National Defense Authorization Act for Fiscal Year 2004

National Defense Authorization Act for Fiscal Year 2004 National Security Personnel System (NSPS) Current Status as of 17 November 2003 Passed House on 7 November Passed Senate on 12 November

NSPS Overview • Establishes framework for new personnel system • Many details need to be worked out • Do. D working groups developing implementation procedures based on established Component Demonstration Projects* • 120, 000 DON employees eligible for initial coverage • Excludes: • DON • NAVSEA Warfare Centers • Naval Research Laboratory • Office of Naval Research • One Air Force and six Army labs • Wage Grade – All Services * Preliminary information based on Best Practices policy and procedures 2

NSPS Goals and Expected Outcomes • Flexible, Agile and Effective Civilian HR System • Improve Readiness by tying performance to mission • Improve Quality of the Workforce through performance feedback • Reward Excellent Performance • Simplify Personnel Process • Increase Organizational Effectiveness 3

NSPS Provisions • Merit-based System • Based on existing statutory Merit System principles • Protects veterans • Employee representatives and OPM involved in development and deployment • Pay Bands – replaces 15 grades and 10 steps * Career Group Name Level 1 Level 2 Level 3 Level 4 CG 1 Professional and Administrative Management GS 5 -12 GS 13 -14 GS-15 Above GS-15 CG 2 Engineering, Scientific, and Medical Support GS 1 -4 GS 5 -7 GS 8 -11 GS-12 & above to CG 1 CG 3 Business and Administrative Support GS 1 -4 GS 5 -7 GS 8 -10 GS-11 & above to CG 1 4

NSPS Provisions • Pay for Performance • To maximum extent possible, maintains funding levels for pay pools for FY 04 -08 as would otherwise have been allocated had NSPS not been established • Funds for pay pool will include: • Promotions expected had employees remained in GS pay schedule • Within-grade increases • General (January) pay increase * • Payouts, effective in March, determined by supervisory appraisal * • More detailed and definitive performance appraisals * • Eliminates January pay raise and within-grade increases * • Does not eliminate locality pay increase * • Increase can be to basic pay, a one-time cash payment, or both * 5

NSPS Provisions • Senior Executive Service Pay • Single Pay Band* • Base Salary of $116, 500 to $154, 700 with approved performance system • Total Compensation, including awards and bonuses, capped at no more than Vice President’s total annual compensation (currently $192, 600) • Increases salary cap by ~$50, 000 6

NSPS Provisions • Hiring of up to 2, 500 Experts Do. D-wide for up to five years • Rehired Annuitants with no offset to retired pay (similar to Military) • Initial career appointment requires 3 -year probationary period * • On-the-spot hiring – criteria not yet determined (i. e. , critical positions, difficult to fill) * • Reassignments and Promotions • Employees may be reassigned within bands without competition * • Alternative forms of competition now possible, e. g. promotion boards, ranking based on performance appraisal * 7

NSPS Provisions • Workforce Shaping • Reduction in Force - Retention primarily based on performance * • Permanent Early Retirement and Separation Incentive Authority * • Separation Incentives of up to $25, 000 • External Agency Review • Labor Relations • National Level Bargaining – Supercedes current agreements • Local bargaining on other issues • Internal (Do. D) Appeals System - MSPB review based on Do. D regulations 8

Implementation Challenges • Changing culture from Entitlement to Performance • Annual pay increase not guaranteed • Performance Evaluations need to be specific and defensible • Communicating and documenting performance goals • Providing professional feedback to employees on performance • Managing Costs • Controlling pay increases within the bands • Ensuring performance is tied to business results • Technology • Systems for documenting and tracking performance goals 9

Implementation Challenges, con’t • Communication/Training • Informing employees of benefits of new system • Guidance to managers and executives about their role • Interface with Unions • Developing employee performance goals • Funding • Do. D PBD 707 • $2. 6 M from each service for establishment and operation of Do. D NSPS Implementation Office • DON • Developing, deploying and implementing new performance system • Training and Communicating to managers and employees 10