[Federal Register Volume 88, Number 64 (Tuesday, April 4, 2023)]
[Notices]
[Pages 19991-19993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06766]


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OFFICE OF PERSONNEL MANAGEMENT


Personnel Demonstration Project; Pay Banding and Performance-
Based Pay Adjustments in the National Nuclear Security Administration

AGENCY: U.S. Office of Personnel Management.

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

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SUMMARY: The Civil Service Reform Act, authorizes the Office of 
Personnel Management (OPM) to conduct demonstration projects that 
experiment with new and different human resources management concepts 
to determine whether changes in policies or procedures would result in 
improved Federal human resources management. On December 21, 2007, OPM 
published a document in the Federal Register announcing final approval 
of a demonstration project plan for the National Nuclear Security 
Administration (NNSA), a separately organized agency within the U.S. 
Department of Energy (DOE). This notice constitutes OPM's approval of a 
modification of NNSA's final project plan to change performance rating 
levels and a related change to the performance rating level pay shares.

DATES: These modifications to NNSA's demonstration project final plan 
are effective immediately upon publication of this notice.

FOR FURTHER INFORMATION CONTACT: National Nuclear Security 
Administration: Melanie Ramirez, 505-261-6338, 
[email protected]. Office of Personnel Management: Michael 
Bostwick, 720-308-3265, [email protected].

[[Page 19992]]


SUPPLEMENTARY INFORMATION: 

1. Background

    OPM approved NNSA's demonstration project final plan and it was 
published in the Federal Register on December 21, 2007 (72 FR 72776). 
The demonstration project was implemented on March 16, 2008, modified 
by three technical corrections to the final project plan on July 31, 
2008, as published in the Federal Register (73 FR 44786) and modified 
by minor administrative changes, one participating organization change, 
and two employee coverage changes on February 14, 2014 (79 FR 9007).
    All employees of the Naval Nuclear Propulsion Program in the 
competitive services (as defined in section 2102 of title 5, United 
States Code) and all employees of the Department of Navy who are 
assigned to the Naval Nuclear Propulsion Program and are in the 
excepted services (as defined in section 2103 of title 5, United States 
Code) participate in the NNSA's demonstration project. With the 
publishing of the current NNSA Act on February 24,2020, NNSA's 
demonstration project was extended for 10 years from the date of 
publication.
    NNSA's demonstration project has been evaluated routinely with the 
latest evaluation taking place in 2017. These evaluations resulted in 
overall positive results.

2. Statement of Purpose

    The principal purposes of the NNSA demonstration project are to--
    (1) Modify and simplify the General Schedule (GS) classification 
system by establishing pay bands which may cover more than one grade; 
and
    (2) Modify the GS pay system to base pay increases on performance 
distinctions made under a credible, strategically aligned performance 
appraisal program and thereby improve the results-oriented performance 
culture within the organization.
    The primary goals of the project are to:
    (1) Improve hiring by allowing NNSA to compete more effectively for 
high quality employees through the judicious use of higher entry 
salaries;
    (2) Motivate and retain staff by providing faster pay progression 
for high-performing employees;
    (3) Improve the usefulness and responsiveness of the position 
classification system to managers;
    (4) Increase the efficiency of administering the position 
classification system through a simplified pay-banded application of 
the current General Schedule grade structure, and reduce the procedural 
steps and documentation requirements traditionally associated with 
classifying positions;
    (5) Eliminate automatic pay increases (i.e., annual adjustments 
that normally take effect the first day of the first pay period 
beginning on or after January 1) by making pay increases performance 
sensitive, so that only Fully Successful (known as ``Fully Meets 
Expectations'' in NNSA) and higher performers will receive pay 
adjustments, and the best performers will receive the largest pay 
adjustments;
    (6) Integrate with, build upon, and advance the work of several key 
human capital management improvement initiatives and projects currently 
underway in NNSA, including--
    a. Advancing the ongoing refinement of NNSA's enterprise-wide 
performance management program, including automated refinements,
    b. Achieving greater parity, though not complete harmony, with 
NNSA's mature excepted service pay-banded and pay-for-performance 
system (e.g., will have a lower high-end pay band; no automatic pay 
increases, etc.),
    c. Building on the simplified position description (PD) format and 
automated PD library that are already in place,
    d. Continuing to develop improved performance management skills 
among first-line supervisors through increased program rigor, 
additional training, and better guidance materials, to better develop 
standards that reflect differences in performance,
    e. Establishing a system of career enhancing career paths for the 
purpose of developing, advancing, and retaining employees,
    f. Building on the workforce analysis and planning system, already 
in place, to identify FTE needs and competency needs and skills gaps, 
to conduct a valid occupational analysis to construct meaningful pay 
bands.
    To accomplish these goals, NNSA modified and waived parts of the GS 
classification and pay system by identifying broad career paths, 
establishing pay bands which often combined grades, eliminating 
longevity-based step progression, and providing for annual pay 
increases based on performance.

3. Description of Changes to the Project Plan

    NNSA amends the original demonstration project final plan (72 FR 
72776) to make two significant changes to the NNSA demonstration 
project performance rating system. One change concerns performance 
rating levels and one change concerns the number of performance shares 
assigned to identified performance rating levels.

(1) Performance Rating Levels Change

    Section III, B.1. indicates the NNSA current performance appraisal 
program uses a four-level rating pattern to both summarize performance 
and to appraise performance at the element level. Its summary level 
pattern under 5 CFR 430.208(d) uses Levels 1, 2, 3, and 5, which NNSA 
has labeled Does Not Meet Expectations, Needs Improvement, Fully Meets 
Expectations, and Significantly Exceeds Expectations, respectively.
    NNSA believes that a rating recognizing employee performance above 
the Fully Meets Expectations (FME) level but not at the level of 
Significantly Exceeds Expectations (SEE) is a potential motivating 
factor for employees. In response, NNSA is altering the current 
Performance Rating titles to better reflect levels of employee 
performance to recognize employees who exceed expectations but do not 
meet the requirements for the SEE performance rating.
    Section III, B.1. is updated to read ``The program currently uses a 
five-level rating pattern to both summarize performance and to appraise 
performance at the element level, its summary level pattern under 5 CFR 
430.208(d) uses Levels 1, 2, 3, 4, and 5, which NNSA has labeled Does 
Not Meet Expectations, Needs Improvement, Fully Meets Expectations, 
Exceeds Expectations, and Significantly Exceeds Expectations, 
respectively.''

(2) Performance-Based Pay Adjustments--Performance Shares Change

    Section III, C.2. discusses how performance shares are distributed 
based on performance rating level and states: ``Initially, the number 
of shares for each rating level will be as follows: 4 shares are 
assigned to a Significantly Exceeds Expectations summary rating when an 
employee receives SEE ratings in all critical elements; 3 shares are 
assigned when an employee receives a summary rating of SEE, but one or 
more critical elements are rated at FME; 2 shares are assigned to an 
FME summary rating when one or more critical elements are rated at SEE; 
and 1 share is assigned to an FME summary rating when no critical 
element is rated below FME. Employees who receive a final summary 
rating of FME with one critical element rated at the NI level are not 
eligible for any shares from the performance pay pool.''

[[Page 19993]]

    The table below, which is included in the DEMO Policies and 
Procedures Manual, illustrates the current performance share 
distribution.

------------------------------------------------------------------------
       Summary rating level                Derivation           Shares
------------------------------------------------------------------------
Level 4--Significantly Exceeds     All Specific Performance           4
 Expectations (SEE).                Objectives (SPOs) are
                                    rated at the SEE level.
                                   A majority of the SPOs             3
                                    are rated at the SEE
                                    level and the remaining
                                    SPOs rated at the FME
                                    level.
Level 3--Fully Meets Expectations  There is an equal amount           2
 (FME).                             of SPOs rated at the SEE
                                    and FME levels, or a
                                    majority of the SPOs are
                                    rated at the FME level
                                    with the remaining SPOs
                                    rated at the SEE level.
                                   All SPOs are rated at the          1
                                    FME level.
Level 2--Needs Improvement (NI)..  One or more NI SPOs with           0
                                    none rated DNME.
Level 1--Does Not Meet             One or more SPOs rated             0
 Expectations (DNME).               DNME.
------------------------------------------------------------------------

    Section III, C.2. is updated to read ``The number of shares for 
each rating level will be as follows: 4 shares are assigned to a 
Significantly Exceeds Expectations summary rating when an employee 
receives SEE ratings in all critical elements; 3 shares are assigned 
when an employee receives a summary rating of EE, when a majority of 
SPOs are rated SEE or EE and the remaining are rated FME; 2 shares are 
assigned to an FME summary rating when an equal amount of SEE or EE and 
FME SPOs, or a majority are rated FME and the remaining are rated SEE 
or EE; 1 share is assigned to an FME rating when all SPOs are rated FME 
and no critical element is rated below FME. Employees who receive a 
final summary rating of FME with one or more critical elements rated at 
the NI level are not eligible for any shares from the performance pay 
pool.''
    The performance share distribution is updated to reflect the 
implementation of the five-level performance rating change. Pay share 
distribution is outlined in the table below:

------------------------------------------------------------------------
       Summary rating level                Derivation           Shares
------------------------------------------------------------------------
Level 5--Significantly Exceeds     All SPOs are rated SEE...          4
 Expectations (SEE).
Level 4--Exceeds Expectations      Majority of SPOs are               3
 (EE).                              rated SEE or EE and the
                                    remaining are rated FME.
Level 3--Fully Meets Expectations  Equal SEE or EE and FME            2
 (FME).                             SPOs or majority are
                                    rated FME and the
                                    remaining are rated SEE
                                    or EE.
                                   All SPOs are rated FME...          1
Level 2--Needs Improvement (NI)..  One or more NI SPOs with           0
                                    none rated DNME..
Level 1--Does Not Meet             One or more SPOs rated             0
 Expectations (DNME).               DNME.
------------------------------------------------------------------------

    This change will take effect immediately upon publication and the 
rating share pattern will be applied in computing performance-based 
shares at the end of FY 2023 performance appraisal period. This table 
will be incorporated into the NNSA DEMO policies and procedures manual.

4. Notification Responsibilities

    As required by 5 CFR 470.315, NNSA has the following notification 
responsibilities for this project modification: Notify and make copies 
of this Federal Register notice available to all employees affected by 
the activities of the demonstration project.
U.S. Office of Personnel Management.

Stephen Hickman,
Federal Register Liaison.

Approval

    Pursuant to 5 CFR 470.315, OPM approves the following modification 
to NNSA's final project plan.

Specific Textual Changes to the Project Plan

    In FR Doc. 07-6144, published on December 21, 2007 (72 FR 72776), 
make the following textual changes:
    (1) On Page 72794: ``Program Requirements''
    Program requirements is amended, as excerpted:
    ``The program currently uses a five-level rating pattern to both 
summarize performance and to appraise performance at the element level. 
Its summary level pattern under 5 CFR 430.208(d) uses Levels 1, 2, 3, 
4, and 5, which NNSA has labeled Does Not Meet Expectations, Needs 
Improvement, Fully Meets Expectations, Exceeds Expectations, and 
Significantly Exceeds Expectations, respectively.''
    (2) On Page 72795: ``Performance Shares''
    Performance Shares is amended, as excerpted:
    ``The number of shares for each rating level will be as follows: 4 
shares are assigned to a Significantly Exceeds Expectations summary 
rating when an employee receives SEE ratings in all critical elements; 
3 shares are assigned when an employee receives a summary rating of EE, 
when a majority of SPOs are rated SEE or EE and the remaining are rated 
FME; 2 shares are assigned to an FME summary rating when an equal 
amount of SEE or EE and FME SPOs, or a majority are rated FME and the 
remaining are rated SEE or EE; 1 share is assigned to an FME rating 
when all SPOs are rated FME and no critical element is rated below 
FME.''

[FR Doc. 2023-06766 Filed 4-3-23; 8:45 am]
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