingent on guidance provided by DoD.

[[Page 77408]]

4. Determining Date of Last Equivalent Increase
    The last equivalent increase will be the date the employee received 
a CCS pay increase, was eligible to receive a CCS pay increase, or 
received a promotion, whichever occurred last.

F. 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.

G. Automation

    ONR 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.

H. 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.

VII. Demonstration Project Duration

    Section 342 of the National Defense Authorization Act for Fiscal 
Year 1995 (Public Law 103-337) does not require a mandatory expiration 
date for this demonstration project. The project evaluation plan 
addresses how each intervention will be comprehensively evaluated. 
Major changes and modifications to the interventions may be made using 
the procedures in DoDI 1400.37, if formal evaluation data warrant a 
change. At the 5-year point, the entire demonstration will be examined 
for either: (a) Permanent implementation, (b) modification and another 
test period, or (c) termination of the project.

VIII. Demonstration Project Evaluation Plan

    Consistent with guidance from OSD, ONR proposes following the same 
evaluation plan as is being used by NRL and the other STRL 
Demonstration Projects. Accordingly, standard language for Evaluation 
Plan, Evaluation, and Method of Data Collection (sections V.B., V.C, 
and V.D., respectively) provided by OSD is used in this document to 
describe ONR's plans and procedures for the demonstration project 
evaluation. The use of parallel evaluation methodologies will 
facilitate comparisons across demonstration projects to derive higher-
order conclusions about the benefits, challenges, and overall 
effectiveness of these programs.

A. Overview

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

B. Evaluation Model

    Appendix G 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 mission, or 
the economy) can have on the effectiveness of the program. The degree 
of implementation considers the extent to which the:
    (1) HR changes are given a fair trial period;
    (2) Changes are implemented; and
    (3) 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 
interventions, causal attributions about the full impact of specific 
interventions will not always be possible for several reasons. For 
example, many of the initiatives are expected to interact with each 
other and contribute to the same outcomes. In addition, the impact of 
changes in the HR system may be mitigated by context variables (e.g., 
the

[[Page 77409]]

job market, legislation, and internal support systems) or support 
factors (e.g., training and 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 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.

IX. 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 CNR or designee will track personnel cost changes and recommend 
adjustments if required to achieve the objective of cost discipline.

B. Implementation Costs

    Current cost estimates associated with implementing the ONR 
demonstration project are shown in Figure 11. These include automation 
of systems such as the CCSDS, training, and project evaluation. The 
automation and training costs are startup costs. Transition costs are 
one-time costs. Costs for project evaluation will be ongoing for at 
least five years.
[GRAPHIC] [TIFF OMITTED] TN10DE10.105

X. Automation Support

A. General

    One of the major goals of the demonstration project is to 
streamline the personnel processes to increase cost effectiveness. 
Automation must play an integral role in achieving that goal. Without 
the necessary automation to support the interventions proposed for the 
demonstration project, optimal cost benefit cannot be realized. In 
addition, adequate information to support decision-making must be 
available to managers if line management is to assume greater authority 
and responsibility for human resources management.
    Automation to support the demonstration project is required at two 
distinct levels. At the DON and DoD level, automation support [in the 
form of changes to the DCPDS] is required to facilitate processing and 
reporting of demonstration project personnel actions. At the ONR level, 
automation support (in the form of local processing applications) is 
required to facilitate management processes and decision-making.

B. Defense Civilian Personnel Data System (DCPDS)

    ONR will continue to use the Defense Civilian Personnel Data System 
(DCPDS) for the processing of personnel-related data. Efforts have been 
made to minimize changes to DCPDS; and, therefore, the resources 
required to make the necessary changes. The following is a compendium 
of the proposed DCPDS modifications. The detailed specifications for 
required changes to DCPDS will be provided in the System Change Request 
(SCR), Form 804.

[[Page 77410]]

C. Requirements Document Writer (RDWriter)

    The RDWriter application is a DoD system which will require 
modification to accommodate the interventions in this demonstration 
project. Specifically, there will be an RD that will replace the 
position description in the basic application; career tracks and pay 
bands will replace GS grades; and a CCS Assessment Summary that will 
replace performance elements.

D. RIF Support System (RIFSS)

    ONR expects to adopt an existing RIF support system or pursue 
automation of the RIF process, as appropriate. Under the demonstration 
project, RIF rules will be modified to increase the credit for 
contributions and limit the rounds of competition. The AutoRIF 
application, developed by DoD, could be used if it were modified to 
accommodate these process changes.

E. Contribution-based Compensation System Data System (CCSDC)

    This automated system is required as an internal control and as a 
mechanism to equate contribution scores to appropriate rates of basic 
pay. This system will allow pay pool managers to develop a spreadsheet 
that will assist them in determining an appropriate merit increase or 
contribution award or both based on the overall contribution score for 
each individual. It will also be used as an internal control to ensure 
that the permanent and nonpermanent money allotted to each pay pool is 
not exceeded. It will further allow pay pool managers to visualize the 
effects of giving large basic pay increases or awards to high 
contributors, and the effects of withholding either the general or 
merit increase or both of those who are low contributors, or in the 
overcompensated range.
BILLING CODE 5001-06-P

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Appendix B: Required Waivers to Laws and Regulations

    In adopting flexibilities without changes from other STRL 
Demonstration Projects, ONR also adopts the associated waivers as 
published in the Federal Register Notices of the applicable 
organizations. Additional waivers, specified below, are required to 
enact ONR's proposed modifications to adopted flexibilities.

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Appendix C: Definitions of Career Tracks and Pay Bands

    ONR's pay band definitions may be modified as experience is 
gained through their application in classification actions and 
performance appraisal.

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Appendix D: Table of Occupational Series Within Career Tracks

    Definitions for ONR's three career tracks are provided below 
along with the breakdown of their respective series. Some series may 
appear in two career tracks depending on the purpose of the 
position. The breakdown of occupational series reflects only those 
occupations that currently exist in ONR. Additional series may be 
added as a result of changes in mission requirements or OPM-
recognized occupations. These additional series will be placed in 
the appropriate career track consistent with the definitions 
provided below.

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Appendix E: Classification and CCS Elements

    The CCS Summaries shown in this appendix are draft templates 
intended to provide an understanding of the information covered by 
the CCS process. Under the demonstration project, the summaries will 
be generated by the CCSDS. They may be changed during the project to 
require additional information, to make them easier to use, or for 
other reasons.
    The contents of the CCS elements, descriptors, discriminators, 
and basic acceptable standards may similarly be changed during the 
life of the demonstration project.
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Appendix F: Computation of the IPS and the NPR

    The ONR demonstration project will use an IPS which links basic 
pay to contribution scores determined by the CCS process. The area 
where basic pay and level of contribution are assumed to be properly 
related is called the NPR. An employee whose CCS score and rate of 
basic pay plot within the NPR is considered to be contributing at a 
level consistent with pay. Employees whose pay plots below the NPR 
for their assessed score are considered ``undercompensated,'' while 
employees whose score and pay plot above the NPR are considered 
``overcompensated.''
    The purpose of this scoring and pay structure is to spread the 
full range of basic pay provided by the GS, between GS-1, step 1, 
and GS-15, step 10, into 80 intervals (scores and pay above those 
points are related using the same parameters). Each interval is a 
fixed percentage of the pay associated with the previous point.
    For each possible contribution score available to employees, the 
NPR spans a basic pay range of 12 percent. The lower boundary (or 
``rail'') is established by fixing the basic pay equivalent to GS-1, 
step 1, with a CCS score of zero. The upper boundary is fixed at the 
basic pay equivalent to GS-15, step 10, with a CCS score of 80. The 
distance between these upper and lower rails for a given overall 
contribution score is then computed to ensure the range of 12 
percent of basic pay is maintained for each available CCS score. The 
middle rail of the NPR is computed as 6 percent above the lower 
rail. This point is used in connection with certain limits 
established for pay increases (see section IV.C.7).
    From the above considerations, five variables, or inputs, were 
identified. They are as follows:
    1. Variable A: GS-1, step 1 (lowest salary)
    2. Variable B: GS-15, step 10 (highest salary)
    3. Variable C: Current C-values
    4. Variable M: 6 percent (middle rail computation above the low 
rail)
    5. Variable H: 12 percent (high rail computation above low rail)
    Other variables are as follows:
    1. Variable N: Number of C-value steps at GS-15, step 10
    2. Variable P (step increase): Salary value for each C-value 
equal to 1 + percentage increase
    From these variables, the following formula definitions were 
developed:

Low rail = A*(P\-\C)
Mid rail = (1+M)*A*(P\-\C)
High rail = (1+H)*A*(P\-\C)
Where P = (B/(A*(1+H)))\-\(1/N)

    As an example, a result of the above computation, using the 2010 
GS Salary Table, P (step increase) equals 1.023664623. Attachment 
(1) is a complete list of CCS pay band scores and basic pay ranges. 
Attachment (2) contains graphic representations of these tables for 
each career track. Once the C-values (0-80) are determined, the CCS 
pay bands and scores are extended at the same percentage increments 
as were computed for the step increase above. These C-values are 
extended to encompass the equivalent of ES-4 effective January 2010. 
In the example, SES Level ES-4 is equal to basic pay of $155,500 and 
is encompassed by the C-value 89 ($142,734 to $159,862).

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[FR Doc. 2010-30876 Filed 12-9-10; 8:45 am]
BILLING CODE 5001-06-C