[Federal Register Volume 76, Number 7 (Tuesday, January 11, 2011)]
[Notices]
[Pages 1924-1964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-237]



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Part V





Department of Defense





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Science and Technology Reinvention Laboratory Personnel Management 
Demonstration Project, Department of the Navy (DON), Space and Naval 
Warfare Systems Center (SSC), SSC Atlantic and SSC Pacific; Notice

  Federal Register / Vol. 76 , No. 7 / Tuesday, January 11, 2011 / 
Notices  

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DEPARTMENT OF DEFENSE

Office of the Secretary


Science and Technology Reinvention Laboratory Personnel 
Management Demonstration Project, Department of the Navy (DON), Space 
and Naval Warfare Systems Center (SSC), SSC Atlantic and SSC Pacific

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

ACTION: Notice.

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SUMMARY: Section 342(b) of the National Defense Authorization Act 
(NDAA) for Fiscal Year (FY) 1995, Public Law (Pub. L.) 103-337 (10 
U.S.C. 2358 note), as amended by section 1109 of NDAA for FY 2000, 
Public Law 106-65, and section 1114 of NDAA for FY 2001, Public Law 
106-398, authorizes the Secretary of Defense to conduct personnel 
demonstration projects at DoD laboratories designated as Science and 
Technology Reinvention Laboratories (STRLs). The above-cited 
legislation authorizes DoD to conduct demonstration projects to 
determine whether a specified change in personnel management policies 
or procedures would result in improved Federal personnel management. 
Section 1105 of the NDAA for FY 2010, Public Law 111-84, 123 Stat. 
2486, October 28, 2009, designates additional DoD laboratories as STRLs 
for the purpose of designing and implementing personnel management 
demonstration projects for conversion of employees from the personnel 
system which applied on October 28, 2009. The SSC Atlantic and SSC 
Pacific are listed in subsection 1105(a) of NDAA for FY 2010 as two of 
the newly designated STRLs. These two STRLs will be the participants in 
the demonstration project proposal described in this Federal Register 
notice (FRN).

DATES: Implementation of this demonstration project will begin no 
earlier than March 1, 2011.

FOR FURTHER INFORMATION CONTACT: SSC Atlantic: Ms. Carissa Miller, SSC 
Atlantic STRL Transition Project Lead, SSC Atlantic, P.O. Box 190022, 
North Charleston, SC 29419-9022: or via e-mail: 
[email protected].
    SSC Pacific: Mr. Michael McMillan, SSC Pacific STRL Transition 
Project Lead, Space and Naval Warfare Systems Center Pacific, 53560 
Hull Street, San Diego CA 92152-5001; or via email: 
[email protected]
    DoD: Ms. Betty A. Duffield, CPMS-PSSC, Suite B-200, 1400 Key 
Boulevard, Arlington, VA 22209-5144

SUPPLEMENTARY INFORMATION:

1. Background

    SSC Atlantic and SSC Pacific are in a unique position relative to 
most DoD STRL laboratories. They previously participated in the 
development of and operated under the China Lake/Naval Ocean Systems 
Center demonstration project before being converted to the National 
Security Personnel System (NSPS). As a direct result of these personnel 
system experiences, SSC Atlantic and SSC Pacific have the benefit of 
being in earlier personnel systems designed to correct and alleviate 
shortfalls related to flexibilities in hiring, compensating, and 
retaining employees while assessing performance and its results in a 
dynamic environment. Given this exposure, SSC Atlantic and SSC Pacific 
consider STRL conversion an ideal evolutionary opportunity in employee 
management, and further intend to incorporate the most effective 
philosophies, methods, practices, and procedures from both legacy 
systems, as well as the experiences of other DoD STRL projects.
    The Centers' organizational experience indicates that the 
contribution-based personnel management and compensation methodology 
affords the best opportunity to appropriately evaluate and compensate 
employees, while emphasizing the employees' contributions towards 
organizational goals and objectives.
    SSC Atlantic and SSC Pacific 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 compensation that attracts high-
quality employees. Once these employees are hired, it is necessary to 
have the means to appropriately reward and incentivize their 
contribution to ensure that the creative and motivational process is 
continually renewed. Compensation must be directly linked to the levels 
of individual contributions to the organization. High contributors must 
be rewarded both to encourage their continued contributions and to 
increase the probability of their retention. Similarly, lower 
contributing individuals should receive less compensation than high 
contributors and unacceptable performance must be addressed by 
appropriate corrective measures (e.g., an improvement plan, demotion, 
or removal). Compensation must also be appropriate to the position held 
and its responsibilities relative to the organizational goals.
    The Systems Centers will also take advantage of flexibilities that 
will simplify and speed classification and staffing actions for 
employees, such as competitive examining, expanded details and 
temporary promotions, and modified term appointments.

2. Overview

    The NDAA for FY 2010 not only designated new STRLs but also 
repealed the National Security Personnel System (NSPS) mandating 
conversion of NSPS covered employees to their former personnel system 
or one that would have applied absent the NSPS. A number of SSC 
Atlantic and SSC Pacific employees are covered by the NSPS and must be 
converted to another personnel system. Section 1105 of NDAA for FY 2010 
stipulates the STRLs designated in subsection (a) of section 1105 may 
not implement any personnel system, other than a personnel system under 
an appropriate demonstration project as defined in section 342(b) of 
Public Law 103-337, as amended, without prior congressional 
authorization. In addition, any conversion under the provisions of 
section 1105 shall not adversely affect any employee with respect to 
pay or any other term or condition of employment; shall be consistent 
with title 5 United States Code (U.S.C.) 4703(f); and shall be 
completed within 18 months after enactment of NDAA for FY 2010. 
Therefore, since SSC Atlantic and SSC Pacific are both designated STRLs 
by section 1105 of NDAA for FY 2010 and have NSPS covered employees, 
they must convert, at a minimum, their NSPS covered employees to a 
personnel management demonstration project before the end of April 
2011.
    On August 24, 2010, DoD published the proposed demonstration 
project plan in the Federal Register, Volume 75, No. 163 pages 52139 
through 52171. During the public comment period ending September 23, 
2010, DoD received 48 comments from 8 individuals. All comments and 
recommendations were carefully considered.
    The following summary addresses comments received, provides 
responses, and notes resultant changes from the original project plan 
as presented in the first Federal Register Notice. Most commenters 
addressed multiple comments which were counted separately, resulting in 
a number of comments which exceeds the number of individual commenters 
cited.

A. Editorial and General Comments

    1. Comment: One commenter addressed the fact that the introductory 
section of the Federal Register Notice contains an error. The contact 
section cites the SSC Atlantic Transition Project

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Lead as Mr. Erick Fry. Ms. Carissa Miller has replaced Mr. Fry in this 
function. Recommend updating the contact section with current 
information.
    Response: SSC Atlantic and SSC Pacific agree with the commenter and 
have made that correction.
    2. Comment: One commenter noted three errors in the Table of 
Contents (TOC) section of the FRN. Sections II.6.a, II.2.b, and II.5.e, 
are all missing from the TOC.
    Response: Concur. We have corrected this administrative oversight.
    3. Comment: Commenter noted inconsistent sub-titling throughout 
TOC.
    Response: Concur. We have corrected this administrative oversight.
    4. Comment: Commenter noted that the TOC, section VIII.B. ``waivers 
to Title 5'' is missing ``CFR'' which appears in the title later in the 
document.
    Response: Concur. We have corrected this administrative oversight.
    5. Comment: Commenter noted that section II.1/f.(3). Titled 
``Provisions:'' has an inconsistent numbering convention, and 
recommended that the subsection numbering ``(2), (3), (4), (5),'' be 
replaced with ``(b), (c), (d), and (e).''
    Response: We agree with the commenter and have made this 
correction.
    6. Comment: One commenter noted that Section IV contains mis-
numbered sub-sections. Section IV, Paragraph one, references sections 
V.B., V.C., and V.D. to IV.B, IV.C, and IV.D.
    Response: Concur. We have corrected this administrative oversight.
    7. Comment: Commenter noted inconsistencies throughout the document 
in the use of capitalization of titles and sub-titles, and recommended 
a review to ensure consistency.
    Response: Concur with commenter. We have reviewed and addressed 
consistency of titling.
    8. Comment: Commenter noted inconsistencies throughout the document 
in the use and appearance of the e.g., and i.e., and recommended a 
review to ensure consistent nomenclature.
    Response: We concur with the commenter and have reviewed and 
addressed consistency in use of referenced terms.
    9. Comment: One commenter noted that Figure 3.1 in Section V., 
Demonstration Project Costs, shows no costs associated with project 
evaluation in FY 2011, yet the demonstration project is required to 
conduct a baseline workforce survey prior to transition. The commenter 
requested clarification relative to this being an administrative 
oversight, and recommended providing an amended table.
    Response: We concur with the commenter and have corrected this 
oversight, adding funds to evaluation costs for FY 2011.

B. Methodology and Personnel System

1. Hiring and Appointment Authorities
    a. Comment: One commenter requested clarification of the following 
sentence in section II.B.1.a, Expanded Detail Authority: ``Effect 
details up to one year to specified positions at the same or similar 
level.'' Commenter also requested the definition of ``similar.''
    Response: In this case, ``similar'' positions would be ones at a 
pay band with the same maximum base salary.
    b. Comment: One commenter recommended changing the following 
sentence in section II.B.1.b, ``If a non-citizen candidate is the only 
qualified candidate for the position, the candidate may be appointed.'' 
To: ``If a non-citizen candidate is the only qualified candidate for 
the position, the candidate may be appointed with documentation/
justification of recruiting efforts and selection made. Neither SSC 
Atlantic nor SSC Pacific establish or maintain the files of qualified 
citizen candidates.''
    Response: Concur with commenter, and have amended section 
appropriately. Section II.B.1.b details the extensive recruitment 
efforts that must occur prior to hiring a non-citizen to include use of 
``paid advertisements * * * as well as normal recruiting methods.'' 
Recruitment files are maintained for two years at the Human Resource 
Servicing Centers (HRSC) and will be available for audit if necessary. 
Local guidance will further define the justification package necessary 
to support approval by the local Technical Directors.
    c. Comment: Two commenters addressed section II.B.1.g.(1), 
Delegated Examining. One noted that SSC STRL does not seem to have 
Delegated Examining while other DoD labs do; a second commenter 
suggested that Delegated Examining should be delegated to HRSCs (vice 
the applicable HRO) and not be further delegated.
    Response: The STRL does intend to make use of Delegated Examining 
as part of its implementation. The laboratory has engaged both Navy and 
DoD on this issue throughout the development of this demonstration 
project plan. Other STRL's have shown that having this ability is very 
important to the success of the demonstration project. To maintain 
flexibility in the use of delegated examining, it is intended to 
maintain the original language on the administration of this authority.
    d. Comment: One commenter addressed the examining process in 
Section II.B.1.g.(2), relative to our elimination of the rule of three, 
and recommended a rewording of the entire section to comply with 
upcoming hiring reforms that will be in effect November 1, 2010.
    Response: After a review of the Presidential Memorandum dated May 
11, 2010 on Improving the Federal Recruitment and Hiring Process and 
subsequent component guidance issued September 17, 2010, the 
commenter's suggestion was adopted. These documents direct the use of 
category rating to fill positions through Delegated Examining and 
eliminate the use of the ``rule of three'' not later than November 1, 
2010. This section will be modified accordingly.
    e. Comment: One commenter noted that in section II.B.1.f.(3), 
``Provisions:'' contains some confusing language in its reference to 
declinations and difficulties relative to veteran hiring. It was not 
clear if the reference to declinations and difficulties were as a 
result of veteran hiring, or were in the process of veteran hiring or 
somehow unrelated.
    Response: The language was clarified and the redundant listing of 
declinations removed to clarify that it was not associated with veteran 
hires. The number of veterans hired is one of many items in a list of 
items that will be reviewed in the evaluation of this flexibility.
    f. Comment: Two commenters noted that in section II.B.1.f.(2).a, 
``Definitions,'' and II.B.1.h. Distinguished Scholastic Achievement 
Appointment, science and engineering (S&E) positions should be defined 
``in accordance with OPM guidance.'' And that similarly, the next 
subsection b., should refer to ``accredited colleges'' as those so 
defined by OPM.
    Response: The commenter's suggestion is adopted and these changes 
have been made.
    g. Comment: One commenter noted that in section II.B.1.f.(6), 
evaluation of direct hire, that the Navy's Human Resources Reporting 
System (HRRS) tool might be a good source for some of the data required 
for the evaluation.
    Response: SSC management appreciates the insight and will explore 
using that tool for some of the requirements.
2. Career Path Pay Band Structure
    a. Comment: One commenter recommended adding to Section II.B.2.d., 
Seamless Movement to a Higher Band Level, to clarify that such band 
movement can only occur as a result of competitive merit promotion

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procedures or via an alternate method of promotion such as an 
assessment board.
    Response: This recommendation is not adopted as it defies the 
original intent and practice associated with Seamless Pay Band Movement 
as previously defined and accepted by other laboratories. As 
implemented at other STRLs, Seamless Pay Band Movement is in and of 
itself an alternative method of personnel action.
    b. Comment: One commenter recommended changes to the wording in 
section II.B.2.a, Career Path and Pay Band Structure, as follows: 
Change ``GS occupations are further broken down into five separate 
career paths'' To: ``The five distinct career paths within SSC STRL 
are:'' for clarity.
    Response: Concur with commenter and made the change as recommended.
    c. Comment: One commenter addressed the description of the 
Supervisor/Manager Career Path noting that the definition of the 
requirement for the Supervisor/Manager Career Path only requires more 
than one employee and felt the number should be three or more and those 
with less should only get the supervisory differential in an effort to 
be fiscally responsible.
    Response: The commenter may not understand the intended use of the 
Differential for Supervisory Functions. The intent is not to apply the 
Differential for Supervisory Functions to every position in the 
Supervisor/Manager Career Path, but to utilize this differential for 
very specific and targeted managerial functions of high significance to 
the organization. As the differential will not be applied ``across the 
board'' to the Supervisor/Manager Career Path and pay bands, the 
description of a supervisory position not being established on the 
basis of one subordinate position enables us to designate and groom 
supervisors and managers, generating a culture of leadership which is 
initiated early in a supervisory career. As the differential for 
supervisory functions is a targeted mechanism, not a general one, the 
supervisory differential assumes no additional fiscal burden on the 
demonstration project.
    d. Comment: One commenter requested clarification of language in 
section II.B.2.c, which describes and summarizes the career path 
structure. The ND (S&E) career path originally had a pay band 6, which 
was to be the Professional, Scientific, and Technical Corps positions. 
Upon discussion with DoD, this pay band was re-designated NM-6 
(Supervisor/Manager Career Path) to be consistent with requirements 
associated with those positions. The language in the FRN still has some 
references to the previous ND-6 pay band. Another commenter noted a 
similar discrepancy in section II.B.3b.
    Response: Concur with commenters. We have reworded these sections 
to clarify placement of the Above GS-15 positions in the NM-6 pay band.
    e. Comment: Three commenters addressed the issue of Above GS-15 
Positions in section II.B.2.c. In two cases, the questions addressed 
the ability of SSC Atlantic and SSC Pacific to exercise this 
flexibility (held by other existing STRL organizations) via this FRN. 
In the third case, the commenter questioned the intent that the 
positions are ``scientific and engineering'' while also being 
managerial.
    Response: Under the SSC STRL demonstration project, it is intended 
to implement the program for scientific and engineering positions that 
are classified above GS-15 after the proposed Professional Scientific 
and Technical Corps (PSTC) is approved and DoD guidance issued.
3. Classification
    a. Comment: One commenter recommended a change to section II.B.3.a. 
on the Simplified Classification Process. Recommended changing ``those 
descriptions may be further tailored'' to: Descriptions will be 
tailored to address levels of difficulty, responsibility, and 
supervisory relationships sufficient to identify complexity and scope 
of the position. Also add: ``In all cases, the description of the 
actual duties of the position will be sufficiently described for use in 
announcing positions to potential applicants so that they will be able 
to tell what the specific duties the selectee will be expected to 
perform.''
    Response: Concur with the need for the ability to provide 
supplemental information to the generic descriptors to support various 
human resources processes. We do intend to provide a description of 
specific duties of the position when announcing positions to potential 
applicants. The FRN language has been modified accordingly.
    b. Comment: One commenter recommended an addition to the wording in 
section II.B.3.b, which addresses delegation of classification 
authority. The commenter recommended changing ``The Systems Centers' 
Technical Directors/Commanding Officers may delegate classification 
authority for all positions except those in Supervisor/Manager pay band 
6.'' To ``The Systems Centers' Technical Directors/Commanding Officers 
may delegate classification authority only to the designated management 
authority within their immediate organizational supervisory chain for 
all positions except those in Supervisor/Manager pay band 6.''
    Response: Concur with commenter. The recommended change has been 
made in the document.
    c. Comment: One commenter recommended changing section II.B.3.c. on 
classification appeals by adding the word ``further'' within the 
sentence which currently reads: ``An employee may not (further) appeal 
the demonstration project classification criteria, the accuracy of the 
pay band descriptor, or the pay setting criteria; the assignment of 
occupational series to a career path; the title of a position; the 
propriety of a base pay schedule; or matters grievable under an 
administrative or an alternative dispute resolution procedure.''
    Response: This suggested wording change is not adopted. Adding the 
word ``further'' seems to imply that an employee could initially appeal 
the STRL classification structural or pay issues cited. In fact, the 
contrary is so. The intent is clearly stated that such structural or 
pay issues are not appealable.
4. Pay Setting Outside the Contribution Assessment and Recognition 
System (CARS)
    a. Comment: One commenter noted changes to the Special Salary Rates 
(SSRs) which may impact the Systems Centers' decision to not initially 
utilize SSRs upon conversion to the demonstration project as specified 
in section II.B.4.f. In fact, new SSRs have been established for series 
in locations which would directly impact Systems Center employees.
    Response: Concur with commenter. We have reworded this section to 
allow for the potential use of SSRs in the form of staffing supplements 
as Systems Center management determines is applicable.
    b. Comment: Two comments were directed at section II.B.4.h.(2), 
Distinguished Contribution Allowance (DCA). One commenter noted a 
change to the OPM Guide to Processing Personnel Actions which changes 
the pay cap computations. A second commenter recommended an addition to 
the section which stipulates a 10-year maximum limit for DCA awards 
over the career of an employee.
    Response: Concur with both comments and the language in this 
section has been adjusted to address the updated pay cap computation 
(``SSC Atlantic and SSC Pacific will implement a Distinguished 
Contribution Allowance, a temporary monetary allowance up to 25 percent 
of base pay, which, when added to an employee's

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rate of locality-adjusted pay, may not exceed the rate of base pay for 
Executive Level I.'') and the maximum DCA award language.
    c. Comment: One commenter recommended addition to section II.B.4.1, 
Pay Differential for Supervisory Functions. Recommended changing ``It 
is paid on a pay period basis and is not included as part of the 
employee's base rate of pay.'' To: ``It is paid on a pay period basis 
as documented via time and attendance, and is not included as part of 
the employee's base rate of pay.''
    Response: Concur with commenter and added this language to the 
appropriate section.
    d. Comment: One commenter suggested that the wording of section 
II.B.4.m, Awards, should be reviewed in conjunction with 5 U.S.C. 
451.103(c)(2).
    Response: The reference was reviewed and documenting the 
justification will be done when these awards are granted.
    e. Comment: One commenter noted that section II.B.4.n. appears to 
be redundant with section II.B.4.g.(3) and asked for clarification.
    Response: Concur that the two sections are redundant. We have 
removed section II.B.4.n. accordingly.
5. Contribution Assessment and Recognition System (CARS)
    a. Comment: One commenter recommended a rewording of section 
II.B.6. to establish and standardize terminology relative to the 
demonstration project. The sentence which reads: ``A sample chart 
showing detailed language for the Technical Contribution Element in the 
Scientific and Engineering career path (ND) is provided in Appendix 
E.'' should be changed to: ``A sample chart showing detailed benchmark 
standards for the Technical Contribution Element in the Scientific and 
Engineering career path (ND) is provided in Appendix E.'' in order to 
establish ``benchmark standards'' as demonstration project terminology.
    Response: Concur with commenter and the recommended change has been 
made.
    b. Comment: One commenter questioned section II.B.6.b.(4)., 
Contribution Bonus Awards, which states in part that unexpended bonus 
dollars may be used to augment the category of base pay increases 
budget authority, and further questioned the legality of this statement 
relative to standing DoD policy.
    Response: While both Systems Centers had initially requested this 
specific capability, we have since decided that the potential benefits 
are outweighed by the associated complications relative to long-term 
costs. Concur with the basic intent of the commenter and have removed 
the language in question.
    c. Comment: One commenter suggested that section II.B.6.a.(3) needs 
to be reworded to address changes in the timeline associated with SSC 
STRL transition. The section currently outlines a transition cycle that 
stipulates a 15-month appraisal cycle as the first official cycle of 
the demonstration project. In actuality, recent changes in SSC 
Atlantic's and Pacific's strategy point to a different initial 
appraisal cycle and require some readdressing.
    Response: Concur with commenter. Due to afore-mentioned changes in 
strategy, SSC Atlantic and Pacific intend to conclude the initial 
transitional appraisal cycle on 30 June 2010. As such, this section has 
been reworded to account for changes and provide an accurate summary of 
intent.
    d. Comment: One commenter noted that section II.B.6.a.(6), Normal 
Pay Range, contains confusing language.
    Response: Concur and the paragraph has been reworded to clarify the 
definition of ``Normal Pay Range.''
    e. Comment: One commenter addressed Section II.B.6.a.(2) on 
contribution-based pay pools, asking if SSC STRL pay pools would have 
Center attorney's as required participants, and if not, what was going 
to be the mechanism to ensure compliance relative to state 
requirements. The commenter further suggested language utilized by 
other STRL organizations which addresses this concern by adding the 
following: ``To avoid conflict with state bar rules, the pay pool panel 
may not alter the contribution element scores or the overall 
contribution score that SPAWAR counsel assigns to an attorney; however, 
the pay pool panel may make independent judgments, such as pay 
adjustments after considering that score. A reconsideration from a 
SPAWAR attorney will be handled in accordance with the Office of 
General Counsel's grievance procedures after SPAWAR counsel and the pay 
pool panel recommend a resolution.''
    Response: Concur with commenter and the recommended language has 
been added to the applicable section.
6. Conversion from NSPS into the Demonstration Project
    a. Comment: One commenter points out that section II.B.8. indicates 
that upon conversion from NSPS, employees will retain the adjusted base 
salary from their permanent NSPS position. It is pointed out that 
additional clarification may be needed with regard to how an employee's 
pay is treated when he/she is temporarily assigned to an NSPS position 
prior to that position converting to the demonstration project if the 
employee is returned to that temporary position immediately after 
conversion. In these cases as the commenter notes, section 1113(c)(1) 
of NDAA for FY 2010 would also apply to the temporary position, i.e., 
there will be no loss or decrease in pay as a result of the conversion 
of positions and employees from NSPS.
    Response: Concur with commenter's point and have amended the 
applicable section to further clarify this issue.
7. Required Waivers to Law and Regulation
    a. Comment: One commenter noted that there is inconsistency in the 
application of title 5 CFR part 430, in that the demonstration project 
waives part 430 subpart B in its entirety, yet references that the 
project's appraisal process complies with title 5 CFR part 430, subpart 
B except where waivers have been approved. Earlier in the document it 
is stated that ``employees under the demonstration project will not be 
subject to the requirement of this part.'' Commenter suggested a review 
of document and clarification of title 5 CFR part 430, subpart B waiver 
requests.
    Response: Our determination is that the language waiving title 5 
CFR part 430 subpart B is necessary, and is consistent with the intent 
of SSC STRL. However, the waiver language has been modified to address 
the commenter's concerns.
    b. Comment: One commenter noted that the demonstration cites a 
waiver to title 5 U.S.C. chapter 45, section 4502, which limits awards 
to $10K, that the actual title of this section is 5 U.S.C. 4502, and 
that this waiver waives the authority which provides that ``the 
Secretary of Defense may grant a cash award under subsection (b) of 
this section without regard to the requirements for certification and 
approval provided in that subsection.'' Commenter further recommends a 
review of 5 U.S.C. 451.103(c)(2).
    Response: The language associated with this waiver has been 
clarified. Paragraph (a), 5 U.S.C. 4502, indicates limitation of cash 
awards to $10K. This section is waived to the limited extent that it 
will allow Technical Director/Commanding Officer to award up to $25K 
with the same level of authority as the Secretary of Defense to grant 
cash awards. The requirement for certification and approval of the cash 
awards by OPM is not required. All other provisions of section 4502 
apply.

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8. Appendices
    a. Comment: One commenter noted that Appendices A and B were 
missing series 1371, Cartographer Technician, which is a series 
occupied at both Centers, and recommended adding this series to 
applicable appendices.
    Response: Concur with commenter and have corrected this oversight 
in Appendices A and B.
    b. Comment: One commenter noted that Appendix H, Intervention 
Model, 2b referenced ``Alignment of organizational and individual 
objectives and results,'' yet the demonstration project documentation 
references ``establishing contribution goals and expectations,'' not 
objectives.
    Response: Agree with the commenter. SSC STRL is a contribution-
based evaluation and compensation system, and as such, the language 
needs to be consistent throughout, including the Intervention Model. 
The language in Appendix H has been corrected to reflect contribution 
rather than objective-based methodology.
9. Demonstration Project Notice Changes
    The following is a summary of substantive changes and 
clarifications which have been made to the project proposal:
    a. Corrected SSC Atlantic contact information for new SSC Atlantic 
STRL Transition Team Lead in the Introduction Contact Information.
    b. Numerous corrections made to Table of Contents to address 
inconsistencies in titling and subtitling of sections and subsections. 
Applicable sections throughout document were then corrected to ensure 
consistency in numbering and subtitling throughout.
    c. Corrected and standardized use of ``i.e.,'' and ``e.g.,'' 
throughout document.
    d. Addressed lack of funding shown in Section V., Figure 3.1. for 
project evaluation in FY 2011.
    e. In Section II.B.1.a, refined definition of ``similar'' as used 
relative to positions under Expanded Detail Authority.
    f. In Section II.B.1.b, further clarified language associated with 
non-citizen hiring in accordance with Department of Navy Human 
Resources Service Center South West recommendation.
    g. In Section II.B.1.g.(1), addressed issues regarding Delegated 
Examining Authority and its ability to be further delegated to service 
component Human Resources.
    h. In Section II.B.1.g.(2), addressed compliance with OPM Hiring 
Reform initiatives regarding the elimination of the rule of three.
    i. In Section II.B.1.f.(3), clarified language relative to veteran 
hiring.
    j. In Section II.B.1.f.(2).a, clarified that relative to S&E 
positions, both the positions and acceptability from accredited 
colleges and universities must be as defined by the Office of Personnel 
Management (OPM).
    k. In Section II.B.2.a, clarified section on Career Path and Pay 
Band structure by re-ordering the sentence. Also, corrected designation 
of ND-6 pay band to NM-6 pay band in accordance with Above GS-15 
position requirements.
    l. In Section II.B.2.c, addressed comments regarding PSTC positions 
by re-inserting language for PSTC governance into FRN.
    m. In Section II.B.3.a, added recommended language to Simplified 
Position Description section to provide additional positional 
definition and granularity.
    n. In Section II.B.3.b, clarified delegation of classification 
authority by stipulating that such authority can only be delegated 
within the applicable Technical Director's chain of command.
    o. In Section II.B.4.f, re-worded section on staffing supplement 
usage upon entering the demonstration project to allow for their use 
immediately upon transition.
    p. In Section II.B.4.h.(2), edited section on Distinguished 
Contribution Allowance (DCA) to account for GPPA changes and 
corresponding changes to pay cap computations (to Executive Level I). 
Also, specified 10-year cumulative maximum limit for receipt of DCA 
awards over the career of an employee.
    q. In Section II.B.4.1, amended section on Pay Differential for 
Supervisory Functions by stipulating that such pay is provided in 
strict accordance with all applicable guidelines.
    r. Section II.B.4.g.(3). Removed this section on retention 
incentives because it was redundant (as covered in Section 
II.B.4.g.(3)).
    s. In Section II.B.6, Contribution Assessment and Recognition 
System. Standardized language associated with contribution element 
scoring as ``benchmark standards'' for each element in each pay band 
was established.
    t. In Section II.B.6.b.(4), Contribution Bonus Awards. Eliminated a 
sentence which suggested that unused bonus amounts could be used to 
fund the continuing portion of the pay pool.
    u. In Section II.B.6.a.(3), Modified the paragraph which discusses 
the initial appraisal cycle of the SSC STRL system, clarifying that the 
initial (partial) cycle will end on June 30 2011, vice June 30, 2012 as 
originally stated.
    v. Section II.B.6.a.(6), Normal Pay Range. Language in this section 
modified to clarify meaning and definition of Normal Pay Range.
    w. Section II.B.6.a.(2), Contribution-Based Pay Pools. Language 
added regarding attorney evaluation and reconsideration, and addressed 
associated State bar requirements.
    x. Section II.B.8, Conversion from NSPS. Clarifying language added 
that standards associated with the retention of base salary upon 
conversion to SSC STRL apply to both permanent and temporary positions 
held under NSPS prior to conversion.
    y. 5 CFR part 430, subpart B. Clarified waiver language.
    z. 5 CFR. Added waiver to part 536, subpart B, waived in its 
entirety. Sections 536.305, Adjusting an employee's retained rate when 
a pay schedule is adjusted, and 536.306, Limitation on retained rates, 
waived only to the extent that under-contributing employees receiving a 
retained rate will not be entitled to the full amount of any increase 
in the maximum rate of the employee's pay band.
    aa. Amended title 5 U.S.C. chapter 53, section 5363 waiver. 
Clarified waiver requirements to (1) enable reduction in GPI for under-
contributing employees receiving a retained rate and (2) to provide pay 
retention based on a discontinued or reduced staffing supplement as 
under the GS system.
    ab. Appendices A and B. Corrected appendices to include missing 
series (1371--Cartographer Technician).
    ac. Appendix H, Intervention Model. Language in subsection 2b that 
referred to employee objectives, rather than to contribution elements 
was corrected.

3. 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 
(DoDI) 1400.37; pages 73248 to 73252 of volume 73, Federal Register; 
and after the fulfilling of any collective bargaining obligations.

    Dated: January 4, 2011.
Morgan F. Park,
Alternate OSD Federal Register Liaison Office, Department of Defense.

Table of Contents

I. Introduction
    A. Purpose
    B. Expected Benefits

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    C. Participating Organizations, Employees, and Union 
Representation
    D. Project Overview
    Figure 1-1. Employee Distribution by Geographic Location
II. Methodology
    A. Project Design
    B. Personnel System Changes
    1. Hiring and Appointment Authorities
    a. Expanded Detail Authority
    b. Non-citizen Hiring
    c. Extended Probationary/Trial Period
    d. Expanded Term Appointments
    e. Voluntary Emeritus Program
    f. Direct Hire Authority for Candidates with Advanced Degrees 
for Scientific and Engineering Positions
    g. Delegated Examining
    h. Distinguished Scholastic Achievement Appointments
    2. Career Path Pay Band Structure
    Figure 2-1. SSC STRL Career Path and Pay Band Structure
    a. Career Paths
    b. Career Path Pay Bands and Levels of Responsibility
    c. Above GS-15
    d. Seamless Movement to a Higher Pay Band Level
    3. Classification
    a. Simplified Classification Process
    b. Delegation of Classification Authority
    c. Classification Appeals
    d. Simplified Assignment Process
    4. Pay Setting Outside the Contribution Assessment and 
Recognition System (CARS)
    a. Advanced In-Hire Rate
    b. Promotion
    c. Reassignment
    d. Change to Lower Pay Band
    e. Locality Pay.
    f. Staffing Supplements
    g. Other Provisions
    h. Distinguished Contribution Allowance (DCA)
    i. Pay Differential for Supervisory Functions
    j. Accelerated Compensation for Developmental Positions
    k. Educational Base Pay Adjustment
    l. Expanded Development Opportunity
    m. Awards
    5. Performance/Contribution Management Principles
    a. Performance Development Assistance
    b. Two-Level Performance Rating System
    c. Establishing Contribution Expectations
    d. On-going Contribution Dialogue
    e. Feedback from Multiple Sources
    f. Performance Improvement Plan (PIP)
    6. Contribution Assessment and Recognition System (CARS)
    a. Rating and Contribution Assessment Process
    (1) Eligibility
    (2) Contribution-Based Pay Pool
    (3) Contribution Assessment and Recognition System (CARS)
    (4) Contribution Expectations and Element Weighting
    (5) Assessment
    (6) Normal Pay Range (NPR)--Base Pay Versus Contribution
    b. Compensation Decision Process
    (1) Employee Compensation
    (2) General Pay Increases
    (3) Base Pay Increases
    (4) Contribution Bonus Awards
    c. Reconsideration of Rating and Scoring Decisions
    7. Reduction-in-Force (RIF)
    8. Conversion from NSPS into the Demonstration Project
    a. Placement into Demonstration project Pay Plans and Pay Bands 
from NSPS
    (1) Determine the Appropriate Demonstration Project Pay Plan
    (2) Determine the Appropriate Pay Band
    b. Pay Upon Conversion
    (1) Fair Labor Standards Act (FLSA) Status
    (2) Transition Equity
    c. Pay Band Retention
    d. Converting Employees on NSPS Term and Temporary Appointments
    e. Probationary Periods
    (1) Initial Probationary Period
    (2) Supervisory Probationary Period
    9. Conversion from Other Personnel Systems
    10. Movement Out of the SSC STRL Demonstration Project
    a. Termination of Coverage under the SSC STRL Demonstration 
Project Pay Plans
    b. Determining a GS-Equivalent Grade and GS-Equivalent Rate of 
Pay for Pay Setting Purposes when an SSC Employee's Coverage by a 
Demonstration Project Pay Plan Terminates or the Employee 
Voluntarily Exits the SSC STRL Demonstration Project
    (1) Equivalent GS-Grade-Setting Provisions
    (2) Equivalent GS-Rate-of-Pay-Setting Provisions
    (3) Employees with Pay Retention
III. SSC STRL Demonstration Project Duration
IV. SSC STRL Demonstration Project Evaluation Plan
    A. Overview
    B. Evaluation Model
    C. Evaluation
    D. Method of Data Collection
V. Demonstration Project Costs
VI. Automation Support
    A. General
    B. Defense Civilian Personnel Data System (DCPDS)
VII. Project Oversight and Management
    A. Oversight and Management
    B. Personnel Administration
    C. Modifications
VIII. Required Waivers to Law and Regulation
    A. Waivers to title 5, U.S.C.
    B. Waivers to title 5, CFR
IX. Appendices
    Appendix A: STRL Demonstration Project Series
    Appendix B: SSC STRL Demonstration Project Series Distribution
    Appendix C. Baseline Performance Standards (Career Path-
Independent)
    Appendix D. Core Contribution Elements
    Appendix E. Element Detail Benchmark Example (Technical) for 
Science and Engineering Career Path (ND)
    Appendix F: Sample Pay Range/Contribution Chart (for ND-4 Pay 
Band)
    Appendix G: Basic Compensation Matrix
    Appendix H: Intervention Model

I. Introduction

A. Purpose

    The goal of this personnel demonstration project is to implement a 
personnel management system incorporating the practices from existing 
STRL and other personnel management systems best suited to the specific 
needs of SSC Atlantic and SSC Pacific. As the Navy's leader in Command, 
Control, Communications, Computers, Intelligence, Surveillance, and 
Reconnaissance (C4ISR), SSC Atlantic and SSC Pacific must be able to 
attract, hire, and retain the best scientists, engineers, business, and 
support personnel in the labor market. The organization's human 
resources management authorities, policies, and practices must have the 
flexibility needed to respond quickly to changes in mission, 
organizational constraints, workload, and market conditions. Unless 
specifically stated otherwise, the Technical Directors/Commanding 
Officers of SSC Atlantic and SSC Pacific may delegate their authority 
to effectively implement the provisions of this notice. Any such 
delegations, including details of implementation, will be documented by 
local business rules and/or implementing instructions.
    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. Expected Benefits

    In order to remain the DON leader in C4ISR, SSC Atlantic and SSC 
Pacific must be able to compete with the private sector for the most 
talented, technically proficient candidates, and must have in place a 
system that fosters their development, enhances their performance and 
experience, and provides a strong retention incentive.
    The SSC STRL demonstration project must enable and enhance:
    1. The ability to attract highly qualified scientific, technical, 
business, and support employees in today's competitive environment;
    2. The ability to select personnel and make job offers in a timely 
and efficient manner, with the attendant compensation that attracts 
high-quality, in-demand employees;

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    3. Improved employee satisfaction with pay setting and adjustment, 
recognition, and career advancement opportunities;
    4. Human Resource (HR) flexibilities needed to staff, shape, and 
adjust to evolving requirements associated with sustaining a quality 
workforce for the future;
    5. Increased retention of high-level contributors; and
    6. Simpler and more cost effective HR management processes.
    To effectively meet the above expectations, the SSC STRL 
demonstration project has identified and established in this notice 
those features and flexibilities that provide the mechanisms to achieve 
its objectives. Those features and flexibilities alone, however, will 
not ensure success.
    The nature of the SSC STRL and its ambitious workforce goals will 
require human resources support at an enhanced level. A traditional 
process-oriented and reactive construct will serve neither the mission 
nor the management needs of the two organizations. A primary emphasis 
of the SSC demonstration project is its streamlined hiring, 
sophisticated contribution-based compensation system, talent 
acquisition/retention, and professional human capital planning and 
execution. Accordingly, successful execution of that vision includes a 
human resources service delivery model that is highly proactive, 
expertly skilled in analytical tools, and fully capable of engaging as 
a strategic partner and trusted agent of a modern multi-faceted defense 
laboratory.

C. Participating Organizations, Employees, and Union Representation

    Both SSC Atlantic and SSC Pacific will participate in the project. 
The primary sites of SSC Atlantic and SSC Pacific are in two major 
geographic locations, Charleston, South Carolina, and San Diego, 
California, respectively, but the organizations employ personnel at 
more than two dozen locations worldwide. Locations are diverse in 
employment profiles and size, ranging from several thousand personnel, 
to a single embedded employee. Both major SSC sites are engaged in the 
full spectrum of research, development, test and evaluation, 
engineering, and fleet support.
    Both SSC Atlantic and SSC Pacific are predominantly Navy Working 
Capital Fund organizations. Instead of receiving congressionally 
appropriated funds, operations are funded by dollars received from 
other government agencies on a fee-for-service/break-even basis. In 
order to fully meet naval requirements and successfully assist in the 
execution of the Navy's mission, SSC Atlantic and SSC Pacific must 
maximize management effectiveness and efficiency in order to control 
expenditures, which support a cost competitive position as compared 
with other government agencies.
    SSC Atlantic's and SSC Pacific's STRL personnel management 
demonstration project is intended to govern all SSC Atlantic and SSC 
Pacific employees with the following exceptions: Bargaining Unit 
employees (as stipulated in the paragraph below), Federal Wage System 
employees, Senior Executive Service (SES), Senior Level (SL), and 
Scientific and Professional (ST) personnel.
    SSC Atlantic's and SSC Pacific's human capital complement includes 
a small number of employees (under 150 total) that are represented by 
exclusive bargaining units. Prior to including any employees in 
bargaining units in the STRL demonstration project, SSC Atlantic and 
SSC Pacific will fulfill their obligation to consult and/or negotiate 
with these labor organizations in accordance with 5 U.S.C. 4703(f) and 
7117, as appropriate. Figure 1 identifies SSC Atlantic and SSC Pacific 
employees by major geographic location.

D. Project Overview

    In response to the authority granted by Congress to develop a 
personnel management demonstration project, SSC Atlantic and SSC 
Pacific chartered a Transition Team tasked with the design and 
implementation of the new demonstration project plan. The joint team is 
responsible for developing all associated deliverables, proposals, and 
implementation details. The Transition Team developed its initial 
concept as a result of information-seeking and assistance visits at the 
NRL, Office of Naval Research, and Naval Sea Systems Command, Surface 
Warfare Center, Dahlgren Division, as well as from consultative 
sessions with numerous other STRL laboratory representatives across the 
DoD. The Transition Team continues to solicit and receive information 
and advice from the DUSD(CPP), DoD Civilian Personnel Management 
Service, and a number of organizations with on-going demonstration 
projects. Information and suggestions have been solicited from SSC 
Atlantic and SSC Pacific employees through an ongoing series of 
interviews, briefings, and small-group meetings.
BILLING CODE 5001-06-P

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[GRAPHIC] [TIFF OMITTED] TN11JA11.188

BILLING CODE 5001-06-C

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II. Methodology

A. Project Design

    The four fundamental elements of the SSC STRL personnel management 
system are: (1) Hiring and staffing flexibilities, (2) simplified 
classification, (3) pay banding, and (4) contribution-based 
compensation and assessment. The hiring and staffing flexibilities are 
being implemented in order to better recruit, hire, and retain the most 
capable, qualified, and competent workforce in the job market today. 
Simplified classification is being implemented to streamline the job 
classification process, simplify the effects of administrative 
processes on personnel, and allow for more flexibility in making job 
reassignments. The pay banding structure will create five career paths 
with multiple pay bands within each career path representing the phases 
of career progression that are typical for the respective careers. This 
banding structure will enable managers to more appropriately reward and 
retain a diverse workforce using principles of pay equity and career 
progression. The contribution-based compensation system is 
characterized by an assessment of an employee's contribution to the 
organization and an appropriate pay allocation predicated on the 
assessed level of contribution. The contribution-based compensation and 
assessment is being implemented to more appropriately recognize and 
reward the employees' overall efforts and results.
    While much of the demonstration project will be applied uniformly 
across both Systems Centers, there are decisions that will be delegated 
to the respective Systems Centers so that the needs and cultures of 
those organizations may be taken into account. Decisions at the local 
level will be made through established governance boards set up by the 
appropriate Center Technical Director or Commanding Officer.

B. Personnel System Changes

1. Hiring and Appointment Authorities
a. Expanded Detail Authority
    SSC Atlantic and SSC Pacific will have an Expanded Detail Authority 
providing the ability to: (1) Effect details up to one year to 
specified positions at the same or similar level (positions in a pay 
band with the same maximum salary) without the current 120-day renewal 
requirement specified at 5 U.S.C. 3341; and (2) effect details to a 
position in a pay band with a higher maximum salary up to one year 
within a 24-month period without competition. Details to higher level 
positions beyond one year in a 24-month period require approval of the 
Technical Director/Commanding Officer and are subject to competitive 
procedures. The specifics of these authorities will be stipulated by 
local business rules, policies, or procedures as organizational 
experience dictates.
b. Non-citizen Hiring
    Where Executive Orders or other regulations limit hiring non-
citizens to the excepted service, both SSC Atlantic and SSC Pacific 
will have the authority to approve the hiring of non-citizens into 
competitive service positions when there are no qualified U.S. 
citizens, and the candidate meets all applicable immigration and 
security requirements. In order to make a determination that there are 
no qualified candidates, the position will be advertised extensively 
using paid advertisements in venues such as major newspapers, 
scientific journals, and electronic media as well as through ``normal'' 
recruiting methods. If a non-citizen candidate is the only qualified 
candidate for the position, the candidate may be appointed. The 
selection is subject to approval by the SSC Atlantic and SSC Pacific 
Technical Director/Commanding Officer. This authority will not be 
delegated further.
c. Extended Probationary/Trial Period
    (1) Initial Probationary Period. Candidates hired under the 
demonstration project into positions classified to the Science and 
Engineering and Administrative Specialist/Professional occupational 
families (the nature of whose work requires the manager to have more 
than one year to assess the employee's job performance) will serve a 
three-year probationary/trial period. Personnel assigned to positions 
classified to the Science and Engineering Technical/Technician and 
General Support occupational families will serve a one-year 
probationary/trial period.
    (2) Supervisory Probationary Period. Personnel assigned for the 
first time to supervisory/managerial positions which have a career path 
pay plan indicator of NM will serve a one-year supervisor probationary 
period. The one-year supervisory/managerial probationary period may run 
concurrently with the required initial probationary period for the 
occupational family to which an employee's position is classified.
    (3) Transitional Probationary Periods. Any personnel entering the 
demonstration project from another Federal government personnel 
management system, who have served an initial or supervisory 
probationary period under that system, will be deemed to have met the 
SSC STRL probationary period requirements. Personnel transitioning into 
the SSC STRL demonstration project who have begun, but have not yet 
completed an initial or supervisory probationary period under another 
Federal government system, will have met the probationary requirements 
of SSC STRL when they have completed the terms of the initial and/or 
supervisory probationary periods under which they were hired or placed.
    (4) Termination of Initial Probationary Period Employees. Initial 
probationary employees may be terminated when they fail to demonstrate 
proper conduct, technical competency, and/or acceptable performance for 
continued employment, and for conditions arising before employment. 
When a supervisor decides to terminate an employee during the initial 
probationary period because his/her work performance or conduct is 
unacceptable, the supervisor shall terminate the employee's services by 
written notification stating the reasons for termination and the 
effective date of the action. The information in the notice shall, at a 
minimum, consist of the supervisor's conclusions as to the inadequacies 
of the employee's performance or conduct, or those conditions arising 
before employment that support the termination.
    (5) Termination of a Supervisory Probationary Period. The 
supervisory probationary period may be terminated when supervisors fail 
to demonstrate proper conduct, technical competency, and/or acceptable 
performance for continued assignment as a supervisor, and for 
conditions arising before supervisory assignment. When a supervisory 
probationary period is terminated by the supervisor (the manager) of 
the supervisor in question, the manager shall terminate the supervisory 
assignment by written notification stating the reasons for supervisory 
assignment termination and the effective date of the action. The 
information in the notice shall, at a minimum, consist of the manager's 
conclusions as to the inadequacies of the supervisor's performance or 
conduct, or those conditions arising before supervisory assignment that 
support the termination of the assignment.
    (6) All initial and supervisory probationary period requirements 
will be outlined in local business rules, policies, or procedures. 
Preference eligibles will maintain their rights under applicable law 
and regulation in both the competitive and excepted service.

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d. Expanded Term Appointments
    The Systems Centers perform engineering and scientific work that 
often has project durations of three to six years. The current four-
year limitation on term appointments, as described in 5 CFR part 316, 
imposes a burden on the Centers by forcing the termination of some term 
employees prior to completion of projects they were hired to support. 
This disrupts the engineering and acquisition process and reduces the 
Centers' ability to serve their customers. Under the demonstration 
project, SSC Atlantic and SSC Pacific have the authority to appoint 
individuals under modified term appointments for a period of more than 
one year but not more than five years when the need for an employee's 
services is not predicted to be permanent. These appointments may be 
extended one additional year for a total of six years. Employees hired 
under the modified term appointment authority may be eligible for 
conversion to career or career-conditional appointments in the 
competitive service. To be converted, the employee must have: (1) been 
selected for the term position under competitive procedures, with the 
announcement specifically stating that the individual(s) selected for 
the term position(s) may be eligible for conversion to a career or 
career-conditional appointment at a later date; (2) served a minimum of 
two years of continuous service in the term position; and (3) have a 
current contribution score consistent with acceptable contribution/
performance criteria as established by each Systems Center. Applicable 
probationary periods apply to both temporary and permanent positions.
    Employees serving under term appointments at the time of conversion 
to the SSC STRL demonstration project may be converted to modified term 
appointments provided they were hired for their current positions under 
competitive procedures. These employees may be eligible for conversion 
to career-conditional or career appointments provided they have 
completed at least two years of continuous service, and are performing 
at a satisfactory level. Should this criterion not be met, legacy term 
employees will remain on existing appointments until the not-to-exceed 
date or until some other terminating event occurs. These appointments 
may be extended in accordance with the requirements of 5 CFR part 316. 
The positions under this feature will be defined by local business 
rules, policies, or procedures.
e. Voluntary Emeritus Program
    SSC Atlantic and SSC Pacific will establish a Voluntary Emeritus 
Program. Under the demonstration project, the Systems Centers' 
Technical Directors/Commanding Officers have the authority to offer 
retired or separated employees in Science and Engineering (S&E) or 
Administrative/Professional occupational families (see Appendix B) 
voluntary assignments (non-paid) in the Centers. This authority may not 
be further delegated. The Voluntary Emeritus Program ensures continued 
quality research, mentoring, support, and program management while 
reducing the overall base pay by allowing higher paid employees to 
retire with the opportunity to retain a presence in the Center's 
workplace. The program is beneficial during manpower reductions as 
senior personnel accept retirement and return to provide valuable on-
the-job training or mentoring to less experienced employees. This 
authority includes employees who have retired or separated from Federal 
service. Voluntary Emeritus Program assignments are not considered 
employment by the Federal government, except for purposes of on-the-job 
injury compensation. Thus, such assignments do not affect an employee's 
entitlement to retain buyouts or severance payments based on an earlier 
separation from Federal service.
    To be accepted into the Voluntary Emeritus Program, a volunteer 
must be recommended by a manager within the Centers. Everyone who 
applies is not automatically entitled to a voluntary assignment. The 
process must be clearly documented and records retained at the command 
level in accordance with established business rules, procedures, or 
processes.
    To encourage participation, the volunteer's Federal civilian or 
military retirement pay will not be affected while serving in a 
voluntary capacity.
    Volunteers are not permitted to monitor contracts on behalf of the 
government or to participate on any contracts or solicitations where a 
conflict of interest exists.
    An agreement is established between the volunteer and the 
respective Center and is reviewed by the local legal counsel 
representative. The agreement must be finalized in advance and shall 
include as a minimum:
    (1) A statement that the voluntary assignment does not constitute 
an appointment in the Civil Service and is without pay or any other 
form of compensation;
    (2) The volunteer waives any and all claims against the Government 
because of the voluntary assignment except for purposes of on-the-job 
injury compensation as provided in 5 U.S.C. 8101(1)(B);
    (3) Volunteer's work schedule as needed or requested;
    (4) Length of agreement (defined by length of project or time 
defined by weeks, months, or years);
    (5) Support provided by the Center (travel, administrative, office 
space, supplies);
    (6) 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;
    (7) A provision allowing either party to void the agreement with 
written notice to the other (volunteers have no appeal or grievance 
rights); and
    (8) The level of security access required--any security clearance 
required by the assignment is managed by the appropriate Systems Center 
while the volunteer is a member of the Voluntary Emeritus Program.
f. Direct Hire Authority for Candidates with Advanced Degrees for 
Scientific and Engineering Positions
    (1) Background.
    The Systems Centers have an urgent need for direct hire authority 
to appoint qualified candidates possessing an advanced degree to 
scientific and engineering positions in competitive and excepted 
service. The market is extremely competitive with industry and academia 
for the small supply of highly-qualified and security clearable 
candidates with a master's degree or PhD in science or engineering. Out 
of approximately 35,000 scientists and engineers employed in the DoD 
laboratories; 27% hold master's degrees, while 10% are in possession of 
a PhD. The Systems Centers employ around 3,308 S&Es 29% holding 
master's degrees, while 4% are in possession of a PhD. Over the next 
five years, the Systems Centers plans to hire approximately 400 of the 
country's best and brightest S&Es just to keep pace with attrition. 
This number does not reflect the impact of other actions affecting the 
demand of S&Es in the Systems Centers (e.g., Base Realignment and 
Closure, in-sourcing, and other initiatives which add to the increased 
demand for scientific and engineering expertise). Additionally, 
statistics indicate that the available pool of advanced degree, 
clearable candidates is substantially diminished by the number of non-
U.S. citizens granted degrees by

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U.S. institutions. For instance, in 2006, 20% of master's degrees in 
science and over 35% of PhDs in science were awarded to temporary 
residents.
    It is expected that this hiring authority, together with 
streamlined recruitment processes, will be very effective in 
accelerating the hiring process for candidates possessing a PhD. For 
instance, under a similar authority in the National Defense 
Authorization Act for Fiscal Year 2009, section 1108 (Pub. L. 110-417), 
October 28, 2009, one STRL had fifteen PhD. selectees in 2009 for the 
sixteen vacancies for which they were using this hiring authority. 
Another STRL, using this expedited hiring authority in calendar year 
2009, made thirty firm hiring offers in an average of thirteen days 
from receipt of paper work in the Human Resources Office. Of these 
thirty selectees, twenty-three possessed PhDs.
    (2) Definitions.
    (a) Scientific and engineering positions are defined in accordance 
with OPM guidance as all professional positions in scientific and 
engineering occupations (with a positive education requirement) 
utilized by the Centers.
    (b) An advanced degree is a Master's or higher degree from an 
accredited college or university as defined by OPM, in a field of 
scientific or engineering study directly related to the duties of the 
position to be filled.
    (c) Qualified candidates are defined as candidates who:
    i. Meet the minimum standards for the position as published in 
OPM's operating manual, ``Qualification Standards for General Schedule 
Positions,'' or the laboratory's demonstration project qualification 
standards specific to the position to be filled;
    ii. Possess an advanced degree; and
    iii. Meet any selective factors.
    (d) ``Employee'' is defined by section 2105 of title 5, U.S.C.
    (3) Provisions.
    (a) Use of this appointing authority must comply with merit system 
principles when recruiting and appointing candidates with advanced 
degrees to covered occupations.
    (b) Qualified candidates possessing an advanced degree may be 
appointed to both competitive and excepted service without regard to 
the provisions of subchapter 1 of chapter 33 of title 5, United States 
Code, other than sections 3303, 3321, and 3328 of such title.
    (c) The hiring threshold for this authority shall be consistent 
with DoD policy and legislative language as expressed in any National 
Defense Authorization Act addressing such.
    (d) When completing the personnel action, the following will be 
given as the authority for the Career-Conditional, Career, Term, 
Temporary, or special demonstration project appointment authority: 
Section 1108, NDAA for FY 2009.
    (e) This authority will be administered by the servicing Human 
Resource Office and Human Resources Service Center in accordance with 
the Department of Navy's common business processes, systems and tools.
    (f) Evaluation of this hiring authority will include information 
and data on its use such as numerical limitation, hires made, 
declinations, how many veterans hired, declinations, difficulties 
encountered, and/or recognized efficiencies in accordance with 
established internal business rules, policies, or procedures.
g. Delegated Examining
    The Systems Centers need a process that will allow for the rapid 
filling of vacancies, is less labor intensive, and is responsive to the 
needs of the Centers.
    (1) Delegated Examining Authority. The Systems Centers propose to 
demonstrate a streamlined examining process for both permanent and non-
permanent positions. Competitive service positions with SSC Atlantic 
and SSC Pacific will be filled through Merit Staffing or under 
Delegated Examining. This authority will be administered by the 
applicable servicing Human Resource Office and Human Resources Service 
Center consistent with veterans' preference and merit principles in 
accordance with the Department of Navy's common business processes, 
systems, and tools.
    (2) Description of Examining Process. SSC Atlantic and SSC Pacific 
will utilize category rating rather than the rule of three as described 
in higher level guidance. Additionally, 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 or ranking. Rating and ranking will be required only when the 
number of qualified candidates exceeds 15 or there is a mix of 
preference and non-preference applicants. Statutes and regulations 
covering veterans' preference will be observed in the selection process 
and when rating and ranking are required.
h. Distinguished Scholastic Achievement Appointments
    SSC Atlantic and SSC Pacific Distinguished Scholastic Achievement 
Appointment Authority uses an alternative examining process which 
provides the authority to appoint individuals with undergraduate or 
graduate degrees through the doctoral level to positions up to the 
equivalent of GS-12 for scientific and engineering positions in the S&E 
career path. This enables both Centers to respond quickly to hiring 
needs for eminently qualified candidates possessing distinguished 
scholastic achievements.
    Candidates may be appointed provided they meet the minimum 
standards for the position as published in OPM's operating manual, 
``Qualification Standards for General Schedule Positions,'' and the 
candidate has a cumulative grade point average of 3.5 (on a 4.0 scale) 
or better in their field of study (or other equivalent score) or are 
within the top 10 percent of a university's major school of graduate 
studies.
    Preference eligibles who meet the above criteria will be considered 
ahead of non-preference eligibles. In making selections, to pass over 
any preference eligible(s) to select a non-preference eligible requires 
approval under current objection procedures.
2. Career Path Pay Band Structure
    A fundamental element of the Centers' demonstration project is a 
simplified classification and pay component. Like other STRL 
demonstration projects, the proposed pay banding approach is tied to 
the fifteen GS grade levels and the above GS-15 level (discussed in 
paragraph II.B.2.c.), and reduces them into five to six pay bands 
within a career path (see Figure 2-1). The five distinct career paths 
within SSC STRL are: Science and Engineering (S&E) (ND), S&E Technical/
Technician (NR), Administrative Specialist/Professional (NO), General 
Support (NG), and Supervisor/Manager (NM). In Figure 2-1, dotted areas 
in the ND and NM pay bands are indicative of an overlap in pay, rather 
than a separate pay band. For example, the ND-2 pay band begins at the 
equivalent of the GS-5, step 1, and ends at the GS-9, step 10; while 
the ND-3 band begins at the equivalent of the GS-9, step 1, and ends at 
the GS-11, step 10.

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[GRAPHIC] [TIFF OMITTED] TN11JA11.189

    SSC STRL will develop new and streamlined career path pay band 
descriptors that will replace the OPM classification standards. While 
the SPAWAR pay band descriptors will be based on OPM classification 
standards, they will be different in that these generic pay band 
descriptors encompass multiple occupational series and provide maximum 
flexibility for the organization to assign individuals consistent with 
the needs of the organization and the individual's qualifications. 
These generic career path pay band descriptors will include the 
essential criteria for each pay band within each career path by listing 
the characteristics of the work, the responsibilities of the position, 
and the skills required to perform the function. New pay band 
descriptors will make personnel packages easier to prepare by 
minimizing writing time and will be a more useful tool for other 
management functions. Career progression between pay bands will occur 
by promotion or through seamless pay band movement (paragraph 
II.B.2.d.), and pay progression within pay bands will occur primarily 
through contribution-based pay.
a. Career Paths
    The Systems Centers classification system will be based upon career 
paths and pay bands. Occupations with similar characteristics (as 
defined under OPM guidance) will be grouped together into one of five 
career paths, with pay bands designed to facilitate pay progression. 
Each career path will be composed of pay bands corresponding to 
recognized advancement and career progression expected within the 
occupations. Pay bands will replace individual grades and will not be 
the same in each career path. The designated career paths are: Science 
and Engineering (S&E) (ND), S&E Technical/Technician (NR), 
Administrative Specialist/Professional (NO), General Support (NG), and 
Supervisor/Manager (NM). Like the other STRL Demonstration projects, 
the GS classification occupational series would be retained. SSC STRL 
currently has positions in approximately 156 occupational series in 16 
occupational groupings. Titles of the career paths and associated 
classification occupational series for each path are provided in 
Appendices A and B respectively. The distribution of the occupational 
series to career paths reflects only those occupational series which 
currently exist within the two Systems Centers. Additional occupational 
series may be added as a result of changes in mission requirements or 
OPM-recognized occupations. These additional occupational series will 
be placed in the appropriate career path consistent with the 
established career path definitions.
    The Science and Engineering career path includes professional 
engineering and scientific positions in the physical, biological, 
psychological (engineering psychology), mathematical, and computer 
sciences and student positions for training in these disciplines. 
Specific course work or educational degrees are required for these 
occupations. Employees with advanced degrees or qualifications may be 
advanced more rapidly, or hired at higher pay bands than others. 
Occupational series and their titles included in this career path are 
listed in Appendices A and B. Five pay bands have been established for 
the Science and Engineering career path.
    The S&E Technical/Technician career path includes the 
nonprofessional technician positions that support scientific and 
engineering activities through the application of various skills and 
techniques in electrical, mechanical, physical science, biology, 
mathematics, and student positions for training in these disciplines. 
This career path includes positions such as engineering technician, 
physical sciences technician, and includes other technical specialty 
areas. Employees in these positions may or may not require specific 
course work, and will otherwise progress through bands on the basis of 
evaluated contribution. Specific series and their titles included in 
this career path are listed in Appendices A and B. Five pay bands have 
been established for this career path.
    The Administrative Specialist/Professional career path includes the 
professional or specialist positions in such administrative, technical, 
and managerial fields as finance, procurement, human resources, 
information technology, legal, librarianship, public information, 
safety, social sciences, program and project management, and analysis, 
and student positions for training in these disciplines. This career 
path includes legal counsel, management and other analysts, finance, 
accounting, contract specialists, and information technology managers. 
Employees in this career path may or may not have specific educational 
requirements, and will otherwise advance through bands based on 
evaluated contribution. Series and their titles included in this career 
path are listed in Appendices A and B. Six pay bands have been 
established for this career path.
    The General Support career path includes the assistant and clerical 
positions providing support in such fields as budget, finance, supply, 
and human resources; positions providing support through application of 
typing, clerical, or secretarial knowledge and skills; and student 
positions for training in these disciplines. This career path includes 
mail and correspondence clerks, typists, purchasing, contracting, and 
legal clerks/assistants, and property disposal technicians. Employees 
in this career path may or may not have

[[Page 1936]]

specific educational requirements, and will otherwise advance through 
bands based on evaluated contribution. Series and titles included in 
this career path are listed in Appendices A and B. Five pay bands have 
been established for this career path.
    The Supervisor/Manager career path includes employees performing 
the supervisory functions listed as follows: assign work to 
subordinates based on priorities, difficulty of assignment, and the 
capabilities of employees; provide technical or specialized oversight; 
develop contribution plans and rate employees; interview candidates for 
subordinate positions; recommend hiring, promotion, or reassignments; 
take corrective action, such as warnings and reprimands; identify 
developmental and training needs of employees; and provide and arrange 
for needed training. A supervisory position cannot be established on 
the basis of only one subordinate position. A supervisory position 
cannot be established on the basis of contractor personnel. The 
Supervisor/Manager career path can include any series. Placement within 
the supervisory career path will take into account the level of work of 
the employees being supervised as well as the level of the non-
supervisory duties. Employees in this career path may or may not have 
specific requirements as established by internal business rules, 
policies, or procedures, and will otherwise advance through bands based 
on evaluated contribution. Five pay bands have been established for 
this career path (this career path omits pay band 1 to maintain 
numerical parity with other career paths).
b. Career Path Pay Bands and Levels of Responsibility
    A fundamental purpose of pay banding is to make the distinctions 
between levels easier to discern and more meaningful. The wider scope 
of classification criteria with pay bands provides more flexibility in 
moving individuals to other positions quickly within the pay band as 
mission needs dictate. These wider pay ranges provide a better ability 
to offer more competitive starting salaries to attract candidates to 
highly specialized positions and appropriate compensation for work 
results achieved thereby increasing retention. The basis for the 
demonstration project pay system is each pay band having a base pay 
that exactly corresponds to base pay of the encompassed GS grade 
levels. This continued linkage with the GS system will result in 
adjustments to the pay band base pay ranges through future general pay 
increases under the GS System. Within each career path, pay bands 
typically include the following categories of positions: student 
trainee and/or entry level, developmental, full performance level, and 
expert.
    With fewer classification grades of difficulty and responsibilities 
of work than the General Schedule, the level of responsibility 
reflected in each pay band typically encompasses the responsibilities 
of two or more GS grades. For example, the responsibilities of a pay 
band covering work at the full performance level may represent a 
synthesis of GS-10 and GS-11 responsibilities.
    The S&E ND 2 and ND 3 pay bands overlap at the GS-9 level. Some of 
the engineers and scientists with a Bachelor of Science degree are 
hired with a starting base salary pay that exceeds the equivalent of a 
GS-8, step 10. In order to continue to accommodate the current 
flexibility of managers to set base pay at this level, a pay band that 
extends to the GS-9, step 10, equivalent, yet at the same time 
accommodates classification of entry-level duties at the GS-7 level, is 
required. Furthermore, master's degree scientists and engineers are 
hired at the base pay equivalent of a GS-10 or GS-11, but the pay band 
still needs to accommodate classification of duties at the GS-9 level. 
In order to do this, both an entry-level pay band that goes up to the 
GS-9, step 10, and a second level pay band that begins at the GS-9, 
step 1, are required. The Systems Centers' experience with very wide 
pay bands for developmental positions was somewhat problematic for 
managers and supervisors. Due to the inconsistency in application and 
timing of promotions, there was a wide variation in base pay for 
employees performing similar functions. In order to overcome this 
potentially confusing scenario, SSC STRL will implement an additional 
level in the pay band, as has previously been employed by NAVSEA in 
other pay bands. NAVSEA introduced the overlapping GS level in their 
Administrative/Technical NT pay band at the GS-14 equivalent level in 
both NT-5 and NT-6. For the SSC STRL demonstration project, the overlap 
at the GS-9 level in the ND-2 and ND-3 pay bands allows more 
flexibility in adjusting base pay of employees to an appropriate level, 
commensurate with contribution.
c. Above GS-15
    The pay banding plan for the Supervisor/Manager career path 
includes a pay band 6 to accommodate classification of scientific and 
engineering positions having duties and responsibilities that exceed 
the 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. 
Should the DoD evaluation endorse the establishment of a Professional 
Scientific and Engineering Corps (PSTC), SSC STRL will abide by all 
applicable guidance and regulation associated with DoD's administration 
of such a program.
d. Seamless Movement to a Higher Pay Band Level
    Under the SSC STRL demonstration project, non-competitive movement 
to a higher pay band may occur via the current accretion of duties 
process, as determined by local business rules, and in accordance with 
DoD/DON guidance and regulation; and potentially once a year as a 
direct result of the Contribution Assessment and Recognition System 
(CARS) process (see paragraph II.B.6.), as long as certain specific 
conditions are met. Movement to pay band 6 of the NM pay plan will be 
governed in accordance with section II.B.2.c, Above GS-15 positions. A 
key concept of the demonstration project is that career growth in a 
career path may be accomplished by movement through a career path's pay 
bands by significantly increasing levels of responsibilities, scope of 
work, and duties providing opportunities for

[[Page 1937]]

increasing employee contributions toward the organizational mission. An 
employee's contribution is a reflection of his/her contribution score, 
which is derived from the employee's performance relative to 
contribution elements. Because contribution elements are written at 
progressively higher levels of expected contribution, and equate 
therefore to work performed at higher pay band levels, higher scores 
reflect that the employee's contribution is equivalent to the pay band 
level associated with the score he/she is awarded.
    The pay band level of a position may be increased when an employee 
consistently contributes at the higher pay band level through increased 
expertise and by performing expanded duties and responsibilities 
commensurate with the higher pay band's contribution elements. If an 
employee's contributions consistently enhance and broaden the scope, 
nature, intent and expectations of the position and are reflective of 
higher pay band level contribution elements, the classification of the 
position can be updated accordingly. This form of movement through pay 
bands in a career path is referred to as a seamless pay band movement 
and can only happen within the same career path. Employees cannot cross 
over career paths through this process. The criteria is similar to that 
used in SSC Atlantic's and SSC Pacific's current accretion of duties 
process and must be met for an employee to move seamlessly to the 
higher pay band level. For this movement to occur: (1) The employee's 
current position is absorbed into the reclassified position, with the 
employee continuing to perform the same basic duties and 
responsibilities, albeit at a higher level and (2) the employee's 
current position is reclassified to a higher pay band as a result of 
additional higher level duties and responsibilities. No additional pay 
band movement to another higher pay band level is guaranteed. It may 
take a number of years for contribution levels to increase to the 
extent a pay band move is warranted, and not all employees will achieve 
the increased contribution levels required for such moves.
    Movement to a higher level pay band may be ``triggered'' by the 
CARS process and deferred to the standard accretion schedule or may be 
carried out following the appraisal cycle as an immediate result of the 
CARS process. In either case, pay band movement is always at the 
discretion of the leadership of the Centers and only as a result of 
direct leadership decision. In no case is such movement ``automatic'' 
on the basis of contribution score-based performance alone.
    Any resulting changes in pay bands that occur as a result of the 
CARS process will be processed and documented with the appropriate 
personnel action. Management also has the option to fill vacancies 
throughout the year using various staffing avenues, including details, 
reassignments, or competitive selection procedures as applicable and/or 
required for competitive promotions or temporary promotions. Employees 
may be considered for vacancies at higher pay band positions consistent 
with the demonstration project competitive selection procedures.
3. Classification
a. Simplified Classification Process
    The Systems Centers will create generic, one page pay band 
descriptors with appropriate titles that also serve as the core of pre-
classified position descriptions within the demonstration project. 
Those descriptions may need to be further supplemented with information 
on Fair Labor Standards Act (FLSA) coverage, selective placement 
factors specialized knowledge, skills and abilities required. When 
announcing positions to potential applicants, a description of specific 
duties will be used to enable potential candidates to understand the 
expectations associated with each position. Within the SSC STRL 
demonstration project, the term ``classification of a position'' for 
positions covered by pay banding is defined as the placement of a 
position in its appropriate career path, occupational series, and pay 
band based on the application of standards that are referred to as pay 
band descriptors established at the Systems Center level. Line managers 
will be meaningfully involved in the classification process to make it 
more relevant to their organization's needs.
b. Delegation of Classification Authority
    The Systems Centers' Technical Directors/Commanding Officers may 
delegate classification authority only to the designated management 
authority within their organizational supervisory chain for all 
positions except those in Supervisor/Manager pay band 6. Classification 
authority for Supervisor/Manager pay band 6 will be consistent with DoD 
guidance. Requesting supervisors at any level will provide 
classification recommendations. Support of the applicable Human 
Resources Organization (HRO) 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 Technical Director/Commanding Officer. Those to whom 
authority is delegated are accountable to the Technical Director/
Commanding Officer and are expected to comply with demonstration 
project guidelines on classification and position management, observe 
the principle of equal pay for work of equal value, and ensure that 
position descriptions are current and accurate. All positions must be 
approved through the appropriate Center chain of command, as 
established by internal business rules, policies, and procedures.
c. Classification Appeals
    An employee may appeal the occupational series, career path, or pay 
band of his or her position at any time. Classification appeal 
procedures for employees placed in pay band 6 of the NM career path are 
governed by DoD and are not affected by the appeal procedures described 
in this demonstration project. For all other employees, the 
Classification Appeals to OPM will be replaced by a two-level appeal 
process modeled after the demonstration project previously approved for 
the Naval Weapons Center, China Lake, and Naval Ocean Systems Center, 
San Diego. The two levels of classification appeals are (1) within each 
Systems Center under guidelines developed by governance boards 
established, or as otherwise delegated, by each Center's Technical 
Director/Commanding Officer, and if not resolved locally, (2) at the 
other Systems Center (i.e., at SSC Pacific for SSC Atlantic appeals and 
vice versa). Decisions made at the second level of the appeal process 
are final.
    An employee may not appeal the demonstration project classification 
criteria, the accuracy of the pay band descriptor, or the pay setting 
criteria; the assignment of occupational series to a career path; the 
title of a position; the propriety of a base pay schedule; or matters 
grievable under an administrative or an alternative dispute resolution 
procedure. The evaluation of a classification appeal under this 
demonstration project is based upon the demonstration project 
classification criteria. Case files and final adjudication 
documentation will be forwarded to the servicing HRO.
d. Simplified Assignment Process
    Today's environment of rapid technology development and workforce 
transition mandates that the

[[Page 1938]]

organization have maximum flexibility to assign individuals. Pay 
banding can be used to address these needs. As a result of the 
assignment to a particular pay band descriptor, the organization will 
have maximum flexibility to assign an employee within pay band 
descriptors consistent with the needs of the organization, the 
individual's qualifications and rank, and pay band. Subsequent 
assignments to projects, tasks, or functions anywhere within the 
organization requiring the same area of expertise and qualifications 
would not constitute an assignment outside the scope or coverage of the 
employee's pay band descriptor. Such assignments within the coverage of 
the generic descriptors are accomplished as realignments and do not 
constitute a position change. For instance, an employee can be assigned 
to any project, task, or function requiring similar technical 
expertise. Likewise, a manager could be assigned to manage any similar 
function or organization consistent with that individual's 
qualifications. This flexibility allows broader latitude in assignments 
and further streamlines the administrative process and system.
4. Pay Setting Outside the Contribution Assessment and Recognition 
System (CARS)
    The following definitions and policies will apply to the pay 
setting of new hires, movement of employees within the demonstration 
project from one career path or pay band to another, as well as any 
other pay action outside the CARS.
a. Advanced In-Hire Rate
    Upon initial assignment into the STRL demonstration project, base 
pay may be set anywhere within the pay band consistent with the special 
qualifications of the individual and the unique requirements of the 
position. These special qualifications may be in the form of education, 
training, experience, scarcity of qualified candidates, labor market 
considerations, programmatic urgency, or any combination thereof that 
is pertinent to the position in which the employee is being placed. 
Management of base pay approval decisions will be delineated in 
internal business rules, policies, or procedures. Consideration should 
be given to the base pay of employees performing similar work within 
the work unit. This provision applies to any action which places a non-
demonstration project employee into the demonstration project, 
specifically initial hires, transfers, and reinstatements (or rehires). 
Specific guidelines for application of advanced in-hire rate will be 
established in internal business rules, policies, or procedures.
b. Promotion
    Within the SSC STRL demonstration project career path pay banding 
system, a promotion will be defined as the movement of an employee from 
a lower to a higher pay band in the same career path, or from one 
career path to another wherein the pay band in the new career path has 
a higher maximum base pay than the pay band from which the employee is 
moving (seamless pay band movement under the CARS is not considered a 
promotion under this definition). The minimum base pay increase upon 
promotion to a higher pay band will be 6% or the minimum base pay of 
the new pay band whichever is higher. Promotions will follow Federal 
Merit Promotion policy that provides for competitive and non-
competitive promotions. Promotion pay thresholds may be modified by 
internal business rules, policies, or procedures as organizational 
experience dictates. Promotion increases may not result in base pay 
higher than the maximum base pay of the pay band. Other specific 
guidelines regarding promotions will be documented in internal business 
rules, policies, or procedures.
c. Reassignment
    A reassignment occurs when an employee moves, voluntarily or 
involuntarily, to a different position or set of duties within his/her 
pay band or to a position in a comparable pay band at a comparable 
level of work, on either a temporary or permanent basis. Under this 
system, employees may be eligible for an increase to base pay upon 
temporary or permanent reassignment as described in this section. A 
decision to increase an employee's base pay under this section will be 
based upon clear Systems Centers' business rules that will define 
criteria necessary to justify a base pay increase. Examples of criteria 
may include, but are not limited to, one or more of the following 
factors:
    (1) A determination that an employee's responsibilities will 
significantly increase;
    (2) Critical mission or business requirements;
    (3) Need to advance multi-functional competencies;
    (4) Labor market conditions (e.g., availability of candidates and 
labor market rates);
    (5) Reassignment from a nonsupervisory to a supervisory position;
    (6) Employee's past and anticipated performance and contribution;
    (7) Physical location of position;
    (8) Specialized skills, knowledge, or education possessed by the 
employee in relation to those required by the position; and
    (9) Base pay of other employees in the organization performing 
similar work.
    When an employee is reassigned within his/her current pay band or 
to a comparable pay band, an authorized management official will set 
base pay at an amount no less than the employee's current base pay and 
may increase the employee's current base pay by up to five percent. If 
the employee's current base pay exceeds the maximum of the new pay 
band, no increase is provided, and the employee's base pay will be set 
at that maximum base pay rate. There is no limit to the number of times 
an employee can be reassigned, but local business rules will be 
established to monitor and control all cases that receive reassignment 
base pay change to ensure fairness and consistency across the 
workforce. Reassignment base pay thresholds may be modified or 
increased by internal business rules, policies, or procedures as 
organizational experience dictates.
d. Change to Lower Pay Band
    Within the SSC STRL demonstration project, a change to a lower pay 
band will be defined as the movement of an employee from a higher pay 
band to a lower pay band within the same career path, or from one 
career path to another where the pay band in the new career path has a 
lower maximum base pay than the pay band from which the employee is 
moving. This action may or may not result in a pay reduction; however, 
an employee's base pay may not exceed the maximum of the assigned pay 
band unless the employee is entitled to pay retention as described in 5 
CFR part 536. In cases where change to a lower pay band is involuntary 
and accompanied by a reduction in pay, adverse action procedures under 
5 CFR part 752 remain unchanged.
e. Locality Pay
    All employees will be entitled to the locality pay authorized for 
their official duty station in accordance with 5 CFR part 531 subpart 
F. In addition, the locality-adjusted pay of any employee may not 
exceed the rate for Executive Level IV. Geographic movement within the 
demonstration project will result in the employee's locality pay being 
recomputed using the newly applicable locality pay percentage, which 
may result in a higher or lower locality pay

[[Page 1939]]

and, thus, a higher or lower adjusted base pay. This adjustment is not 
an adverse action.
f. Staffing Supplements
    If at any time after establishment of the demonstration project 
special salary rates (SSRs) are deemed necessary by SSC Atlantic and 
SSC Pacific leadership, they will be implemented via a staffing 
supplement. If implemented, additional internal business rules, 
policies, and procedures will be established on the use and application 
of staffing supplements including any limitations. Employees assigned 
to occupational categories and geographic areas where GS special rates 
apply may be entitled to a staffing supplement if the maximum adjusted 
base pay rate for the demonstration band to which the employee is 
assigned is exceeded by a GS special rate for the employee's 
occupational category and geographic area. The staffing supplement is 
added to the base pay, much like locality rates are added to base pay.
    The staffing supplement plus the base pay is the staffing 
supplement adjusted pay. To calculate the staffing supplement a 
staffing factor must be determined. The staffing factor will be 
determined by dividing the maximum special rate for the banded grades 
by the GS unadjusted rate corresponding to that special rate (step 10 
of the GS rate for the same grade as the special rate). The employee's 
staffing supplement is then derived by multiplying the base pay rate by 
the staffing factor minus one. Therefore, the employee's final staffing 
supplement adjusted pay equals the base pay rate plus the staffing 
supplement. The specific formulas are:

Staffing factor = Maximum special rate for the banded grades
GS unadjusted rate corresponding to that special rate
Staffing supplement = Base pay rate * (staffing factor -1)
Staffing supplement adjusted pay = base pay rate + staffing supplement

    For newly hired employees into the demonstration project, basic pay 
will be determined in accordance with section II.B.4.a, Advanced In-
Hire Rate. Any applicable staffing supplement will be calculated after 
base pay is determined. If a staffing supplement has been authorized by 
Systems Center leadership, any GS or special rate schedule adjustment 
will require re-computing the staffing supplement. Employees receiving 
a staffing supplement remain entitled to an underlying locality rate, 
which may over time supersede the need for a staffing supplement. If 
OPM discontinues or decreases a special rate schedule, pay retention 
provisions will be applied. Upon geographic movement of employees, the 
applicability and amount of any staffing supplement will be re-
determined. Any resulting reduction in pay will not be considered an 
adverse action or a basis for pay retention.
    An established base pay rate plus the staffing supplement will be 
considered adjusted base pay for the same purposes as a locality rate 
under 5 CFR 531.610 (e.g., for purposes of retirement, life insurance, 
premium pay, severance pay, and advances in pay). It will also be used 
to compute worker's compensation payments and lump-sum payments for 
accrued and accumulated annual leave.
g. Other Provisions
    (1) Grade and Pay Retention. The new system will eliminate retained 
grade but will preserve retained pay in accordance with 5 CFR part 536. 
Former NSPS employees retaining a rate that exceeds the limits or 
conditions imposed by 5 CFR part 536 will retain that pay until it 
falls back within those limits or conditions or until the employee's 
eligibility is lost or the retained pay is terminated in accordance 
with 5 CFR 536.308.
    (2) Highest Previous Rate. Employees in the demonstration project 
may have their base/basic pay set consistent with the highest previous 
rate provisions at 5 CFR 531.221 through 223. Use of the highest 
previous rate will be governed by local pay setting policies.
    (3) Recruitment, Retention, and Relocation Incentives. The 
demonstration project may continue to employ these incentives, as 
described in 5 CFR part 575, and provide internal policy, guidance, 
and/or internal procedures for utilizing the incentives as necessary.
    (4) Qualification Standards for Demonstration Project Positions. 
OPM's ``Qualification Standards for General Schedule Positions'' will 
be used to determine qualifications for demonstration project positions 
except with minor modifications to address application of OPM 
qualifications in a pay banding environment.
h. Distinguished Contribution Allowance (DCA)
    SSC Atlantic and SSC Pacific will implement a Distinguished 
Contribution Allowance, a temporary monetary allowance up to 25 percent 
of base pay, which, when added to an employee's rate of locality-
adjusted pay, may not exceed the rate of base pay for Executive Level 
I. It is paid on either a bi-weekly basis concurrent with scheduled pay 
days or as a lump sum following completion of a designated contribution 
period, or a combination of these, at the discretion of the Technical 
Director/Commanding Officer of the appropriate Systems Center. It is 
not base pay for any purpose, such as retirement, life insurance, 
severance pay, promotion, or any other payment or benefit calculated as 
a percentage of base pay. The DCA will be available to certain 
employees whose present contributions are worthy of scores found at a 
higher career level and whose level of contribution is expected to 
continue at the higher career level for at least one year.
    Award of the DCA rather than a change to a higher career level will 
generally be appropriate for employees under the following 
circumstances: (1) Employees have reached the top of their target 
career levels; (2) when it is not certain that the higher level 
contributions will continue indefinitely (e.g., a special project 
expected to be of one- to five-year duration); (3) when no further 
promotion or compensation opportunities are available, but in all 
situations, when current market conditions compensate similar 
contributions at a greater rate in private industry and academia than 
the organization is able to do under normal compensation conditions.To 
be eligible for DCA, employees must meet the criteria below:
    (1) Employees in the S&E, Technical, Administrative Professional, 
General, and Supervisor/Manager career paths are eligible for the DCA 
if their contribution to the organization is deemed worthy, as 
determined by the appropriate Center Technical Director/Commanding 
Officer.
    (2) Employees may receive a DCA for up to five years but for no 
more than 10 cumulative years over an employee's entire career. The DCA 
authorization will be reviewed and reauthorized as necessary, but at 
least annually at the time of the CARS appraisal through nomination by 
the pay pool manager and approval by the appropriate Technical 
Director/Commanding Officer.
    (3) Monetary payment may be up to 25 percent of base pay.
    (4) Nominees are required to sign a statement indicating they 
understand that the DCA is a temporary allowance; it is not a part of 
base pay for any purpose; it is 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.
    All other details regarding nomination, termination, reduction, 
allocation, and budget determination

[[Page 1940]]

will be stipulated by internal business rules, policies, or procedures 
approved by the applicable Center Technical Director/Commanding 
Officer.
i. Pay Differential for Supervisory Functions
    SSC Atlantic and SSC Pacific will establish a pay differential to 
be provided at the discretion of the appropriate Center Technical 
Director or assigned delegates to incentivize and reward personnel 
performing supervisory functions but the functions do not meet all the 
specific criteria to be classified to the formal supervisory career 
path, or the functions are temporary in nature, or the functions are 
otherwise considered not eligible for supervisory career path pay band 
classification. Pay differential-eligible positions will be further 
defined and managed by internal business rules, policies, or 
procedures. A pay differential is a cash incentive that may range up to 
10 percent of the employee's base rate of pay. It is paid on a pay 
period basis as documented via time and attendance, and is not included 
as part of the employee's base rate of pay. The pay differential must 
be terminated if the employee is removed from the designated position/
duties (and is not placed in a position with equivalent duties/
responsibilities), regardless of cause, or who initiates removal. All 
personnel actions involving a pay differential will require a statement 
signed by the employee acknowledging that the differential is not part 
of base pay for any purpose, and may be terminated or reduced as 
dictated by fiscal limitations, changes in assignment or scope of work, 
or by the appropriate Center Technical Director/Commanding Officer. 
Positions, titles, duties and responsibilities which are eligible for 
supervisory differential, as well as standards for differential awards 
will be defined in internal business rules, policies, or procedures. 
The termination or reduction of the differential is not an adverse 
action and is not subject to appeal or grievance.
j. Accelerated Compensation for Developmental Positions
    SSC Atlantic and SSC Pacific will implement Accelerated 
Compensation for Developmental Positions (ACDP) to facilitate 
applicability to a compensation-based assessment approach. ACDP is an 
increase to base pay that may be provided to employees participating in 
Center training programs or in other developmental capacities as 
determined by Center policy. ACDP recognizes growth and development in 
the acquisition of job-related competencies combined with successful 
contribution to the organization. The use of ACDP is limited to: (1) 
Employees in a developmental pay band of a non-supervisory pay plan who 
are in developmental or trainee level positions (developmental/trainee 
positions will be defined by local business rules, policies, or 
procedures); and (2) employees in positions which are assigned to the 
Student Career Experience Program (SCEP).
    Standards by which ACDP increases are provided and development 
criteria by which additional base pay increases may be given will be 
established and documented in internal business rules, policies, or 
procedures. The amount of the ACDP increase generally will not exceed 
20 percent of an employee's base pay. The decision to grant an ACDP 
exceeding 20 percent of an employee's base pay must be made on a case-
by-case basis and approved by the appropriate Center Technical 
Director/Commanding Officer or their delegates as established by 
internal business rules, policies, or procedures. The amount of the 
ACDP increase may not cause the employee's base pay to exceed the top 
of the employee's pay band or that set by internal business rules, 
policies, or procedures. An ACDP increase may not be granted unless an 
employee is in a pay and duty status under the SSC STRL demonstration 
project on the effective date of the increase.
k. Educational Base Pay Adjustment
    SSC Atlantic and SSC Pacific will establish an educational base pay 
adjustment which is separate from other incentive pay(s) and may not 
exceed the top of the employee's assigned pay band. The educational 
base pay adjustment may be used to adjust the base pay of individuals 
who have acquired a level of mission-related education that would 
otherwise make the employee qualified for an appointment at a higher 
level and would be used in lieu of a new appointment. For example, this 
authority may be used to adjust the base pay of employees who are 
participating in a graduate level SCEP, or employees who have obtained 
an advanced degree, such as a Ph.D., in a field related to the work of 
their position or the mission of their organization.
l. Expanded Development Opportunity
    (1) SSC Atlantic and SSC Pacific will establish an Expanded 
Development Opportunities Program which will cover all demonstration 
project employees. An expanded developmental opportunity provides 
possibilities such as (1) long-term training, (2) one-year work 
experiences in an industrial setting via the Relations With Industry 
Program, (3) one-year work experiences in laboratories of allied 
nations via the Science and Engineer Exchange Program, (4) rotational 
job assignments within both SSC Atlantic and SSC Pacific, (5) 
developmental assignments in higher headquarters within the DON and 
DoD, (6) self-directed study via correspondence courses and at local 
colleges and universities, (7) details within SSC Atlantic and SSC 
Pacific and to other Federal agencies, (8) Intergovernmental Personnel 
Act Program Agreements, and (9) sabbaticals.
    Each developmental opportunity period should benefit the 
organization and increase the employee's individual effectiveness as 
well. Various learning or uncompensated developmental work experiences 
may be considered, such as advanced academic teaching or research and 
sabbaticals. An expanded developmental opportunity period will not 
result in loss of or reduction in base pay, leave to which the employee 
is otherwise entitled, or credit for time or service. Input for 
performance rating purposes will be obtained from the gaining 
supervisor to ensure a rating of record is on file and, if warranted, a 
contribution award and/or bonus and retention years' credit for RIF 
purposes is documented.
    Expanded Development Opportunities Program openings will be 
announced as opportunities arise. Instructions for application and the 
selection criteria will be included in the announcement. Final 
selection/approval for participation in the program will be made by the 
appropriate Center Technical Director/Commanding Officer. The position 
of employees on an expanded developmental opportunity may be backfilled 
by temporary assignment of another employee(s) or temporary 
redistribution of work. However, that position or its equivalent must 
be made available to the employee returning from the expanded 
developmental opportunity.
    An employee accepting an Expanded Developmental Opportunity must 
sign a continuing service agreement up to three times the length of the 
assignment with the service obligation to the respective Systems Center 
organization. If the employee voluntarily leaves the organization 
before the service obligation is completed, the employee is liable for 
repayment unless the service agreement or the repayment is waived by 
the SSC Atlantic or SSC Pacific

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Technical Director/Commanding Officer.
(2) Critical Skills Training
    (a) The Commanding Officers/Technical Directors have the authority 
to approve academic degree training consistent with 5 U.S.C. 4107. 
Training is an essential component of an organization that requires 
continuous acquisition of advanced and specialized knowledge. Degree 
training is also a critical tool for recruiting and retaining employees 
with or requiring critical skills.
    (b) Each academic degree training program in its entirety can be 
approved based upon a complete individual degree study program plan. It 
will ensure continuous acquisition of advanced specialized knowledge 
essential to the organization and enhance the ability to recruit and 
retain personnel critical to the present and future requirements of the 
organization. Degree or certificate payment may not be authorized where 
it would result in a tax liability for the employee without the 
employee's express and written consent. Any variance from this policy 
must be rigorously determined and documented. Guidelines will be 
developed to ensure competitive approval of degree or certificate 
payment and that such decisions are fully documented. Employees 
approved for degree training must sign a service obligation agreement 
to continue service in the respective Systems Center for a period three 
times the length of the training period commencing after the completion 
of the entire degree program. If an employee voluntarily leaves the 
Systems Center before the service obligation is completed, he/she is 
liable for repayment of expenses incurred by the SSC STRL that are 
related to the critical skills training. Expenses do not include salary 
costs. The Commanding Officers/Technical Directors have the authority 
to waive this requirement. Criteria for such waivers will be addressed 
in the operating procedures.
    (c) Student Career Experience Program (SCEP) Service Agreement. The 
extended repayment period also applies to employees under the SCEP who 
have received tuition assistance. They will be required to sign a 
service agreement up to three times the length of the academic training 
period or periods (semesters, trimesters, or quarters). In addition, 
the Technical Directors/Commanding Officers of the Systems Centers may 
approve relocation incentives for new SCEP students, and relocation 
incentives to SCEP students whose worksite is in a different geographic 
location than that of the college enrolled.
m. Awards
    To provide additional flexibility in motivating and rewarding 
individuals and groups, some portion of the performance award budget 
will be reserved for special acts and other categories as they occur. 
Awards may include, but are not limited to, special achievements, 
patents, inventions, suggestions, and on-the-spot. The funds available 
to be used for awards are separately funded within the constraints of 
the organization's overall award budget. While not directly linked to 
CARS, this additional flexibility is important to encourage outstanding 
accomplishments and innovation in accomplishing the diverse missions of 
the Systems Centers. Additionally, to foster and encourage teamwork 
among its employees, group awards may be given. Under the SSC STRL 
demonstration project, a team leader or supervisor may allocate a sum 
of money to a team for outstanding performance, and the team may decide 
the individual distribution of the total dollars among themselves, with 
any disputes being resolved by the award allocator. The appropriate 
Center Technical Director/Commanding Officer will have the authority to 
grant special achievement awards to covered employees of up to $25,000.
5. Performance/Contribution Management Principles
    The philosophical base of this demonstration project is that 
employees are valued and trusted and are the organization's most 
critical assets. Accordingly, the primary objectives of the SSC STRL 
demonstration project are to: Develop employees to meet the changing 
needs of the organization; help employees achieve their career goals; 
improve contribution in current positions; retain high performers; and 
improve communication with customers, colleagues, managers, and 
employees. The system focuses on continuous contribution improvement 
and minimizes administrative requirements.
a. Performance Development Assistance
    At the heart of the performance-contribution system is the concept 
of providing organizational resources to support the development 
process. While the design of these resources will be delegated to each 
Systems Center, they will typically consist of performance development 
assistance, specific to each pay pool, for employees or supervisors 
requiring developmental support. These resources will act as a support 
system to identify or help provide for the needs of employees and 
supervisors in the development process.
    Performance development assistance will be available to facilitate 
communications around expectations and needs and help supervisors and 
employees seek agreement throughout all aspects of the performance 
development process. Should performance problems arise, these resources 
will be particularly useful in diagnosing issues impacting performance 
(e.g., employee skills, attitudes and motivation, clarity of job 
expectations, systemic issues, access to information and resources, and 
relationships with co-workers and supervisor). Additional support may 
take the form of identifying options for addressing these issues (e.g., 
development opportunities, tools or equipment to support improved 
performance, and/or reassignment of the employee to a position that 
better matches his/her capabilities and interests). Referrals may also 
be made to other beneficial resources/services and systemic or 
organizational issues may be examined. Supervisors are expected to 
utilize performance development assistance in order to prevent and 
alleviate performance problems. Employees may also seek performance 
development assistance to help in correcting self identified 
performance deficiencies, development planning to enhance their career 
opportunities consistent with the needs of the organization, and 
facilitating communication and feedback with their supervisors, etc.
b. Two-Level Performance Rating System
    Employee performance ratings will be documented annually. The 
system employs a two-level performance rating system: Acceptable and 
unacceptable performance. Acceptable performance is defined as, 
``performance that fulfills the requirements for which the position 
exists.'' Basic performance standards will be established for each 
contribution element; however, a baseline standard of performance from 
which element-specific performance standards are derived is provided in 
Appendix C. This baseline is intended to represent the methodology on 
which performance will be evaluated for all employees, and may be 
modified as organizational experience with the demonstration project 
dictates. A formal determination of unacceptable performance is made 
only if the employee does not meet the requirements detailed in a 
Performance Improvement Plan (PIP) (see paragraph

[[Page 1942]]

II.B.5.f.). No performance-related adverse action will be initiated 
against an STRL employee under 5 U.S.C. chapter 43 until a formal PIP 
has been completed and an employee's performance has been found to be 
unacceptable. Nothing in this section will preclude a performance-
related adverse action under title 5 U.S.C. chapter 75.
c. Establishing Contribution Expectations
    Clear, mutually understood contribution expectations that are 
linked to organizational goals, strategies, and values are fundamental 
to successful individual and organizational performance. The outcome of 
mutually understood contribution expectations is clear communication of 
the products and/or services to be delivered by the employee(s), and 
the success criteria against which those outputs will be assessed. 
Documentation of outputs and success criteria is required to facilitate 
mutual understanding of contribution expectations.
    The most effective means of creating a common understanding is 
through a process in which the supervisor and employee discuss 
requirements and establish contribution goals and expectations. 
Documentation of contribution expectations will be done annually, at a 
minimum, at the beginning of the appraisal cycle. Employees and 
supervisors are expected to actively participate in these discussions 
to seek clarity regarding expectations and identify potential obstacles 
to meeting goals. In addition, employees should explain to the extent 
possible what they need from their supervisor to support goal 
accomplishment. More frequent task specific discussions of expectations 
may be appropriate. In cases where work is accomplished by a team, team 
discussions regarding goals and expectations may be appropriate. 
Expectations for individual contributions to the team goals, however, 
should always be clearly specified.
    Documentation of contribution expectations is a helpful mechanism 
for ensuring clarity of understanding and providing a focus for later 
discussions on progress and developmental needs. In addition to the 
yearly documentation of contribution expectations, documentation of 
expectations is required within 30 days of when an employee begins a 
new or substantially different job.
    It is important that employees understand what is expected in order 
to receive a base pay increase. Supervisors will interpret 
organizational criteria for their employees to clarify how it applies 
to their work and have periodic assessment discussions with employees 
to prevent surprise decisions at the time of payout. In addition, 
supervisors will document their payout recommendation decisions and 
discuss their decision rationale with employees.
d. On-Going Contribution Dialogue
    To facilitate contribution development, employees and supervisors 
will engage in on-going dialogue. Ideally this dialogue will occur as 
part of the day-to-day interactions for the purpose of ensuring a 
common understanding of expectations, reviewing whether expectations 
are being met, providing support in identifying resources or solving 
problems, providing coaching on complex or sensitive issues, providing 
information to increase the understanding of the project context, and 
keeping the supervisor informed of progress. In addition to this on-
going interaction, however, more formal dialogues will occur focused on 
reviewing progress, discussing customer feedback, exploring process 
improvements that could remove obstacles to effective performance, and 
identifying developmental needs to support continual improvement and 
career growth. At a minimum, the employee and supervisor will meet 
twice annually--once at mid-year and again at the end of the 
contribution appraisal cycle. Documentation of these discussions and 
resulting plans to support the continuous improvement of individual 
contribution and organizational performance will be accomplished as 
described in each organization's internal business rules, policies, or 
procedures.
e. Feedback From Multiple Sources
    The primary purpose of feedback in CARS is to provide employees 
with information regarding how well the results of their performance is 
meeting customer requirements in order to help the employees 
continually improve their contribution to the organization. This 
feedback provides input to the review and continuous improvement 
planning discussed as part of the on-going dialogue component.
    The responsibility for employee development and continuous 
improvement is jointly held between the supervisor and employee. They 
are expected to work together to identify internal and external 
customers and to define and implement a process by which the employee 
can regularly receive feedback. A variety of mechanisms may be 
appropriate, such as customer surveys, process measures which track 
customer requirements, and discussions with customers. Supervisors are 
expected to facilitate this process and work with employees to 
interpret the feedback and establish improvement goals.
    Managers and supervisors are also expected to obtain feedback from 
their customers, including their employees, and to use that feedback as 
a basis for establishing their own personal and organizational 
performance development goals.
f. Performance Improvement Plan (PIP)
    When an employee has continued performance difficulties, as 
evidenced by the employee's repeated failure to perform even at the 
basic performance level specified for all employees, the supervisor 
will develop a formal PIP to support the employee in resolving 
performance problems. Performance development assistance may be an 
integral part of this effort. Supervisors may request assistance in 
preventing or alleviating performance problems before the need for 
formal action arises. When there is an indication that the results of 
an employee's performance are consistently failing to meet customer and 
organizational requirements, supervisors are expected to provide 
performance development assistance to analyze the causes of the 
difficulty and develop an approach for resolving it. Development of a 
formal PIP is indicated if and when it is determined that the 
employee's performance, is lagging, as evidenced by the employee's 
repeated failure to perform even at the basic performance level 
specified for all employees and informal intervention has not been 
successful in correcting the problem. Use of the performance 
development assistance is expected throughout the period of the PIP in 
an attempt to facilitate a solution to the problem. The PIP must be 
written and will clearly document organizational expectations for 
successful job performance, specify accountability, identify 
developmental resources to correct any skill deficiencies, define the 
time frame of the PIP, specify organizational support that will be 
provided and how performance results will be monitored. In addition, 
the PIP will clearly specify potential consequences if performance does 
not improve to an acceptable level. Discussions between the supervisor 
and employee will occur during the time frame of the PIP to review 
progress. These discussions must be documented. Unacceptable 
performance may ultimately be addressed via adverse

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action procedures available in 5 U.S.C. chapter 43 or 5 U.S.C. Chapter 
75.
    If an employee's performance is found to be unacceptable following 
the PIP, one of three actions will be taken: (1) Removal from the 
Federal service, (2) placement in a lower pay band (demotion) with or 
without a corresponding reduction in pay, or (3) reduction in pay while 
remaining in the same pay band. Following any base pay reduction, the 
objective is to restore performance, produce acceptable results, and 
maintain base pay commensurate with contribution. A plan will be 
established to maximize the opportunity for success in the assignment 
by clearly identifying performance expectations and defining a plan to 
achieve them within an appropriate time frame, not to exceed 12 months. 
Typically, PIPs should be complete prior to or within 90 days after the 
end of an appraisal period. If a PIP is not completed in that time 
frame the Technical Director/Commanding Officer may grant an additional 
90 day extension. Ratings of record and any contribution scores and 
associated payouts following a PIP that completed after the appraisal 
period will be made retroactive to the end of the appraisal period. 
Formal and informal performance guidance will always be made available. 
If and when performance improves during the period, some or all of the 
reduced base pay may be restored. Such restoration is not retroactive 
and is separate and apart from incentive pay.
    For the demotion actions, the employee may be moved to a lower pay 
band within the most appropriate career path, and the employee's new 
base pay cannot exceed the top of the lower pay band. Within the SSC 
STRL demonstration project, a change to a lower band without a 
reduction in pay would not be considered an adverse action and would 
not be appealable through a statutory appeals process.
6. Contribution Assessment and Recognition System (CARS)
    SSC Atlantic and SSC Pacific plan to model a contribution-based 
system similar to that in use at the NAVSEA Warfare Center's Dahlgren 
Division and NRL's Contribution-based Compensation System (CCS) models, 
with some specific modifications designed to integrate elements of each 
system. SSC Atlantic and SSC Pacific will conduct a careful financial 
review prior to demonstration project implementation and will make 
minor adjustments as needed within the specific budgetary guidelines of 
the NAVSEA contribution-based system procedures.
    The purpose of the CARS is to provide an effective means for 
evaluating and compensating the SSC Atlantic and SSC Pacific 
workforces. It will enhance and increase fairness and consistency in 
the appraisal process, facilitate natural career progression for 
employees, and provide an understandable basis for career progression 
by linking contribution to compensation determinations.
    Supervisors will conduct an annual review of each employee's base 
pay and contribution in order to decide how base pay should be adjusted 
to reflect the employee's contribution to the organization. The 
adjustment may be made as a continuing increase to base pay and/or as a 
one-time cash bonus. The philosophical foundation for contribution-
based pay is described as follows.
    One of the outcomes of pay banding, defined here as any base pay 
range that includes the base pay range of two or more GS grades, is an 
expanded range of base pay progression opportunities for employees 
consistent with proper classification of duties. Contribution-based pay 
is awarded to personnel based on the combination of their contribution 
and their current base pay. With this comes the necessity to ensure 
that pay decisions are consistent with the needs and values of the 
organization. At the same time, they should be seen as fair and 
equitable. While the SSC STRL demonstration project provides discretion 
for SSC Atlantic and SSC Pacific to substantially define the criteria 
and process for managing contribution-based pay, it is appropriate that 
there be general project wide principles that provide a policy 
framework for organizational decisions. Those principles are described 
as follows.
    (a) PRINCIPLE: The organization succeeds through the collective 
contributions of personnel in all occupations.
    SSC Atlantic and SSC Pacific perform critical missions for the Navy 
in support of national defense. These missions require the collective 
efforts of all personnel. While certain positions and occupations are 
highly visible, it is the entirety of the organization operating as a 
collective team toward the same goals that enables the Centers to 
excel. In that regard, no occupational groups under this demonstration 
project will be excluded from opportunities for contribution-based pay 
and bonuses, incentive awards, or other forms of reward or recognition. 
Further, all personnel whose performance is deemed ``acceptable'' in an 
annual SSC STRL demonstration project performance rating can 
participate in contribution assessment and recognition. Amounts and 
time intervals will be set by SSC Atlantic and SSC Pacific.
    (b) PRINCIPLE: Base pay should be commensurate with value of 
contribution to the organization.
    There should be relative base pay equity among personnel whose 
contributions to the organization are of equal value. Consistent with 
this principle, base pay increases should be commensurate with 
contribution. It follows that as an individual's base pay increases; 
there is a corresponding increase in expected level of contribution to 
the organization.
    Typically, when a person is hired or promoted to a higher pay band, 
and base pay is at or near the lower end of that band, there are 
expected successive increases in base pay toward the mid-range of the 
corresponding pay band. This base pay growth is reflective of the 
expected learning curve upon entering a new position and the 
corresponding increase in contribution commensurate with increasing 
experience. Pay progression through the mid-range occurs with 
progressively higher levels of contribution. Beyond that, increasingly 
higher levels of contribution are expected for base pay to 
correspondingly increase through the upper range of the pay band.
a. Rating and Contribution Assessment Process
    (1) Eligibility.
    All employees whose performance is determined to be acceptable in 
an annual performance rating can participate in contribution assessment 
and recognition. Employees receiving an unacceptable rating are 
ineligible for participation in contribution assessment and 
recognition. Additionally, the annual General Pay Increase (GPI) will 
be denied for those with a current rating of unacceptable.
    (2) Contribution-Based Pay Pool.
    Payments under the contribution-based pay system are made from the 
contribution-based pay pool. Each Systems Center will have authority to 
manage the contribution-based pay allocation derived from the base pay 
of employees in that Center that are participating in this 
demonstration project. Within the contribution-based pay pool, there 
are separate funds for base pay increases and bonus payments. The 
contribution-based pay pool is not used to fund promotions between pay 
bands. Pay pool panels or managers may reduce or deny the next annual 
GPI for

[[Page 1944]]

employees whose contributions are in the ``contribution significantly 
below expectations'' category. Such reduction or denial may not place 
an employee in the ``contribution above expectations'' category. The 
employees on retained pay in the demonstration project will receive 
base pay adjustments in accordance with 5 U.S.C. 5363 and 5 CFR part 
536. An employee receiving retained pay is not eligible for a 
contribution base pay increase, but may be eligible for a contribution 
bonus.
    The contribution-based pay pool will be operated within the 
parameters of the overall finance system governing the Systems Centers. 
As a predominately Navy Working Capital Fund (NWCF) activity, SSC 
Atlantic and SSC Pacific operate on a fee-for-service/break-even basis 
within the DoD. Under NWCF, the Centers provide reimbursable services 
for their customers and receive payments based on published stabilized 
rates. The Assistant Secretary of the Navy for Financial Management and 
Comptroller oversees the establishment of these stabilized rates 
through reviews of Biannual Financial Management Budget submissions, 
which are highly visible at all Command levels. This funding process 
imposes a discipline in controlling costs.
    The size of the base pay fund is based on appropriate factors, 
including the following:
    (a) Historical spending for base pay increase (prior China Lake/
Naval Ocean Systems Center demonstration project C Points Fund);
    (b) Labor market conditions and the need to recruit and retain a 
skilled workforce to meet the business needs of the organization; and
    (c) The fiscal condition of the organization.
    The size of the bonus fund will be based on appropriate factors, 
including the following:
    (a) Historical spending for bonuses (prior China Lake/Naval Ocean 
Systems Center demonstration project B Points Fund);
    (b) The organization's fiscal condition and financial strategies; 
and
    (c) Employee retention rates.
    The decision process for defining the size of the contribution-
based pay pool and the funds within that pool will be established at 
the Systems Center level.
    (3) Contribution Assessment and Recognition System (CARS)
    CARS combines performance appraisal and contribution assessment 
into a single annual process. At the end of each appraisal period, base 
pay adjustment decisions are made based on each employee's actual 
contribution to the organization's mission during the period and the 
employee's current base pay. A separate but related function is also 
accomplished by determining if an employee's performance fulfills the 
requirements for which the position was established. Supervisory 
officials recommend scores to reflect each employee's contribution, 
considering both how well the employee is performing and at what level 
the employee is contributing. Often the two considerations are 
inseparable. 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.
    Supervisors will use CARS to measure employee contributions. CARS 
employs standardized contribution elements that represent contribution 
areas for all employees. Each employee in the SSC STRL demonstration 
project will have four basic contribution elements defined in Appendix 
D. The four basic elements may be further differentiated, or additional 
elements derived for specific job functions as demonstration project 
experience dictates.
    Each contribution element will be broken down into specific target 
language, designed to capture the contribution of the jobs in each pay 
band of each career path. For each element, this more detailed guidance 
will assist in distinguishing levels of contribution within a specific 
pay band and ultimately serve as guidance for managers and supervisors 
relative to an employee's contribution. Base pay adjustments are based 
on a comparison of the employee's actual level of contribution and 
current base pay to an expected level of contribution for typical 
employees in a pay band and corresponding base pay range.
    A sample chart showing detailed benchmark standards for the 
technical contribution element in the Scientific and Engineering career 
path (ND) is provided in Appendix E. This example, representative of a 
single contribution element in one career path, is intended to 
demonstrate the model, methodology, and approach to evaluating employee 
contribution. Currently written at the highest contribution standard 
for the contribution elements, specific language and target level may 
be adjusted with demonstration project experience, and based on further 
modifications to contribution elements themselves.
    The CARS process will be carried out by supervisors and pay pools 
in order to facilitate equity and consistency across the organization. 
Contribution assessments and base pay adjustments may be recommended by 
the supervisor and must be approved by the appropriate pay pool manager 
after being validated by the respective pay pool panel, which will 
consist of supervisory officials or other individuals who are familiar 
with the organization's work and the contributions of its employees.
    In the case of Systems Center attorneys, special consideration must 
be made relative to assigned score. To avoid conflict with state bar 
rules, the pay pool panel may not alter the contribution element scores 
or the overall contribution score that SPAWAR counsel assigns to an 
attorney; however, the pay pool panel may make independent judgments, 
such as pay adjustments after considering that score. A reconsideration 
from a SPAWAR attorney will be handled in accordance with the Office of 
General Counsel's grievance procedures after SPAWAR counsel and the pay 
pool panel recommend a resolution.
    Both SSC Atlantic and SSC Pacific expect to have their evaluation 
year run from July 1-June 30, and expect to conduct the annual payout 
no later than the last pay period in October of each year. The first 
partial SSC STRL appraisal cycle is expected to end on 30 June 2011 
(after which the cycle will run 1 July 2011-30 June 2012, with pay 
adjustments being effective no later than the last pay period in 
October 2012, and each year thereinafter). Dates of rating and 
appraisal cycles may be modified further as organizational experience 
dictates.
    (4) Contribution Expectations and Element Weighting
    Supervisors and/or managers may decide that some contribution 
elements are more important than others relative to the applicability 
of the individual employee's function or that some do not apply at all 
to the effective accomplishment of the organization's mission. In such 
instances, element weights may be established in increments of 5% 
including a weight of zero which renders the element not applicable to 
a given employee's position. These supervisor-recommended weights 
should be reviewed by a higher level supervisor. Contribution elements 
and any supplemental criteria will be assigned and agreed to by the 
employee and supervisor. In cases of disagreement

[[Page 1945]]

between employee and supervisor, the higher level supervisor will 
finalize element weighting and any supplemental criteria.
    (5) Assessment.
    The appraisal period will generally be one year, with a minimum 
appraisal period of 90 days. At the beginning of the appraisal period, 
upon an employee's arrival at either Systems Center, 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 path and pay band; 
applicable contribution elements, element details, element weights, any 
established supplemental criteria, and basic acceptable performance 
standards. This communication will be documented and retained in 
accordance with internal business rules, policies, or procedures. The 
communication of information described by this paragraph constitutes 
performance planning as required by 5 CFR 430.206(b).
    At each mid-year assessment and the end of the appraisal period, 
employees will have the opportunity to provide input describing their 
contributions. Standard operating procedures will provide guidance for 
supervisors, pay pools and employees on the requirement, content and 
format of their annual supervisory and employee contribution 
assessments, and on other types of information about employee 
contributions which should be developed and considered by 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 the Systems Center, and other such 
circumstances.
    If an employee changes positions before the final 90 days of the 
appraisal period, feedback will be provided by the losing supervisor to 
the gaining supervisor. If an employee changes positions within the 
demonstration project during the final 90 days of the appraisal period, 
the losing supervisor will conduct a performance rating and recommend a 
contribution score at the time the employee moves to the new position. 
All employees who have worked 90 days or more by the end of the 
appraisal period will receive a performance rating of record and a 
contribution score. For employees currently under a formal PIP at the 
end of the appraisal period, their rating may be delayed up to 90 days 
to allow for completion of the PIP. Employees who report to SSC 
Atlantic or SSC Pacific during the last 90 days of the appraisal 
period, will receive a presumed rating of acceptable, but will not be 
eligible for a contribution assessment. The employees mentioned above 
who are not appraised under CARS will not be eligible for base pay 
increases or bonus awards, but will be given full GPI and locality 
increases. For other position changes within the last 90 days, the 
rating and contribution assessment will be conducted in accordance with 
local business rules, policies, and procedures.
    Contributions will be assessed consistent with the organization's 
policy and criteria as reflected in the written guidance for all 
employees except those not meeting the minimum 90-day performance 
threshold or those receiving an unacceptable rating. Supervisors will 
then review any available employee input and the contribution elements 
to recommend an appropriate contribution score for each employee. 
Recommendations on appropriate base pay increases and/or bonuses, both 
amount and type, will be made based on the employee's contribution 
score and current base pay in accordance with organizational guidance. 
These recommendations will be reviewed by the second-level supervisor. 
Decisions regarding approval/disapproval of recommendations will be 
made at the organizational level to which authority has been delegated 
to manage the pay pool.
    The pay pool panel will meet to compare scores, make appropriate 
adjustments, and approve/determine the final base pay adjustment for 
each employee. Final approval of contribution scores, summary ratings 
and base pay/bonus award decisions will rest with the pay pool manager 
(unless higher level approval is requested or deemed necessary). 
Supervisors will communicate the ratings, scores, and base pay 
adjustment and/or bonus award to each employee, in accordance with 
timeline and guidance determined by internal business rules, policies, 
or procedures.
    (6) Normal Pay Range (NPR)--Base Pay Versus Contribution.
    The NPR is defined as a numerical range of base pay corresponding 
to a related range of contribution scores in which the ideal 
combination of contribution score and base pay falls within that 
expected range. The mathematical output follows a directly proportional 
relationship between contribution score and base pay for each career 
path and pay band centered around a Normal Pay Line, on which a minimum 
contribution score directly corresponds to the minimum base pay of the 
pay band and a maximum contribution score corresponds to the maximum 
base pay of the pay band. By this methodology a base pay half way 
between the minimum base pay and the maximum base pay in a specific pay 
band would correspond roughly to a contribution score of 50% ( x %) of the maximum score possible in order to fall within the 
NPR.
    A sample Normal Pay Range/Contribution Chart is represented in 
Appendix F. This example is intended to demonstrate the methodology, 
model and approach to be used in determining the relationship between 
employee contribution and current salary, and will further be used to 
assist in determining future compensation adjustments. Certain 
specifics, including contribution element score range (0-10 in this 
example), the NPR (as defined by the normal pay line, and both sets of 
upper and lower ``rails''), and associated nomenclature (``zone'' 
labeling/designation) may be adjusted by the demonstration project in 
accordance with normal salary growth, as well as organizational 
experience with the contribution system.
    CARS assumes a relationship between the assessed contribution of 
the employee and an expected range of base pay commensurate with an 
employee's contribution score. Employees whose contribution scores are 
higher than the expected level of contribution for their base pay are 
considered to have ``contribution above expectations,'' while employees 
whose contribution scores are lower than the expected level of 
contribution for their base pay are considered to have ``contribution 
below expectations.'' All other cases are considered ``appropriately 
compensated'' or within the ``contribution as expected'' category. Each 
year, the boundaries for the NPR plus the minimum and maximum rate of 
base pay for each pay band will be adjusted by the amount of the GPI 
increase granted to the Federal civilian workforce as applied in the GS 
increase.
b. Compensation Decision Process
    (1) Employee Compensation.
    Employee compensation can be established, adjusted, and/or 
augmented in a variety of ways, including general pay increases, base 
pay increases, locality pay increases, contribution and incentive 
awards, and promotions. Under the SSC STRL demonstration project, SSC 
Atlantic and SSC Pacific will distribute the budget authority in 
accordance with section II.B.6.a.(2) above, into five categories:
    (a) General pay increases (not part of contribution-based pay pool 
funds);

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    (b) Locality pay increases (not part of contribution-based pay pool 
funds);
    (c) Continuing base pay increases;
    (d) Contribution bonuses; and
    (e) Incentive awards (not part of contribution-based pay pool 
funds).
    From these categories, two annual personnel actions will be 
authorized based primarily on employees' contributions, relative to the 
NPR. Continuing base pay and contribution bonuses typically become 
effective no later than October following each appraisal cycle. General 
Pay Increases (dependent on employee's contribution score in 
relationship to the NPR) and Locality Pay adjustments will be issued at 
the same time they are issued for the greater Federal workforce. Payout 
dates may be redefined as organizational experience is gained.
    In general, the goal of CARS is to pay in a manner such that base 
pay is consistent with employee contribution. A basic matrix of 
compensation eligibility vs. placement relative to NPR is provided in 
Appendix G. More detailed industry and organizational-based guidance is 
being developed to provide specific compensation recommendations to pay 
pool management. This data will change as market, and organizational 
experience dictates. All contribution-based pay pool amounts, and 
consequent payouts, will be in terms of dollars.
    After the annual appraisal process has been completed and the 
employees' contribution scores, and base pay adjustments and/or 
contribution awards have been initially assigned by the appropriate 
supervisory authority, the pay pool manager, in consultation with the 
pay pool panel or other pay pool supervisory and staff officials, will 
finalize/approve the base pay increases, portions of the GPI, and 
contribution bonuses. Internal policies will provide guidance to assist 
pay pool managers in making payout determinations. In most cases, the 
pay pool manager will approve contribution-based continuing pay changes 
and bonuses. In some cases, however, approval of a higher level 
official will be required.
    (2) General Pay Increases.
    General pay increase budget authority will be available as derived 
under 5 U.S.C. 5303 or similar authority. Pay pool panels or managers 
may reduce or deny the annual GPI for employees whose contributions are 
in the ``contribution significantly below expectations'' category. Such 
reduction or denial may not place an employee in the ``contribution 
above expectations'' category.
    (3) Base Pay Increases.
    Base pay increases will normally be granted to employees whose 
contribution places them in the ``contribution as expected'' or 
``contribution above expectations'' categories. In general, the level 
of continuing base pay increase should correspond to the level of 
contribution relative to the normal pay range for the career path and 
pay band. In other words, contribution above the level of the 
established pay range should result in a corresponding increase in base 
pay. The following limitations apply in that a base pay increase should 
not place any employee's:
    (a) Base pay in the ``contribution below expectations'' category;
    (b) Adjusted base pay in excess of Executive Level IV;
    (c) Base pay in excess of the maximum rate of base pay for the 
individual's pay band (unless the employee is being concurrently 
advanced to a higher pay band).
    Continuing base pay increase guidance will be outlined in internal 
business rules.
    Each Systems Center's base pay increase category will be set each 
year at or near 2.4 percent of their individual total base pay rates. 
The 2.4 percent figure will be adjusted as necessary to facilitate the 
most efficient business operations.
    The amount of budget authority available to each pay pool will be 
determined annually by the appropriate Center Technical Director/
Commanding Officer. Factors to be considered by the Technical Director/
Commanding Officer 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 base pay increase allocation may be transferred to the 
contribution-bonus category.
    (4) Contribution Bonus Awards.
    Authority for contribution bonuses (lump-sum payments recognizing 
significant contributions not adequately recognized through a base pay 
increase) will be initially available to pay pools as a straight one 
percent of the total of employees' base pay. The percentage rate may be 
adjusted in future years of the demonstration project. Generally, 
bonuses will be granted to those employees whose contributions place 
them in the ``contribution as expected,'' or in the ``contribution 
above expectations,'' category. Internal business rules will provide 
guidance to pay pool managers in establishing and applying criteria and 
contribution-based bonus award limits to determine significant 
contributions which warrant awards.
    Much of the terminology used above is consistent with both 
performance, and contribution-based evaluation and compensation. Use of 
terms such as ``elements'' and categories of ``contribution above 
expectations'' or ``contribution below expectations'' are to provide 
the direct linkage between the SSC STRL demonstration project and those 
systems from which it has evolved. As SSC STRL is implemented, language 
associated with these areas may be modified in order to facilitate 
workforce understanding and acceptance of contribution theory, as well 
as to effectively integrate annual performance requirements with 
contribution appraisal. Any such changes in terms or associated 
language will not change the essential meaning of performance/
objective/contribution theory.
c. Reconsideration of Rating and Scoring Decisions
    Employees will have the opportunity to request reconsideration of 
their ratings of record and/or assessed contribution scores. In this 
way, SSC Atlantic and SSC Pacific believe that contribution assessment 
disputes will be focused on the substantive and relevant contribution 
issues, which in turn guide base pay and bonus decisions. While the 
specific purpose of the reconsideration dispute is for employees to 
address concerns about such decisions, the process is also intended to 
facilitate communication and understanding between employees and 
supervisors/managers concerning contributions and their impact on pay 
decisions. In addition, the process seeks to identify possible systemic 
problems that need to be addressed. In that regard, reconsideration is 
considered a positive and integral component of an effective 
contribution-based pay system by providing a mechanism to support 
continuous improvement. Accordingly, employees will not be discouraged 
from requesting reconsideration, nor will they be subjected to reprisal 
or stigma. The specific process for reconsideration will be defined at 
the Systems Center level. That process will include, but will not 
necessarily be limited to, the following characteristics: it should be 
administratively streamlined; provide expedited resolution; maintain 
appropriate confidentiality; be fair and impartial; address assertions 
of harmful error involving issues of process and procedure; and ensure 
that management rating and scoring decisions reflect reasonableness in 
judgment in evaluating applicable criteria. Harmful

[[Page 1947]]

error is defined as: Error by the Systems Center in the application of 
its procedures which, in the absence or cure of the error, might have 
caused the Systems Center to reach a conclusion different than the one 
reached. The burden is upon the appellant to show that based upon the 
record as a whole the error was harmful (i.e., caused substantial harm 
or prejudice to his/her rights).
    SSC Atlantic and SSC Pacific will employ an appeal process in which 
the employee desiring reconsideration appeals directly to the 
organization's Technical Director/Commanding Officer or delegate. Prior 
to this consolidated appeal process, employees will be encouraged to 
seek informal reconsideration with first-, second- or third-level 
supervisors. The formal consolidated process will eliminate costly and 
staggered review processes, and will provide the employees timely and 
high-level appeal decisions by a senior third party. The Technical 
Director/Commanding Officer ruling is final. If an employee's rating or 
contribution score is changed during the reconsideration process, the 
new score will be applied to the compensation adjustment process. The 
following are not considered appealable under the reconsideration 
process: compensation decisions such as receipt, non-receipt, or amount 
of general increase, base pay increase, and bonus.
    Appeals that contain allegations that a performance rating was 
based on prohibited action(s) that are subject to formal review and 
adjudication by a third party may not be processed through the 
reconsideration process, but instead may be processed by the employee 
through the applicable third party process. Such third parties include, 
but are not limited to: The Merit Systems Protection Board (MSPB), the 
Office of Special Counsel (OSC), the OPM, the Federal Labor Relations 
Authority (FLRA), and the Equal Employment Opportunity Commission 
(EEOC).
7. Reduction-in-Force (RIF)
    Flexible and responsive alternatives are needed to restructure an 
organization in a short period of time. The proposed RIF system will 
have a single round of competition to replace the ``two round'' 
process. Once the position to be abolished has been identified, the 
incumbent of that position may ``displace'' another employee when the 
incumbent has a higher retention standing and meets OPM and agency 
qualification standards for the position occupied by the employee with 
a lower standing. Retention standing is based on tenure, veterans' 
preference, and RIF Service Computation Date (SCD) as adjusted by the 
employee's contribution scores. Adjustments applied and RIF procedures 
will be specified in internal business rules, policies, or procedures, 
and will be consistent across all pay bands and career paths. An 
employee rated as unacceptable during the 12-month period preceding the 
effective date of a RIF may only displace an employee rated 
unacceptable during that same period.
    5 CFR 351.702 will serve as the criteria to determine employee 
qualification in RIF placement. The displaced individual may similarly 
displace other employees. If/when there is no position in which an 
employee can be placed by this process or assigned to a vacant 
position, that employee will be separated. Displacement is limited to 
one pay band below the employee's present level. A preference eligible 
employee with a compensable service connected disability of 30 percent 
or more may displace up to two pay bands (or the equivalent of five GS 
grades) below the employee's present level. The new system will 
eliminate retained grade but will preserve retained pay in accordance 
with 5 CFR part 536. The competitive area may be determined by career 
paths, business units, product lines, organizational units, funding 
lines, occupational series, competency, geographic location, or a 
combination of these elements, and must include all STRL demonstration 
project employees within the defined competitive area. All positions 
included in the demonstration project within an activity at a specific 
geographic location will be considered a separate competitive area. 
RIFs are conducted by the DON Human Resources Service Centers.
8. Conversion From NSPS Into the Demonstration Project
a. Placement Into Demonstration Project Pay Plans and Pay Bands From 
NSPS
    The employee's NSPS occupational series, pay plan, pay band, and 
supervisory code will be considered upon converting into the 
demonstration project as follows.
    (1) Determine the Appropriate Demonstration Project Pay Plan. 
Employees will be converted into a pay plan based on the occupational 
series of their position. For supervisors, conversion to that pay plan 
will be without regard to the occupational series. In cases where the 
employee is assigned to a NSPS-unique occupational series, a 
corresponding OPM occupational series must be identified using OPM GS 
classification standards and guidance to determine the proper 
demonstration project pay plan.
    (2) Determine the Appropriate Pay Band. The appropriate pay band 
will be determined primarily by classifying each employee's position 
using the applicable classification standards for the Demo project. 
Relevant background information such as GS conversion grade, grade/
level held previously, etc., may be an indicator of the level of 
classification review required.
b. Pay Upon Conversion
    Conversion from NSPS into the demonstration project will be 
accomplished with full employee pay protection. Adverse action 
provisions will not apply to the conversion action. In accordance with 
section 1113(c)(1) of NDAA for FY 2010, which prohibits a loss of or 
decrease in pay upon transition from NSPS, employees converting to the 
demonstration project will retain the adjusted base salary (as defined 
in 5 CFR 9901.304) from their NSPS permanent position at the time the 
position converts or have base pay adjusted to correspond to the base 
pay of the pay band minimum to which they are converting. Upon 
conversion, the retained NSPS adjusted salary may not exceed Level IV 
of the Executive Schedule (EX-IV) plus 5 percent. If the employee's 
base/basic pay exceeds the maximum rate for his or her assigned 
demonstration project pay band, the employee will be placed on 
indefinite pay retention until an event, as described in 5 CFR 536.308, 
results in a loss of eligibility for or termination of pay retention. 
Increases to the retained rate after conversion will be in accordance 
with applicable regulations; however, for any NSPS employee whose 
retained rate exceeds EX-IV upon conversion, any adjustment to the 
retained rate in accordance with applicable pay retention regulations 
may not cause the employee's adjusted pay to exceed EX-IV plus 5 
percent.
    In the case of employees temporarily assigned to an NSPS position 
prior to that position converting to the demonstration project, who is 
then in turn retained in that temporary position immediately after 
conversion--Section 1113(c)(1) would still apply to the temporary 
position, i.e., there will be no loss or decrease in pay as a result of 
the conversion of either a temporary or permanent position from NSPS to 
the demonstration project.
    Employees who were covered by an NSPS targeted local market 
supplement (TLMS) prior to conversion to the demonstration project will 
no longer be covered by a TLMS. Instead they may

[[Page 1948]]

receive a locality or, if applicable similar supplement (e.g., a 
staffing supplement), whichever is greater, or pay retention, if 
applicable. The adjusted base pay upon conversion will not change.
    Once converted, employees may receive other adjustments and/or 
differentials if applicable, as described in this regulation or an 
implementing issuance.
    (1) Fair Labor Standards Act (FLSA) Status. Since FLSA provisions 
were not waived under NSPS and duties do not change upon conversion to 
the demonstration project, the FLSA status determination will remain 
the same upon conversion. Employees will be converted to the 
demonstration project with the same FLSA status they had under NSPS.
    (2) Transition Equity. During the first 12 months following 
conversion to the demonstration project, management may approve certain 
adjustments within the pay band for pay equity reasons stemming from 
conversion. For example, if an employee would have been otherwise 
promoted but demonstration project pay band placement no longer 
provides the opportunity for a promotion, a pay equity adjustment may 
be authorized provided the adjustment does not cause the employee's 
base pay to exceed the maximum rate of his or her assigned pay band and 
the employee's contribution warrants an adjustment. The decision to 
grant a pay equity adjustment is at the sole discretion of management 
and is not subject to employee appeal procedures.
    During the first 12 months following conversion, management may 
approve an adjustment of not more than 10 percent, provided the 
adjustment does not cause the employee's base pay to exceed the maximum 
rate of his or her assigned pay band and the employee's contribution 
warrants an adjustment, to mitigate compensation inequities that may be 
caused by artifacts of the process of conversion into STRL pay bands.
c. Pay Band Retention
    Employees converting from NSPS to the demonstration project will 
not be granted pay band retention based on the pay band formerly 
assigned to their NSPS position.
d. Converting Employees on NSPS Term and Temporary Appointments
    Employees serving under term appointments at the time of conversion 
to the demonstration project will be converted to modified term 
appointments provided they were hired for their current positions under 
competitive procedures. These employees will be eligible for conversion 
to career or career-conditional appointments in the competitive service 
provided they:
    (1) Have served two years of continuous service in the term 
position;
    (2) Were selected for the term position under competitive 
procedures; and
    (3) Are performing at a satisfactory level.
    Converted term employees who do not meet these criteria may 
continue on their term appointment up to the not-to-exceed date 
established under NSPS. Extensions of term appointments after 
conversion may be granted in accordance with 5 CFR part 316, subpart D.
    Employees serving under temporary appointments under NSPS will be 
converted when their organization converts to the demonstration project 
and may continue on their temporary appointment up to the not-to-exceed 
date established under NSPS. Extensions of temporary appointments after 
conversion may be granted in accordance with 5 CFR 213.104 for excepted 
service employees and 5 CFR part 316, subpart D, for competitive 
service employees.
e. Probationary Periods
    (1) Initial Probationary Period. NSPS employees who have completed 
an initial probationary period prior to conversion from NSPS will not 
be required to serve a new or extended initial probationary period. 
NSPS employees who are serving an initial probationary period upon 
conversion from NSPS will serve the time remaining on their initial 
probationary period.
    (2) Supervisory Probationary Period. NSPS employees who have 
completed a supervisory probationary period prior to conversion from 
NSPS will not be required to serve a new or extended supervisory 
probationary period. NSPS employees who are serving a supervisory 
probationary period upon conversion from NSPS will serve the time 
remaining on their supervisory probationary period.
9. Conversion From Other Personnel Systems
    Employees who enter this demonstration project from other personnel 
systems (e.g., Defense Civilian Intelligence Personnel System, DoD 
Civilian Acquisition Workforce Demonstration Project, or other STRLs) 
due to a reorganization, mandatory conversion, Base Closure and 
Realignment Commission decision, or other directed action will be 
converted into the SSC STRL demonstration project via movement of their 
positions using an 890 Nature of Action Code. Employees' positions will 
be classification based upon the position classification criteria under 
the laboratory demonstration project rules and their pay, upon 
conversion, maintained under applicable pay setting rules.
10. Movement Out of the SSC STRL Demonstration Project
a. Termination of Coverage Under the SSC STRL Demonstration Project Pay 
Plans
    In the event employees' coverage under the SSC STRL demonstration 
project pay plans is terminated, employees move with their 
demonstration project position to another system applicable to SSC STRL 
employees. The grade of their demonstration project position in the new 
system will be based upon the position classification criteria of the 
gaining system. Employees when converted to their positions classified 
under the new system will be eligible for pay retention under 5 CFR 
part 536, if applicable.
b. Determining a GS-Equivalent Grade and GS-Equivalent Rate of Pay for 
Pay Setting Purposes When an SSC Employee's Coverage by a Demonstration 
Project Pay Plan Terminates or the Employee Voluntarily Exits the SSC 
STRL Demonstration Project
    If a demonstration project employee is moving to a GS or other pay 
system position, the following procedures will be used to translate the 
employee's project pay band to a GS-equivalent grade and the employee's 
project base pay to the GS-equivalent rate of pay for pay setting 
purposes. The equivalent GS grade and GS rate of pay must be determined 
before movement out of the demonstration project and any accompanying 
geographic movement, promotion, or other simultaneous action. For 
lateral reassignments, the equivalent GS grade and rate will become the 
employee's converted GS grade and rate after leaving the demonstration 
project (before any other action). For transfers, promotions, and other 
actions, the converted GS grade and rate will be used in applying any 
GS pay administration rules applicable in connection with the 
employee's movement out of the project (e.g., promotion rules, highest 
previous rate rules, pay retention rules), as if the GS converted grade 
and rate were actually

[[Page 1949]]

in effect immediately before the employee left the demonstration 
project.
    (1) Equivalent GS-Grade-Setting Provisions.
    An employee in a pay band corresponding to a single GS grade is 
provided that grade as the GS-equivalent grade. An employee in a pay 
band corresponding to two or more grades is determined to have a GS-
equivalent grade corresponding to one of those grades according to the 
following rules:
    (a) The employee's adjusted base pay under the demonstration 
project (including any locality payment or staffing supplement) is 
compared with step 4 rates in the highest applicable GS rate range. For 
this purpose, a GS rate range includes a rate in:
    i. The GS base schedule;
    ii. The locality rate schedule for the locality pay area in which 
the position is located; or
    iii. The appropriate special rate schedule for the employee's 
occupational series, as applicable.
    If the series is a two-grade interval series, only odd-numbered 
grades are considered below GS-11.
    (b) If the employee's adjusted base pay under the demonstration 
project equals or exceeds the applicable step 4 adjusted base pay rate 
of the highest GS grade in the band, the employee is converted to that 
grade.
    (c) If the employee's adjusted base pay under the demonstration 
project is lower than the applicable step 4 adjusted base pay rate of 
the highest grade, the adjusted base pay under the demonstration 
project is compared with the step 4 adjusted base pay rate of the 
second highest grade in the employee's pay band. If the employee's 
adjusted base pay under the demonstration project equals or exceeds the 
step 4 adjusted base pay rate of the second highest grade, the employee 
is converted to that grade.
    (d) This process is repeated for each successively lower grade in 
the band until a grade is found in which the employee's adjusted base 
pay under the demonstration project rate equals or exceeds the 
applicable step 4 adjusted base pay rate of the grade. The employee is 
then converted at that grade. If the employee's adjusted base pay is 
below the step 4 adjusted base pay rate of the lowest grade in the 
band, the employee is converted to the lowest grade.
    (e) Exception: An employee will not be provided a lower grade than 
the grade held by the employee immediately preceding a conversion, 
lateral reassignment, or lateral transfer into the project, unless 
since that time the employee has either undergone a reduction in band 
or a reduction within the same pay band due to unacceptable 
performance.
    (2) Equivalent GS-Rate-of-Pay-Setting Provisions.
    An employee's pay within the converted GS grade is set by 
converting the employee's demonstration project rates of pay to GS 
rates of pay in accordance with the following rules:
    (a) The pay conversion is done before any geographic movement or 
other pay-related action that coincides with the employee's movement or 
conversion out of the demonstration project.
    (b) An employee's adjusted base pay under the demonstration project 
(i.e., including any locality payment or staffing supplement) is 
converted to a GS adjusted base pay rate on the highest applicable GS 
rate range for the converted GS grade. For this purpose, a GS rate 
range includes a rate range in:
    i. The GS base schedule,
    ii. An applicable locality rate schedule, or
    iii. An applicable special rate schedule.
    (c) If the highest applicable GS rate range is a locality pay rate 
range, the employee's adjusted base pay under the demonstration project 
is converted to a GS locality rate of pay. If this rate falls between 
two steps in the locality-adjusted schedule, the rate must be set at 
the higher step. The converted GS unadjusted rate of base pay would be 
the GS base rate corresponding to the converted GS locality rate (i.e., 
same step position).
    (d) If the highest applicable GS rate range is a special rate 
range, the employee's adjusted base pay under the demonstration project 
is converted to a special rate. If this rate falls between two steps in 
the special rate schedule, the rate must be set at the higher step. The 
converted GS unadjusted rate of base pay will be the GS rate 
corresponding to the converted special rate (i.e., same step position).
    (3) Employees with Pay Retention.
    If an employee is receiving a retained rate under the demonstration 
project, the employee's GS-equivalent grade is the highest grade 
encompassed in his or her pay band level. Demonstration project 
operating procedures will outline the methodology for determining the 
GS-equivalent pay rate for an employee retaining a rate under the 
demonstration project.

III. SSC STRL Demonstration Project Duration

    Section 342 of the National Defense Authorization Act for fiscal 
year 1995 (Pub. L. 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 for 
at least the first 5 years of the demonstration project. Major changes 
and modifications to the interventions would be made using the 
provisions of DoDI 1400.37.
    At the five-year point, the entire demonstration will be reexamined 
for either: (a) Permanent implementation, (b) modification and another 
test period, or (c) termination of the project.

IV. SSC STRL Demonstration Project Evaluation Plan

    Consistent with guidance from DoD, SSC Atlantic and SSC Pacific 
propose utilizing the same evaluation plan as is being used by existing 
demonstration projects. Accordingly, standard language for Evaluation 
Plan, Evaluation, and Method of Data Collection (sections IV.B., IV.C, 
and IV.D., respectively) provided by DoD is used in this document to 
describe SSC Atlantic's and SSC Pacific'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 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 (see 
Proposed Plan for Evaluation of the Department of Defense S&T 
Laboratory Demonstration Program, Office of Merit Systems Oversight and 
Effectiveness, June 1995). 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). In March 1996, the Director of Defense Research & 
Engineering (DDR&E), who is responsible for laboratory management, 
entered into an agreement with OPM's Personnel Resources and 
Development Center (PRDC) to conduct the external evaluation of the 
project from FY 1996

[[Page 1950]]

to FY 2001. The Centers will make arrangements for the continued 
evaluation of the project beyond the PRDC evaluation period and 
throughout the life of the demonstration project so as to fulfill the 
requirements of 5 U.S.C. Chapter 47.

B. Evaluation Model

    Appendix H shows an intervention model for the evaluation of the 
demonstration project. The model is designed 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, and 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 (e.g., 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 of 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 evaluation plan.
    The intervention model presented in Appendix H 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, such as 
the job market, legislation, and internal support systems, or support 
factors, such as 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 title 5 
U.S.C. comparison group will be compiled from the Central 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. 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.

V. Demonstration Project Costs

    SSC Atlantic and SSC Pacific will model their demonstration project 
on existing demonstration projects, but must assume some expanded 
demonstration project costs, as detailed in Figure 3-1.
    Current cost estimates associated with implementing the SSC 
Atlantic and SSC Pacific demonstration project are shown in Figure 3.1. 
These include possible automation of training and project evaluation 
systems. The automation and training costs are startup costs. 
Transition costs are one-time costs. Costs for project evaluation will 
be ongoing for at least 5 years.

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VI. 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 atuomation 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 the 
DON and DoD level, (in the form of changes to the Defense Civilian 
Personnel Data System (DCPDS)) to facilitate processing and reporting 
of demonstration project personnel actions, and may be ultimately 
required by the Systems Centers to assist in processing a variety of 
personnel-related actions in order to facilitate management processes 
and decision making.

B. Defense Civilian Personnel Data System (DCPDS)

    DCPDS is the DoD's authoritative personnel data system and program 
of record and, as such, will be the system of choice for the STRL labs. 
The detailed specifications for required changes to DCPDS will be 
provided in the System Change Request (SCR), Form 804, concurrent with 
submission of this document.

VII. Project Oversight and Management

    Project oversight and management will be carried out by the Systems 
Centers' Senior Leadership, composed of the Technical Directors and 
Commanding Officers of both organizations. They will be assisted 
initially by the SSC STRL Demonstration Project Implementation 
Committee, and once established, by the permanent SSC STRL Project 
Management team.

B. 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.

C. Modifications

    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. Modifications would be made in accordance with DoD 
Instruction (DoDI) 1400.37.

VIII. Required Waivers to Law and Regulation

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

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

    Chapter 5, section 552a: Records. Waive to the extent required to 
clarify that volunteers under the Voluntary Emeritus Program are 
considered employees of the Federal government for purposes of this 
section.
    Chapter 31, section 3111: Acceptance of volunteer service. Waived 
to allow for a Volunteer Emeritus Program in addition to student 
volunteers.
    Chapter 33, section 3317(a): Competitive service, certification 
from register (in so far as ``rule of three'' is eliminated under the 
demonstration project).
    Chapter 33, section 3318(a): In so far as ``rule of three'' is 
eliminated under the demonstration Project. Veterans' preference 
provisions remain unchanged.
    Chapter 33, section 3321: Competitive Service; Probationary Period. 
This section waived only to the extent necessary to replace grade with 
``pay band.''
    Chapter 33, section 3341: Details. Waived in its entirety.
    Chapter 41, section 4108(a)-(c): Employee Agreements; Service after 
Training. Waived to the extent necessary to: (1) Provide that the 
employee's service obligation is to the respective Systems Center 
organization for the period of the required service; (3) permit the 
Technical Directors/Commanding Officers to waive in whole or in part a 
right of recovery; and (3) require employees under the Student Career 
Experience Program who have received tuition assistance to sign a 
service agreement up to three times the length of the training.
    Chapter 43, section 4303: Only insofar as it applies to the 
downward

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movement between pay bands because of failure to receive base pay 
increases.
    Chapter 43, section 4304(b)(1) and (3): Responsibilities of the 
OPM. Waived in its entirety to remove the responsibilities of the OPM 
with respect to the performance appraisal system.
    Chapter 45, section 4502: Limitation of cash awards to $10K. Waived 
to allow Technical Director/Commanding Officer to award up to $25K with 
the same level of authority as the Secretary of Defense to grant cash 
awards. The requirement for certification and approval of the cash 
awards by OPM is not required. All other provisions of section 4502 
apply.
    Chapter 51, section 5101-5112: Purpose, definitions, basis, 
classification of positions, review, authority--to the extent that 
white collar employees will be covered by broad banding.
    Chapter 53, section 5301; 5302(1), (8), and (9); section 5303; and 
section 5304: Pay Comparability System. (To the extent necessary to 
allow demonstration project employees covered by broad banding to be 
treated as General Schedule employees and to allow basic rates of pay 
under the demonstration project to be treated as scheduled rates of 
basic pay.)
    Chapter 53, section 5305: Special Pay Authority. Waived in its 
entirety.
    Chapter 53, section 5331-5336: General Schedule Pay Rates. Waived 
in its entirety.
    Chapter 53, section 5362: Grade Retention. Waived in its entirety.
    Chapter 53, section 5363: Pay Retention. Waived only to the extent 
necessary to (1) Replace ``grade'' with ``pay band;'' (2) allow 
demonstration project employees to be treated as General Schedule 
employees; (3) provide that pay retention does not apply to reductions 
in basic pay due solely to the operation of the pay setting rules for 
geographic movement within the demonstration project; (4) enable 
reduction in the GPI for under-contributing employees receiving a 
retained rate; (5) allow no provision of grade or pay band retention 
under this demonstration project; and (6) allow STRL employees 
receiving a staffing supplement to be considered for pay retention when 
the staffing supplement is discontinued or reduced. (The waiver of this 
section does not apply to SL/ST employees unless they move to a GS 
equivalent position under conditions that trigger entitlement to pay 
retention.)
    Chapter 55, section 5545(d): Related to hazardous duty premium pay 
(only to the extent necessary to allow demonstration project employees 
to be treated as General Schedule employees).
    Chapter 57, sections 5753, 5754, and 5755: Related to recruitment, 
relocation, retention payments, and supervisory differential. (These 
sections waived to the extent necessary to allow: (1) Employees and 
positions under the demonstration project to be treated as employees 
and positions under the GS; and (2) that management may offer a bonus 
to incentivize geographic mobility to a SCEP student.)
    Chapter 59, section 5941: Allowances based on living costs and 
conditions of environment; employees stationed outside continental 
United States or Alaska (Only to the extent necessary to provide that 
COLA's paid to employees under the demonstration project are paid in 
accordance with regulations prescribed by the President (as delegated 
to OPM)).
    Chapter 75, sections 7501(1), 7511(a)(1)(A)(ii), and 
7511(a)(1)(C)(ii): Adverse Actions--Definitions. Waived to the extent 
necessary to allow for up to a three-year probationary period and to 
permit termination during the extended probationary period without 
using adverse action procedures for those employees serving a 
probationary period under an initial appointment except for those with 
veterans' preference.
    Chapter 75, section 7512(3); To the extent necessary to (1) replace 
``grade'' with ``pay band'' and (2) exclude reductions in pay band not 
accompanied by a reduction in pay taken under Chapter 43.
    Chapter 75, section 7512(4): Adverse Action. (Only to the extent 
necessary to provide that adverse action provisions do not apply to (1) 
conversions from General Schedule special rates to demonstration 
project pay and reallocations of demonstration project pay rates within 
special rate extensions to locality adjusted pay rates due to 
promotions of general or locality pay increases, as long as the 
employee's total rate of pay is not reduced; and (2) reductions in 
basic pay due solely to the operations of the pay setting rules for 
geographic movement within the demonstration project.)

B. Waivers to title 5, CFR

    Part 300, sections 300.601 through .605: Time-in-grade restrictions 
are eliminated in the demonstration project.
    Part 308, sections 308.101 through 308.103: Volunteer service. 
Waived to allow for a Volunteer Emeritus Program in addition to student 
volunteers.
    Part 315, sections 315.801(a), 315.801(b)(1), (c), and (e), and 
315.802(a) and (b)(1): Probationary period and Length of probationary 
period. Waived to the extent necessary to allow for up to a three-year 
probationary period and to permit termination during the extended 
probationary period without using adverse action procedures for those 
employees serving a probationary period under an initial appointment 
except for those with veterans' preference.
    Part 316, sections 316.301, 316.303, and 316.304: Term Employment. 
These sections are waived to allow modified term appointments as 
described in this Federal Register.
    Part 332, section 332.402: ``Rule of three'' will not be used in 
the demonstration project. When there are no more than 15 qualified 
applicants and no preference eligible, all eligible applicants are 
referred to the selection official without rating or rankings. Statutes 
and regulations covering veterans' preference are observed in the 
selection process and when rating and ranking are required.
    Part 332, section 332.404: Waived to provide that the order of 
selection is not limited to highest three eligibles.
    Part 335, section 335.103: Agency promotion programs. Waived to the 
extent necessary to extend the length of details and temporary 
promotions without requiring competitive procedures or numerous short-
term renewals.
    Part 337, section 337.101(a): Rating applicants. Waived to the 
extent necessary to allow referral without rating when there are 15 or 
fewer qualified candidates and no qualified preference eligibles.
    Part 340, subpart A, subpart B, and subpart C: Other than Full-Time 
Career Employment. These subparts are waived to the extent necessary to 
allow a Volunteer Emeritus Program.
    Part 351, section 351.402(b): Competitive area to the extent that 
``part of the agency'' can be defined by career paths, business units, 
product lines, organizational units, funding lines, occupational 
series, competency, and geographic locations.
    Part 351, sections 351.403(a) and (b): Competitive levels to the 
extent that there is no requirement for the establishment of 
competitive levels in the demonstration project.
    Part 351, section 351.404(a) and (b): Retention register to the 
extent that the requirement to establish separate retention registers 
by competitive level is eliminated.
    Part 351, section 351.501(a)(3): For order of retention, delete 
``as augmented by credit for performance'' under section 351.504. Part 
351, section 351.504: Credit for performance to the extent that

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the demonstration project eliminates service credit for performance.
    Part 351, section 351.504: Performance Credit for RIF, to the 
extent veteran standing is based on Service Computation Data (SCD), 
veterans' preference and contribution scores.
    Part 351, section 351.601 through .608: References to competitive 
levels are eliminated.
    Part 351, section 351.701(b) and (c) Assignment rights (bump and 
retreat): To the extent that the distinction between bump and retreat 
is eliminated and the placement of demonstration project employees is 
restricted to no more than one broad band below the employee's current 
level, except that for a preference eligible with a compensable service 
connected disability of 30 percent or more, the limit is two pay bands 
(or the equivalent of five General Schedule grades) below the 
employee's present level.
    Part 410, section 410.308(a) and (c) sufficient to allow the 
Systems Centers to pay for all courses related to an academic degree 
program approved by the applicable Systems Centers' Technical Director/
Commanding Officer.
    Part 410, section 410.309: Agreements to continue in service. 
Waived to the extent necessary to allow the applicable Systems Centers' 
Technical Director/Commanding Officer to determine requirements related 
to continued service agreements, including employees under the Student 
Career Experience Program who have received tuition assistance.
    Part 430, subpart B, Performance appraisal for General Schedule, 
Prevailing Rate and certain other employees: Section 430.210, OPM 
Responsibilities, is waived. The remainder of subpart B is waived to 
the extent that it is inconsistent with the STRL performance appraisal 
program as described in this Federal Register notice, and, for example, 
sections 430.208(a)(1) and (2): Rating Performance, is waived to allow 
presumptive ratings for new employees hired 90 days or less before the 
end of the appraisal cycle or for other situations not providing 
adequate time for an appraisal.
    Part 432: Only insofar as it applies to the downward movement 
between pay bands because of failure to receive base pay increases. 
Also, modified to delete reference to critical element. For employees 
who are reduced in pay band without a reduction in pay, sections 
432.105 and 432.106(a) do not apply.
    Part 432, sections 432.104 and .105: Proposing and Taking Action 
Based on Unacceptable Performance: Insofar as references to ``critical 
elements'' are deleted and adding that the employee may be ``reduced in 
grade or pay or removed'' if performance does not improve to acceptable 
levels after a reasonable opportunity.
    Part 451, subpart A, section 451.103(c)(2): Waived with respect to 
performance awards under the SPAWAR CARS and Distinguished Contribution 
Allowance.
    Part 511, section 511.201: To the extent that White Collar 
positions are covered by broad banding.
    Part 511, subpart A: General Provisions and subpart B: Coverage of 
the GS. Waived to the extent necessary to allow for the demonstration 
project classification system and pay banding structure.
    Part 511, section 511.601: Applicability of regulations. 
Classification appeals modified to the extent that white collar 
positions established under the project plan, although specifically 
excluded from title 5 CFR, are covered by the classification appeal 
process outlined in this FRN section III.B.5, as amended below.
    Part 511, section 511.603(a): Right to appeal. Waived to the extent 
necessary to substitute pay band for grade.
    Part 511, section 511.607(b): Non-Appealable Issues. Add to the 
list of issues that are neither appealable nor reviewable, the 
assignment of series under the project plan to appropriate occupational 
families and the demonstration project classification criteria.
    Part 530, subpart C: Special Rate Schedules for Recruitment and 
Retention. Waived in its entirety to allow for staffing supplements.
    Part 531, subparts B, D, and E: Determining the Rate of Basic Pay, 
Within-Grade Increases and Quality Step Increases. (Except that the 
provisions relating to highest previous rate under Parts 531.202 and 
531.203 are waived only to the extent necessary to work in a broad 
banding system.)
    Part 531, subpart F: Locality-Based Comparability Adjustments. 
(This waiver applies only to the extent necessary to allow 
demonstration project employees covered by broad banding, except, to be 
treated as General Schedule employees; and to allow basic rates of pay 
under the demonstration project to be treated as scheduled annual rates 
of pay. This waiver does not apply to FWS employees.
    Part 531, subparts B: Determining Rate of Basic Pay. Waived to the 
extent necessary to allow for pay setting and pay for performance/
contribution under the provisions of the demonstration project.
    Part 531, subparts D and E: Within-Grade Increases and Quality Step 
Increases. Waived in its entirety.
    Part 531, subpart F: Locality-Based Comparability Payments. Waived 
to the extent necessary to allow demonstration project employees to be 
treated as GS employees and base rates of pay under the demonstration 
project to be treated as scheduled annual rates of pay.
    Part 536: All provisions pertaining to grade retention. Waived in 
their entirety.
    Part 536, section 536.104: Pay Retention. Waived only to the extent 
necessary to (1) Replace ``grade'' with ``pay band;'' (2) allow 
demonstration project employees to be treated as General Schedule 
employees; and (3) provide that pay retention does not apply to 
reductions in basic pay due solely to the operation of the pay setting 
rules for geographic movement within the demonstration project.) (This 
waiver does not apply to SL/ST employees unless they move to a GS 
equivalent position under conditions that trigger entitlement to pay 
retention.)
    Part 536, subpart B, waived in its entirety. Sections 536.305, 
Adjusting an employee's retained rate when a pay schedule is adjusted, 
and 536.306, Limitation on retained rates. Waived only to the extent 
that under-contributing employees receiving a retained rate will not be 
entitled to the full amount of any increase in the maximum rate of the 
employees' pay band.
    Part 550, sections 550.703: Severance Pay, definition of 
``reasonable offer'' waived by replacing ``two grade or pay levels'' 
with ``one pay band'' and ``grade or pay level'' with ``pay band.''
    Part 550, section 550.902, definition of ``employee:'' Hazardous 
Duty Pay. (Only to the extent necessary to treat demonstration project 
employees covered by broad banding as General Schedule employees.)
    Part 575, subparts A, B, and C: Recruitment Bonuses, Relocation 
Bonuses, Retention Allowances, and Supervisory Differentials. Waived 
only to the extent necessary to allow: (1) Employees and positions 
under the demonstration project covered by broad banding to be treated 
as employees and positions under the General Schedule; (2) relocation 
incentives to new SCEP students; and (3) relocation incentives to SCEP 
students whose worksite is in a different geographic location than that 
of the college enrolled.
    Part 575, subpart D: Waive in its entirety.
    Part 591, subpart B: Cost-of-Living Allowances and Post 
Differential-Non-foreign Areas. (To the extent necessary

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to allow demonstration project employees covered by broad banding to be 
treated as employees under the General Schedule.)
    Part 752, sections 752.101, 752.201, 752.301 and 752.401: Principal 
statutory requirements and Coverage. Waived to the extent necessary to 
allow for up to a three-year probationary period and to permit 
termination during the extended probationary period without using 
adverse action procedures for those employees serving a probationary 
period under an initial appointment except for those with veterans' 
preference.
    Part 752, sections 752.401(a)(3): Reduction in grade and pay (but 
only to the extent necessary to exclude reductions in pay band not 
accompanied by a reduction in pay) and 752.401(a)(4) (but only to the 
extent necessary to exclude conversions from a General Schedule special 
rate to demonstration project pay that do not result in a reduction in 
the employee's total rate of pay).
    Part 752, section 752.401(a)(4): Adverse Action. (Only to the 
extent necessary to provide that adverse action provisions do not apply 
to-- (1) conversions from General Schedule special rates or NSPS 
Targeted Local Market Supplements to demonstration project pay and 
reallocations of demonstration project pay rates within special rate 
extensions to locality adjusted pay rates due to promotions or general 
or locality pay increases, as long as the employee's total rate of pay 
is not reduced; and (2) reductions in basic pay due solely to the 
operation of the pay setting rules for geographic movement within the 
demonstration project.

IX. Appendices

Appendix A: STRL Demonstration Project Series

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Appendix B: SSC STRL Demonstration Project Series Distribution

                                                              SSC STRL Series Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Science and Engineering (ND).........................       0401       0403       0408       0410       0413       0801       0803       0806       0807
                                                            0808       0810       0819       0830       0840       0850       0854       0855       0858
                                                            0861       0893       0896       1301       1306       1310       1313       1320       1321
                                                            1330       1340       1350       1360       1370       1386       1515       1520       1529
                                                            1550       0701       0899       1599       0180       1399       1501

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Administrative Specialist/Professional (NO)..........       0018       0020       0028       0080       0101       0132       0170       0184
                                                            0201       0260       0301       0340       0341       0342       0343       0346       0391
                                                            0501       0505       0510       0511       0560       0904       0905       0950       1001
                                                            1021       1035       1040       1071       1082       1083       1084       1101       1102
                                                            1103       1150       1221       1222       1410       1412       1601       1640       1670
                                                            1712       1750       1801       1810       1811       1910       2001       2003       2010
                                                            2030       2032       2050       2101       2130       2150       2152       2210       0399
                                                            0599       1099       1199       2299
S&E Technical/Technician (NR)........................       0404       0802       0809       0856       0895       1311       1341       1521       1531
                                                            0021       1060       1152       1371
General Support (NG).................................       0019       0029       0086       0134       0181       0203       0302       0303       0304
                                                            0305       0309       0312       0318       0322       0326       0335       0344       0350
                                                            0356       0361       0390       0392       0394       0503       0525       0540       0544
                                                            0561       0986       1087       1105       1106       1107       1411       2005       2102
                                                            2135       0332       0335
Supervisor/Manager (NM)..............................        All
                                                          Series
--------------------------------------------------------------------------------------------------------------------------------------------------------
* NSPS-unique series 2203 & 2204 were directly converted in the SSC STRL Demonstration Project to series 0332 & 0335 (in the General Support Career
  Path) respectively.

Appendix C: Baseline Performance Standards (Career Path-Independent)

    Work is timely, efficient, and of acceptable quality. Flexibility, 
adaptability, and decisiveness are exercised appropriately. Leadership 
effectively demonstrates commitment to mission, ethical behavior, and 
integrity. Interactions show respect for individual differences and 
diversity. Personal and organizational interactions exhibit and foster 
cooperation and teamwork. Communications are clear, concise, effective, 
and at appropriate level. Resources are utilized effectively and 
efficiently to accomplish the mission. Personal and organizational 
interactions also enhance customer relations and actively promote 
rapport with customers.

Appendix D: Core Contribution Elements

    Technical: This element measures personal and organizational 
problem solving results. It is comprised of the following components: 
Scope/impact, Complexity/difficulty, Independence, and Creativity
    Teamwork and Communication: This element measures individual and 
organizational teamwork and cooperation as well as effectiveness of 
oral/written communications. It is comprised of the following 
components: Scope of team effort, Contribution to team, Team 
effectiveness, Level of interaction (audience), and Communication (oral 
and written)
    Management: This element measures personal and organizational 
utilization of resources to accomplish the mission. (Resources include 
but are not limited to personal time, equipment and facilities, human 
resources and funds.) This element also measures the effectiveness of 
personal and organizational interactions with customers, both internal 
and external. It is comprised of the following components: Scope of 
resource responsibility, Planning, Execution, Customer interaction 
level, Customer needs
    Leadership: This element measures individual and organizational 
leadership. It is comprised of the following components: Scope of 
leadership influence, Leadership activities, Mentoring/employee 
development
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