Federal Register, Volume 76 Issue 30 (Monday, February 14, 2011)

[Federal Register Volume 76, Number 30 (Monday, February 14, 2011)]
[Notices]
[Pages 8530-8570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3094]

[[Page 8529]]

Vol. 76

Monday,

No. 30

February 14, 2011

Part IV

Department of Defense

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Science and Technology Reinvention Laboratory (STRL) Personnel
Management Demonstration Project, Department of the Navy (DON), Naval
Air System Command (NAVAIR) Naval Air Warfare Center, Aircraft Division
(NAWCAD), and Naval Air Warfare Center, Weapons Division (NAWCWD);
Notice

Federal Register / Vol. 76 , No. 30 / Monday, February 14, 2011 /
Notices

[[Page 8530]]

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DEPARTMENT OF DEFENSE

Office of the Secretary

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 NAWCAD and the NAWCWD 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:
NAVAIR: Mr. Richard Cracraft, Naval Air Warfare Center, Weapons
Division (NAWCWD), Code 730000D, 1 Administration Circle, Building
00464, China Lake, CA 93555-6100.
DoD: Ms. Betty A. Duffield, CPMS- PSSC, Suite B-200, 1400 Key
Boulevard, Arlington, VA 22209-5144.

SUPPLEMENTARY INFORMATION:

1. Background

Since 1966, many studies of Department of Defense (DoD)
laboratories have been conducted on laboratory quality and personnel.
Almost all of these studies have recommended improvements in civilian
personnel policy, organization, and management. Pursuant to the
authority provided in section 342(b) of Public Law 103-337, as amended,
a number of DoD STRL personnel demonstration projects were approved.
These projects are ``generally similar in nature'' to the Department of
Navy's ``China Lake'' Personnel Demonstration Project. The terminology,
``generally similar in nature,'' does not imply an emulation of various
features, but rather implies a similar opportunity and authority to
develop personnel flexibilities that significantly increase the
decision authority of laboratory commanders and/or directors. The STRL
Personnel Management Demonstration Projects involve broad-banded pay
systems and simplified classification; compensation linked to
performance, including contribution-based pay; recruitment and staffing
changes; and enhanced training and development including critical
skills training, Voluntary Emeritus Corps, and sabbaticals.
This demonstration project involves: (1) Two appointment
authorities (permanent and modified term); (2) extended probationary
period for newly hired employees; (3) pay banding; (4) streamlined
delegated examining; (5) modified reduction-in-force (RIF) procedures;
(6) simplified job classification; (7) a mission aligned objectives and
compensation based appraisal system; (8) market based starting
salaries; (9) academic degree and certificate training; (10)
sabbaticals; and (11) a Voluntary Emeritus Corps.

2. Overview

The covered organizations transitioned to the National Security
Personnel System (NSPS) late in 2008. Subsequently, section 1113 of
NDAA for FY 2010, Public Law 111-84,123 Stat. 2486, required all
employees to exit NSPS by no later than January 1, 2012. Another
section of NDAA for FY 2010, section 1105, identifies NAWCAD and NAWCWD
as STRLs and requires them to convert to an STRL demonstration project
within 18 months of enactment of NDAA for FY 2010. DoD published notice
in 75 FR 55160, September 9, 2010, that Section 1105 of the NDAA for FY
2010, Public Law 111-84, 123 Stat. 2486, October 28, 2009, designated
NAWCAD and NAWCWD as new STRLs in subsection 1105(a) of NDAA for FY
2010 and further provided notice of the intent of the Naval Air Warfare
Center (NAWC) to model and implement an STRL Personnel Management
Demonstration project based on the flexibilities in use by the other
STRL laboratories and demonstration projects. Relative to NAWC's intent
to model and implement a new demonstration project, DoD received
comments from 14 people during the public comment period which ended on
October 12, 2010. All comments were carefully considered. The following
summary addresses the pertinent comments received, provides responses,
and notes resultant changes to the original NAWC project plan published
in 75 FR 55160, September 9, 2010. Several commenters addressed more
than one topic and each topic was counted separately. Thus, the total
number of comments exceeds the number of individual commenters.

A. General Issues

In reviewing the comment submissions, several recurring themes were
discerned that spanned multiple sections of the proposed regulation and
which were not necessarily aimed directly at the substance of the
proposed regulation. General issues identified included: (1) Requests
for a return to the former demonstration project (officially identified
as the Navy Personnel Management Demonstration Project but generally
recognized as the China Lake Demo, which became a permanent Alternative
Personnel System); (2) the perceived similarity of some aspects between
this STRL and the National Security Personnel System (NSPS) and the
rescinding of NSPS; (3) transparency and fairness; and (4) a request
for the comment period to be extended.
(1) Return to the Former Navy Personnel Management Demonstration
Project
Comments: Three comments were received expressing the benefits and
value of the Navy Personnel Management Demonstration Project and its
tried and tested positive outcomes. Two of these also asked that it be
reinstated.
Response: While there is no question about the value and benefits
that were realized under the Navy Personnel Management Demonstration
Project, it is not possible to return to it. NDAA 2010 specifically
states that NAWCAD and NAWCWD were to exit NSPS and transition to a
Science and Technology Reinvention Laboratory Demonstration Project and
that the organizations had 18 months from signature of the NDAA to
implement this decision.

[[Page 8531]]

(2) Perceived Similarities Between STRL and NSPS
Comments: Ten commenters made the comparison that this STRL
demonstration project is similar to or the same as NSPS and will thus
not be a success.
Response: The proposed STRL provisions are based on concepts proven
over more than 25 years for the Navy Demonstration Project and more
than 10 years by the multiple STRLs in Army, Air Force and Navy who
have operating demonstration projects. There are both conceptual
similarities and differences between the NAWC STRL, NSPS, the other
existing STRL demonstration projects, and the Navy Personnel Management
Demonstration Project that covered Space and Naval Warfare Systems
Command (SPAWAR) organizations as well as NAWCWD for more than 25
years. For instance, the NAWC STRL has a five-level performance rating
system, so did the Navy Personnel Management Demonstration Project and
so does NSPS. The STRL has five occupational families: Scientific and
Engineering (S&E), S&E Technician, Technical Specialist, Business
Professional & Program Management, and Administrative Support as did
the Navy Personnel Management Demonstration Project; NSPS has four:
Standard Career Group, Scientific and Engineering Career Group, Medical
Career Group and Investigative and Protective Services Career Group.
The STRL will have hiring flexibilities that neither the Navy Personnel
Management Demonstration Project nor NSPS had available. These
flexibilities, such as the proposed Direct Hire Authority for
Scientists and Engineers with Advanced Degrees, Distinguished
Scholastic Achievement Appointment Authority (DSAA) for Scientific and
Engineering Positions, and Non-Citizen Hiring flexibilities are only
available to laboratories covered by STRL demonstration projects.
(3) Transparency and Fairness
Several comments were received that addressed the topics of the
transparency and fairness of the STRL.
Comments: Four of the comments spoke to protecting the integrity of
the STRL and the need for credible unbiased oversight and employee
protections. Some expressed a concern for the possibility that the STRL
personnel system for the laboratories could be sub optimized due to
efforts to reconcile differences with the other personnel systems
(General Schedule (GS), Interim GS, Federal Wage System (FWS), Senior
Executive Service (SES), and Scientific and Professional (ST)) in place
across NAVAIR.
Response: DoD actively monitors the new STRLs which are also
subject to periodic evaluations by DoD. Congress maintains oversight
through a mandatory 5-year report and evaluation of each new STRL as
well as a mandatory annual report on demonstration project activities.
Any major changes that are made to the approved regulations require
notification to the appropriate stakeholders and possible publication
of a Federal Register Notice (FRN).
(4) Extension of the Comment Period
Comments: Two commenters asked for an extension to the comment
period.
Response: Unfortunately there is no opportunity to extend the
comment period as the NDAA 2010 requires that the STRL demonstration
project be implemented and conversion from NSPS occur no later than 18
months after enactment of NDAA for FY 2010 or by 28 April 2011.

B. Participating Organizations and Employees

Three comments were received that relate to the definition of the
organizations participating and the coverage of the STRL.
(1) Definition of the Organizations Participating
Comments: The section on participating organizations, section D
should be corrected as it inaccurately identifies each Warfare Center
site as a `business unit.'
Response: This correction has been made.
(2) Coverage of the STRL
Comments: One commenter questioned the organizational coverage of
the field sites by the STRL and another requested a provision that
would allow employees to opt out of the STRL. Another commenter
suggested that STRL positions be filled by former military who had
successful military careers and that other civilian employees be
excluded from coverage to avoid impacts on their productivity.
Response: The NDAA identified NAWCAD and NAWCWD as the
organizations to be covered by an STRL. Each of these organizations
includes more than one geographic location. All locations and civilian
employees covered by NSPS are required by the Congressional mandate to
convert to the STRL Demonstration Project. Employees covered by other
personnel systems such as those in health care, medical, intelligence,
SES, FWS, and ST are excepted from conversion to the Demonstration
Project. The provisions of the STRL do not apply to any bargaining unit
employees within NAWCAD or NAWCWD until a mutual agreement is reached
between the STRL organization and the applicable exclusive
representative. The obligation to consult and/or negotiate with all
labor organizations is established by 5 U.S.C. 4703(f) and 7117, as
applicable.

C. Project Design

Comments: Three comments were received on this subject. One comment
requested that the STRL provide for every optional OPM benefit. The
other two comments request that the STRL provision include medical and
legal support to employees in the STRL and that medical testing should
be conducted to identify whether employees have disabilities that
prevent them from performing successfully under the STRL.
Response: STRL demonstration projects are prohibited by law from
making any changes in the areas of employee benefits, employee leave,
equal employment opportunity, political activity, merit system
principles, or other prohibited personnel practices.

D. Pay Banding

There were six comments on the proposed pay banding. Four
identified the pay bands as being too broad and two addressed the use
of a supervisory and managerial pay band.
(1) Pay Bands Are Too Broad
Comments: Four comments noted that the proposed STRL pay bands are
too broad and will have negative impacts on financial systems and the
ability to appropriately recognize employees' progression to higher
levels of work and that the provision for more promotion opportunities
could be seen as a positive by the workforce. Examples of specific
comments include: ``Broad pay bands, such as were designed in NSPS and
seem to be continuing into STRL, cause stabilized rate setting concerns
and instability in our net operating results. When the salary range of
the band fluctuates so wildly (salary ranges with a span of $50K or
more) it is hard to set the rates to minimize the stabilized rate
variance to any degree of certainty. This presents a problem
particularly in NWCF facilities where workload can vary by millions
between those being charged at stabilized rates versus accelerated
labor. A change in the workforce shifting from assumptions used when
weighting the stabilized

[[Page 8532]]

rates will cause net operating result gains or losses that have the
potential to impact future year rates, compounding the problem.'';
``Thirdly, the STRL paybands are still too broad. While the attempt has
been made to restructure the NSPS paybands, the lack of built in checks
and balances for salary control remains unaddressed.'' and ``The last
point revolves around employee morale. Employees crave promotion
recognition. Additional bands meet that need. * * * As it is in the
current STRL pay band proposal, promoting once takes them from a GS 1-4
pay band to being capable of moving all the way to a GS 11 with only
one promotion.''
Response: We concur with these recommendations and have modified
the pay band levels by adding additional levels within each of the
occupational families with the exception of the Administrative Support
family. The number of pay levels within the Supervision & Management
pay schedule also remains the same. All levels now have a base pay span
of less than $50,000 and the additional levels provide for more
promotional opportunities while still meeting the need for broad bands
to facilitate the ability to quickly move employees to areas of mission
need when necessary.
(2) Supervisory Pay Bands
Comments: Two comments were submitted and questioned the utility of
a supervisory and managerial pay band. They spoke to the blended nature
of the work of many positions which include both supervisory and non-
supervisory duties with emphasis on the technical workforce in the
laboratories and the difficulties of drawing distinctions in the value
of these two elements. One commenter made reference to the former Navy
Personnel Management (China Lake) Demonstration Project and its
experience in this area where there was no separate pay schedule for
supervisory positions.
Response: The establishment of a separate supervisory pay schedule
is not incompatible with the STRL and does not define how the
organization values or compensates different types of work. One of the
differences between the China Lake demonstration project and the STRL
is the coverage. The STRL covers two large organizations with multiple
diverse sites and the flexibilities adopted under the STRL must be
broad enough to address the needs of each. The China Lake Demo was
originally designed for and applied to one part of what is today
NAWCWD. The establishment of a separate pay schedule recognizes the
differences inherent in supervisory and non-supervisory work but also
allows flexibility for the organizations to compensate both types of
positions appropriately.

E. Classification

Four comments addressed the topic of position classification. Three
speak to the position series used by the STRL and the other focuses on
the method of actually creating and assigning pay schedules and pay
bands to positions.
(1) Occupational Series
Comments: These comments advocated the use of the established OPM
series and one of the three also suggested the establishment of a
single multi-disciplinary series for all supervisory/managerial
positions covered by the STRL.
Response: The STRL has adopted the use of Office of Personnel
Management (OPM) standard series and titling practices. This STRL
demonstration project did not identify supervision and management as a
separate occupational family because all supervisory/managerial
positions do not have knowledge, skills, and qualifications
requirements similar enough to be classed together. Each occupational
family is built around a body of knowledge and area of expertise, e.g.,
Scientific and Engineering as compared to Business and Program
Management. Supervision and management, while arguably a body of
knowledge, is not separate unto itself but rather spans all of the
occupational families that are identified under the STRL.
(2) Classification Standards and Position Descriptions
Comments: This comment spoke to the streamlined procedures of the
China Lake classification system and the ease of application and
consistency it brought to creating position descriptions.
Response: The FRN speaks at a high level and the flexibilities as
proposed allow for the streamlined classification procedures available
in the former China Lake system while also allowing room for the
adoption of additional features if desired. The specific system and
procedures used to create and classify positions will be included in
internal operating issuances.

F. Mission Aligned Objectives and Compensation

Eleven comments were submitted on the performance management
aspects of the STRL. Three addressed the timing of the beginning and
end of the annual performance cycle. One spoke to employee self
assessments. One commented on the proposed pay pool process. Five
expressed thoughts on the performance pay outcomes. The final one
identified a concern with the proposed request for reconsideration
regulation.
(1) Annual Performance Cycle Begin and End Dates
Comments: These comments identified concerns with the current
performance rating cycle and payout date. The timing of the end of the
performance cycle to coincide with the end of the financial fiscal year
has a significant workload impact on employees and the organization. At
this time of year, the pay pools have to work with estimated salary
values for the January increase since the official figures are not
normally published until late November or December. Furthermore, moving
the cycle dates and payout to a schedule that permitted the payout to
occur before the holiday period could be desirable from the employees'
perspective.
Response: The difficulties presented by the timing of the current
cycle are recognized and the FRN is purposefully silent on the specific
timing of the performance period to permit the organizations the
flexibility of evaluating other options and changing the cycle if
warranted.
(2) Self Assessments
Comments: It was recommended that employees have the choice to
submit written statements of accomplishments at mid-year and end-of-
year performance milestones rather than being required to provide them.
Response: We concur that there are circumstances which may prohibit
the submission of written statements and that employees should have a
choice in this matter. The appropriate changes have been made in the
relevant section to make the submission of written statements
permissive rather than required.
(3) Pay Pools
Comments: The comment questioned the cost/benefit value of the pay
pool process when the cost of the process is compared to the amount of
money available to allocate in the payout process.
Response: The experience of all the demonstration projects is that
the startup learning curve associated with new performance systems and
pay pools is fairly steep but it does return to more reasonable levels
after two or three cycles. This initial investment is more than
returned in out-year benefits. The demonstration project performance

[[Page 8533]]

system delivers increased focus on what is expected to be accomplished
and enhanced rewards for those who contribute the most. Pay pools are
charged primarily with ensuring that the appraisals and ratings
assigned to each employee are appropriate and rating benchmarks are
applied consistently across the organization. Establishing this shared
understanding of the broad benchmarks and their application to specific
accomplishments is one of the Pay Pool Managers' and Panels' core
responsibilities and while important, the specific amount of money in
the pay pool fund is secondary and subordinate to this.
(4) Performance Payout Determination
Comments: Five comments expressed thoughts in this area. Two spoke
specifically to the overlapping payout points available for Partial
Mission Success and Mission Success ratings. One of the two commented
that 0 payout points for an employee with a Mission Success rating was
the wrong decision and the other commented that there should be a
lesser reward for Partial Mission Success vs. Mission Success and
suggested that the Partial Mission Success should receive one-half of
any January pay increase as well as 0 payout points. Two spoke to the
complexity of the proposed payout point computations and one of these
suggested a fixed dollar value for payout points similar to one of the
former demonstration projects. The final comment expressed concern with
the variance in the payout point value that can occur between pay
pools.
Response: The Partial Mission Success rating is applicable for
those situations where less than was needed was accomplished but some
work was accomplished that did contribute to the mission. There is
merit in the recommendation to have the payout for this to be at a
lesser level and other STRL demonstration projects do have this
flexibility available and consideration may be given to adopting this
flexibility at a later date.
The inclusion of the 0 payout points option for Mission Success
provides the flexibility for the supervisor and pay pool panel to
appropriately rate and compensate those situations where Mission
Success has been fully achieved but the employee is already adequately
compensated for that level of work and neither an increase in salary
beyond the equivalent of the annual general pay increase or a bonus is
warranted for the accomplishments for that year. The employee would
receive the full January general increase authorized for all employees
so they do not fall behind; but all jobs, no matter what the
compensation system, reach a plateau where salary growth levels off;
some at the top of the pay scale and others at different points.
There is a degree of complexity in the computation of the payout
point value and it can vary by pay pool due to the factors required for
the calculation. The design provides for a variable pay point value to
allow the ratings to be paramount and drive the outcomes rather than be
limited by the payout. The method chosen to implement this capability
is one that is similar to a process with which the organization is
familiar and has applied successfully in the past.
(5) Requests for Reconsideration
Comments: One commenter spoke to this area pointing out that it is
not reasonable for a Pay Pool Manager to be the final deciding official
on requests for reconsideration for those cases where they are also the
rating official or immediate supervisor.
Response: Concur that it is not reasonable for a Pay Pool Manager
to be the final deciding official on requests for reconsideration for
those cases where they are also the rating official or immediate
supervisor. The appropriate changes have been made in the relevant
section to adopt this recommendation.

G. Hiring Authority

Three comments were submitted on the hiring authorities for the
STRL. Two requested additional hiring flexibilities: one for
acquisition workforce jobs and one for re-employed annuitants. The
second comment spoke to the tension between the need to tailor the
features of the STRL demonstration project to the specific requirements
of the proposing organization and the DON's desire to standardize HR
operations across the component.
(1) Hiring Flexibilities for Re-Employed Annuitants
Comments: The Naval Air Warfare Center Commanders should have the
flexibility to approve the re-employment of retired civil service
employees for purpose of delivering on the mission. The current process
for hiring re-employed annuitants is lengthy, time-consuming and
inconsistent with the pressures from the Chief of Naval Operations to
deliver rapid, capable, warfighting solutions to our men and women in
uniform.
Response: There is no question about the loss of intellectual
capital or the need to be able to draw upon the expertise of those who
have retired when necessary. These needs can be met following our
existing processes. While the current process to approve the
appointment of reemployed annuitants is perceived by some as being
lengthy and time consuming, it is designed to preserve the interests of
the Department of the Navy and ensure appointments of this nature are
made only after very deliberate and careful thought is given to
workforce requirements, succession planning, alternative sources of
candidates, and the intent of this hiring flexibility.
(2) Hiring Flexibilities for Acquisition Workforce Positions
Comments: The comment requests consideration to include direct hire
authority for 1102 series positions for individuals who possess an
advanced degree. 1102s are one of the critical occupational series at
NAWCAD and are also some of the most difficult to fill. Having this
authority will greatly reduce cycle time and help hire qualified
candidates in this career field in support of the warfighter.
Response: There is no question about the critically of the
acquisition workforce to mission accomplishment or the difficulty in
finding candidates for these positions; however, the authority being
requested is essentially already in place under the Expedited Hiring
Authority for Select Defense Acquisition Workforce Positions and this
STRL demonstration project will rely on this authority to meet these
needs.
(3) STRL Flexibilities and Standardized Business Processes
Comments: One commenter addressed the requirement to follow the
Department of Navy's common business processes, systems, and tools in
carrying out hiring authorities and expressed concern that the use of
common processes and tools designed for the entire Navy is limiting and
unresponsive to the creative problem solving and unique business
processes needed to expedite solutions and provide rapid response to
the war fighter.
Response: DON's common business processes balance the need for
flexibility with fiscal constraints, cost of doing business,
consistency across the Component, Hiring Reform initiatives and
metrics.

H. Internal Placement

Three comments were submitted on this topic. One each addressing
standardized business processes, promotions, and reassignments.

[[Page 8534]]

(1) STRL Flexibilities and Standardized Business Processes
Comments: The comment is the same as the comment under Hiring
Authority above.
Response: The Warfare Centers do need responsive business processes
that are adaptable to their requirements in acquiring the skills and
talent needed to react quickly to the needs of the warfighter. DON's
common business processes will be relied upon to address this need.
(2) Promotions
Comments: The comment expressed concern about scientific,
engineering, and/or technical career paths being blocked due to the
effects of the STRL's proposed demonstration project provisions.
Response: The comment did not provide any specifics about which
provisions were of concern or examples of situations where promotion or
career advancement would be impacted by the STRL Demonstration Project
so it can only be assumed that the concern relates to the broad pay
bands. As noted in an earlier section, the pay bands have been modified
to include additional levels which allow more promotional
opportunities.
(3) Reassignment
Comments: One comment received expressed concern on the limit of 5%
upon reassignment believing it is unduly restrictive and does not allow
management to use the broad pay band flexibilities and suggests this
authority be increased up to 10%.
Response: The STRL Demonstration Project is a mission aligned
system, moving to a culture where salary increases are driven by
accomplishments and contributions to achieve the mission and away from
a longevity and position-based system. Providing flexibility to adjust
salary up to 5% for a reassignment maintains the distinction between
reassignment and promotion. This allows management to assign work
within a broad pay band range. At the same time, it incentivizes
employees to seek and accept new work assignments, tasks, projects,
responsibilities, etc., consistent with what would be available in the
range of work within a pay band, while maintaining a distinction
between the percentage increases for reassignments and percentage
increases for promotions. The STRL demonstration project will proceed
with the 5% increase as proposed.

I. Pay Administration

Two comments were received addressing this subject. Both are from
sites that will have GS and STRL covered employees in the same work
group and each expressed concern about the differing compensation
outcomes that are inherent in the STRL vs GS and the potential impacts
these might have.
Comments: The comments express concern that due to pay banding the
STRL Demonstration Project will not provide results in base pay
increases that are equal to those possible under the GS for entry-level
employees and the perceived disadvantages that control points place on
the STRL employee.
Response: Under the STRL Demonstration Project starting salaries
can be more market sensitive and are not held to step 1 if a higher
entry salary is appropriate for that occupation. Comparisons of salary
outcomes were completed to compare STRL pay progression scenarios to
normal GS scenarios to ensure that there were no unintended outcomes
for new hires into the STRL as compared to their counterparts in other
systems and that STRL Mission Success performers would generally
maintain equity with the other compensation systems. The comparisons
looked for both unintended negative consequences as well as unintended
windfall benefits. The principal difference between GS and STRL is that
GS is longevity based while the STRL Demonstration Project is
performance based and it is possible for the highest contributors to
the mission to move forward at a faster pace.
As noted earlier, no matter what the compensation system, over time
positions reach a plateau where salary growth levels off; some at the
top of the pay scale and others at other points.

J. Reduction-in-Force (RIF) Procedures

Two comments were submitted on the topic of RIF. One addressing
competitive areas and the other the employee support mechanisms used in
RIF.
(1) Competitive Areas
Comments: The current Federal Register notice requires separate
competitive areas within the STRL workforce by occupational families.
To allow for greater flexibility within individual geographic
locations, it is recommended that the language be changed to reflect
that separate competitive areas may be established within the STRL
workforce by occupational families.
Response: We concur with the rationale and need for this authority.
The appropriate changes have been made in the relevant section to allow
this flexibility.
(1) Employee Support Mechanisms
Comments: The comment suggested drawing upon government experience
with demotions, RIF's, firings, etc., and incorporating the same
employee support mechanisms into the STRL Demonstration Project.
Response: The STRL has incorporated broad lessons learned from the
other STRLs, the Navy Personnel Management Demonstration Project, and
GS in the areas of RIF with the intent of minimizing what is a very
impactful and disruptive process for the workforce and the
organization.

K. Training

Six comments were submitted on the topic of training. Three
comments addressed the content of the training. One suggested employees
be tested. One addressed remedial training and the final one spoke to
the cost of providing training.
Comments: The three comments that address training content
suggested drawing materials and lessons learned from other
demonstration projects and systems such as the military evaluation
system to enhance the training. Another comment suggested employees be
tested for suitability and ability to perform the STRL tasks and
responsibilities. One addressed the need for remedial training and the
final one spoke to the cost of providing training on the STRL
Demonstration Project vice returning to the China Lake demo which would
minimize training costs.
Response: Training materials and content cannot be finalized until
the STRL is approved but the suggestion to draw upon other materials
and lessons learned is a good one and will continue to be a practice as
the STRL and the associated training requirements are finalized.
The process for determining suitability is nuanced and not amenable
to standardized testing. Assessments to determine ability must be
developed and validated through a rigorous process. Currently Office of
Personnel Management in conjunction with other Executive Agencies is
pursuing the viability of such assessment instruments. Pending the
outcome of their efforts the STRL's may adapt the recommended
instruments. As noted above implementation and sustainment training are
still being designed and cannot be finalized until the STRL itself is
approved but the availability of training post conversion to refresh
and enhance the necessary skills for

[[Page 8535]]

employees and supervisors is part of that design process.
Cost of training, both in terms of the dollars spent and the impact
on the productivity of the workforce is clearly an important
consideration. These factors are being taken into consideration in the
training design but delivery of the knowledge and skills needed are
also a critical factor. The STRL Demonstration Project training will
build upon the training that NAVAIR has already completed. Many of the
skills needed are applicable under any of the demonstration projects
(including NSPS) and provide a good foundation to build upon and will
not need to be re-taught.

L. Automation Support

Comments: One comment was received on this topic. Concern is
expressed about the nature and features of the information technology
(IT) tool that will be used to support the STRL performance system and
that it might be as resource intensive and as rigid, restrictive, and
difficult to use as the Performance Appraisal Application (PAA) was
under NSPS. The comment notes that no information was provided in the
September FRN on this subject.
Response: The IT tool that will support the NAWC STRL performance
system will be specific to NAWC requirements and hosted within NAVAIR.
Ease of use and flexibility have been identified as two of the key
performance requirements. Specific information about the tool was not
provided in the FRN because that level of detail is not appropriate for
this document. Preliminary requirements identification has been
initiated and does incorporate input provided by NAWCAD and NAWCWD
employee and supervisor focus group meetings as well as input from a
variety of leadership briefings.

M. Evaluation Plan

Comments: One comment was received on this topic. It stated that
the STRL Demonstration Project should include provisions for metrics
regarding comparison of health and stress between STRL situations and
the former demo project situations (which focused upon retention and
rewarding of employees based upon engineering, scientific, technical,
and similar abilities and capabilities).
Response: The STRL provisions for evaluation of the demonstration
projects were provided by DoD. This evaluation plan was developed by a
joint OPM/DoD Evaluation Committee and approved by the Office of
Defense Research & Engineering. This evaluation plan has been applied
at the existing STRLs and will be applied to the new ones that are
currently being established.

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

Dated: February 8, 2011.
Morgan F. Park,
Alternate OSD Federal Register Liaison Officer, Department of Defense.

Table of Contents

I. Executive Summary
II. Introduction
A. Purpose
B. Problems With the Present System
C. Changes Required/Expected Benefits
D. Participating Organizations
E. Participating Employees and Union Representation
F. Project Design
G. Personnel Management Board
III. Personnel System Changes
A. Pay Banding
1. Occupational Families
2. Pay Band Design
3. Above GS-15 Positions
B. Classification
1. Occupational Series
2. Classification Standards and Position Descriptions
3. Fair Labor Standards Act
4. Classification Authority
5. Classification Appeals
C. Mission Aligned Objectives and Compensation
1. Overview
2. Individual Mission Objectives (IMO)
3. Rating Benchmarks
4. Performance Feedback and Formal Ratings
5. Pay Pools
6. Performance Payout Determination
7. Base Pay Increases and Bonuses
8. Extraordinary Achievement Allowance (EAA)
9. Pay Growth Within a Pay Band
10. Awards
11. General Pay Increase
12. Requests for Reconsideration
13. Adverse Actions
D. Hiring Authority
1. Qualifications
2. Delegated Examining
3. Distinguished Scholastic Achievement Appointment Authority
(DSAA) for Scientific and Engineering Positions
4. Legal Authority
5. Expanded Term Appointments
6. Extended Probationary Period
7. Termination of Probationary Employees
8. Supervisory Probationary Periods
9. Volunteer Emeritus Corps
10. Direct Hire Authority for Scientists and Engineers with
Advanced Degrees for Scientific and Engineering Positions
11. Non-citizen Hiring
E. Internal Placement
1. Employees Hired From Outside the NAWC STRL
2. Promotion
3. Reassignment
4. Demotion or Placement in a Lower Pay Band
5. Simplified Assignment Process
6. Details and Temporary Promotions
7. Exceptions to Competitive Procedures
F. Pay Administration
1. General
2. Locality Pay
3. Pay and Compensation Ceilings
4. Pay Setting for Appointment
5. Pay Setting for Promotion
6. Pay Setting for Reassignment
7. Pay Setting for Demotion or Placement in a Lower Pay Band
8. Staffing Supplements
9. Educational Pay Adjustment
10. Developmental Promotions
11. Pay Retention
G. Employee Development
1. Expanded Developmental Opportunity Program
H. Reduction-in-Force (RIF) Procedures
1. Competitive Areas
2. Assignment Rights
3. Crediting Performance in RIF
IV. Implementation Training
V. Movement Into and Out of the Demonstration Project
A. Conversion From NSPS to the Demonstration Project
1. Placement Into Demonstration Project Pay Plans and Pay Bands
2. Pay Upon Conversion
3. Fair Labor Standards Act (FLSA) Status
4. Transition Equity
5. Converting Employees on NSPS Term and Temporary Appointments
6. Probationary Periods
B. Conversion From Other Personnel Systems
C. Movement Out of the NAVAIR STRL Demonstration Project
1. Termination of Coverage Under the NAVAIR STRL Demonstration
Project Pay Plans
2. Determining a GS-equivalent Grade and GS-equivalent Rate of
Pay for Pay Setting Purposes When a NAVAIR Employee's Coverage by a
Demonstration Project Pay Plan Terminates or the Employee
Voluntarily Exits the NAVAIR STRL Demonstration Project
3. Supervision and Management Pay Band VI Employees
4. Employees With Pay Retention
5. Within-Grade Increase--Equivalent Increase Determinations
D. Personnel Administration
E. Automation Support
1. General
2. Defense Civilian Personnel Data System (DCPDS)
F. Experimentation and Revision
VI. Project Duration

[[Page 8536]]

VII. Evaluation Plan
A. Overview
B. Evaluation Model
C. Evaluation
D. Method of Data Collection
VIII. Demonstration Project Costs
A. Cost Discipline
B. Developmental Costs
IX. Required Waivers to Law and Regulation
A. Waivers to Title 5, U.S.C.
B. Waivers to Title 5, CFR
Appendix A: NAWCAD and NAWCWD Duty Locations
Appendix B: Occupational Series by Occupational Family
Appendix C: Intervention Model
Appendix D: Individual Pay Band Level Rating Benchmarks Examples
Appendix E: Career Stage Rating Benchmarks Examples

I. Executive Summary

NAWCAD is an organization within NAVAIR dedicated to maintaining a
center of excellence for fixed- and rotary-wing aircraft and their
propulsion systems, avionics systems, training systems, take-off and
landing systems, and associated support and equipment including air
traffic control and communications and ship/shore/air operations.
NAWCAD has three primary locations: Patuxent River, MD; Lakehurst, NJ;
and Orlando, FL. These facilities support research, development, test,
evaluation, engineering, and fleet support of Navy and Marine Corps air
vehicle systems and trainers. NAWCAD is a world leader in Naval
aviation whose products and services include: aircraft, avionics, air-
launched weapons, electronic warfare systems, cruise missiles, unmanned
aerial vehicles, launch and arresting gear, training equipment and
facilities, and all other equipment related to Navy and Marine Corps
air power. The mission of the NAWCAD is to be the Navy's principal
research, development/test, evaluation, engineering, and fleet support
activity for naval aircraft, engines, avionics, aircraft support
systems, and ship/shore/air operations. NAWCAD is the steward of the
ranges, test facilities, laboratories, and aircraft necessary to
support the Fleet's acquisition requirements.
NAWCWD is an organization within NAVAIR dedicated to maintaining a
center of excellence in weapons development for the DON. NAWCWD has two
locations: China Lake, CA hosting the land test range and Point Mugu,
CA hosting the sea test range. NAWCWD is a world leader in Research,
Development, Acquisition, Test, and Evaluation (RDA, T&E) of guided
missiles, advanced weapons and systems, complex software integration on
tactical aircraft, energetic materials, and subsystems. It is also a
Center of Excellence for weapons and armaments and live-fire
survivability testing. The mission of the NAWCWD is to provide Navy and
Marine Corps warriors with effective, affordable, integrated warfare
systems, and lifecycle support to ensure battlespace dominance. The
NAWCWD is the steward of the ranges, test facilities, and laboratories
necessary to support the Fleet's acquisition requirements.
The goal of this demonstration project is to enhance and sustain
the quality and professionalism of the covered organizations'
workforces through improvements in the efficiency and effectiveness of
the human resource system. The project interventions will strive to
achieve the best workforce for the mission, adjust the workforce for
change, and improve workforce satisfaction. This demonstration project
is built on the concepts, and uses much of the same language, as the
other STRL demonstration projects already in place in DoD and is guided
by 25 years of experience in operating the Navy's ``China Lake''
demonstration project. The results of the project will be evaluated
within five years of implementation.

II. Introduction

A. Purpose

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

B. Problems With the Present System

The current Civil Service General Schedule (GS) system has existed
in essentially the same form since 1949. Work is classified into one of
fifteen overlapping pay ranges that correspond with the fifteen grades.
Base pay is set at one of those fifteen grades and the ten interim
steps within each grade. The Classification Act of 1949 rigidly defines
types of work by occupational series and grade, with very precise
qualifications for each job. This system does not quickly or easily
respond to new ways of designing work and changes in the work itself.
The performance management model that has existed since the passage
of the Civil Service Reform Act in 1980 has come under extreme
criticism. Employees frequently report there is inadequate
communication of performance expectations and feedback on performance.
There are perceived inaccuracies in performance ratings with general
agreement that the ratings are inflated and often unevenly distributed
by grade, occupation, and geographic location.
The present reduction-in-force (RIF) process is unresponsive to
requirements for work force restructuring and requires enhancement to
provide better retention of the highest performing employees with
mission appropriate skills.
The need to change the current hiring system is essential as the
covered organizations must be able to recruit and retain scientific,
engineering, acquisition, skilled technical, and other professional,
administrative, and support employees. The covered organizations must
be able to compete with the private sector for the best talent and be
able to make job offers in a timely manner with the attendant bonuses
and incentives to attract high quality employees.
Current limitations on training, retraining, and otherwise
developing employees make it difficult to correct skill imbalances and
to prepare current employees for new lines of work to meet changing
missions and emerging technologies.

C. Changes Required/Expected Benefits

1. The primary benefit expected from this demonstration project is
greater organizational effectiveness through increased employee
satisfaction. The Department of the Navy ``China Lake'' and NIST
demonstration projects produced impressive statistics on increased job
satisfaction and quality of

[[Page 8537]]

employees versus that for the Federal workforce in general. This
project will demonstrate that a human resource system tailored to the
mission and needs of the covered organizations' workforce will
facilitate increased:
a. Quality in the workforce and resultant products,
b. Timeliness of key personnel processes,
c. Retention of ``excellent performers,''
d. Success in recruitment of personnel with critical skills,
e. Management authority and accountability,
f. Satisfaction of customers, and
g. Workforce satisfaction with the personnel management system.
2. An evaluation model was developed for the Director of Defense,
Research and Engineering (DDR&E) in conjunction with STRLs, service
representatives, and the Office of Personnel Management (OPM). The
model, as modified in this plan, will measure the effectiveness of this
demonstration project and will be used to measure the results of
specific personnel system changes.

D. Participating Organizations

NAWCAD and NAWCWD are Warfare Centers within the Naval Air Systems
Command and are composed of five diverse major geographic locations.
The locations are: Lakehurst, NJ, Patuxent River, MD; Orlando, FL;
China Lake, CA; and Pt. Mugu, CA. Additionally, there are employees in
a variety of other geographic locations shown in Appendix A. It should
be noted that sites with fewer than 10 people may change. Successor
organizations will continue coverage in the demonstration project.

E. Participating Employees and Union Representation

This demonstration project will cover approximately 8,400 NAWCAD
and NAWCWD civilian employees under title 5 U.S.C. in the occupations
listed in Appendix B. The project plan does not cover members of the
Senior Executive Service (SES), Scientific and Professional (ST)
employees, Federal Wage System (FWS) employees, employees presently
covered by the Defense Civilian Intelligence Personnel System (DCIPS),
or DON centrally funded interns.
The details and provisions covered under this Personnel Management
Demonstration Project do not apply to any bargaining unit within NAWCAD
or NAWCWD until a mutual agreement is reached between the STRL
organization and the applicable exclusive representative. This
demonstration project will not cover any bargaining unit members at
implementation. If there is interest on the part of any of NAWCAD's or
NAWCWD's bargaining units at any of their sites in participating in the
NAWCAD or NAWCWD STRL demonstration project, negotiations would begin
after publication of this Federal Register notice. The covered STRL
organizations will fulfill their obligation to consult and/or negotiate
with all labor organizations in accordance with 5 U.S.C. 4703(f) and
7117, as applicable.

F. Project Design

An overarching objective in the project design has been the
development of a personnel system that provides a maximum opportunity
for adaptability to meet the variety of requirements of organizations
engaged in missions ranging from RDA, T&E of guided missiles, advanced
weapons and systems, complex software integration on tactical aircraft,
energetic materials and subsystems to fixed- and rotary-wing aircraft
and their propulsion systems, avionics systems, training systems, take-
off and landing systems, associated support and equipment including air
traffic control and communications, and ship/shore/air operations. This
demonstration project is built upon the successes of the many
demonstration projects that have preceded it and adapts many of the
provisions and features that have been shown to be successful in these
other STRL demonstration projects to the NAWCAD and NAWCWD
organizations.

G. Personnel Management Board

1. The covered organizations will create a Personnel Management
Board to oversee and monitor the fair, equitable, and consistent
implementation of the provisions of the demonstration project to
include establishment of internal controls and accountability. Members
of the board are senior leaders appointed by the Executive Directors of
the covered organizations. As needed, ad hoc members will serve in an
advisory capacity to the Board.
2. The board will execute the following:
a. Establish policies and issue guidance on the composition of pay
pools in accordance with the guidelines of this proposal and internal
procedures;
b. Review operation of pay pools and provide guidance to Pay Pool
Managers;
c. Oversee disputes in pay pool issues;
d. Establish policies and issue guidance on the formulation and
execution of the civilian pay budget;
e. Establish policies and issue guidance on the awards pools;
f. Establish policies and issue guidance on hiring and promotion
base pay as well as exceptions to pay-for-performance base pay
increases;
g. Establish policies and issue guidance on classification review
and oversight, monitoring and adjusting classification practices and
deciding board classification issues;
h. Approve major changes in position structure;
i. Address issues associated with multiple pay systems during the
demonstration project;
j. Establish policies and issue guidance on and approve Standard
Performance Elements and Benchmarks;
k. Assess the need for changes to demonstration project procedures
and policies;
l. Ensure in-house budget discipline;
m. Establish policies and issue guidance for workforce staffing and
budget plans;
n. Develop policies and procedures for administering Developmental
Opportunity Programs;
o. Ensure that all employees are treated in a fair and equitable
manner in accordance with the policies, regulations and guidelines
covering this demonstration project; and,
p. Monitor the evaluation of the project.

III. Personnel System Changes

A. Pay Banding

The design of the pay banding system has the benefit of being
preceded by exhaustive studies of pay banding systems currently
practiced in the Federal sector. The pay banding system will replace
both the current NSPS and GS structure. The flexibilities in this pay
banding section are similar in nature to the authority granted to: The
Naval Ocean Systems Center, San Diego, California 92152 and the Naval
Weapons Center, China Lake, California 93555, 45 FR 26504, April 18,
1980.
1. Occupational Families
Occupations with similar characteristics will be grouped together
into one of five occupational families with pay band levels designed to
facilitate pay progression. Progression through the band depends on
individual achievement, contribution to the mission goals, and
accomplishment of higher level, broader scope, more difficult work
assignments. Each occupational family will be composed of pay bands
corresponding to recognized advancement and career progression expected
within the

[[Page 8538]]

occupations. These pay bands will replace individual grades and will
not be the same for each occupational family. Each occupational family
will be divided into three to six pay bands with each pay band covering
the same base pay range that would be covered by one or more GS grades.
Employees track into an occupational family based on their current
series as provided in Appendix B. Note that where the current series
does not exist outside of NSPS the employee will be placed in the
appropriate OPM series before being placed into an STRL occupational
family. Upon conversion into the demonstration project each employee is
assured an initial placement in the STRL demonstration project without
a loss in pay. The upper and lower pay rate for base pay of each band
is defined by the GS rate for the grade and step as indicated in Figure
1 except for Pay Band VI of the Supervision and Management pay
schedule. Comparison to the GS grades and NSPS pay bands was used in
setting the upper and lower base pay dollar limits of the pay band
levels. However, once employees are moved into the demonstration
project, GS grades and NSPS pay bands will no longer apply. The current
occupations have been examined, and their characteristics and
distribution have served as guidelines in the development of the
following five occupational families:
a. Scientific and Engineering (S&E) (Pay Plan DP): This
occupational family includes technical professional positions, such as
engineers, physicists, chemists, mathematicians, operations research
analysts, and computer scientists. Specific course work or educational
degrees are required for these occupations. Five bands have been
established for the S&E occupational family:
(1) Band I is a student trainee developmental track covering GS-1,
step 1, through GS-4, step 10.
(2) Band II is a developmental track covering GS-5, step 1, through
GS-9, step 10.
(3) Band III is an intermediate developmental track covering GS-9,
step 1, through GS-11, step 10.
(4) Band IV is a full-performance technical track covering GS-12,
step 1, through GS-13, step 10.
(5) Band V includes senior technical positions covering GS-14, step
1, through GS-15, step 10.
b. S&E Technician (Pay Plan DT): This occupational family includes
technician positions, such as engineering technicians, electronics
technicians, physical science technicians, mathematic technicians, and
geodetic technicians. These occupations require practical technical
expertise in scientific or engineering support but specific course work
or educational degrees are not required for these occupations. Five
bands have been established for the S&E Technician occupational family:
(1) Band I is an entry level trainee developmental track covering
GS-1, step 1, through GS-4, step 10.
(2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-8, step 10.
(3) Band III is a full-performance technical track covering GS-9,
step 1 through GS-10, step 10.
(4) Band IV is a senior technical track covering GS-11, step 1
through GS-12, step 10.
(5) Band V is an expert technical track covering GS-12, step 1,
through GS-13, step 10.
c. Technical Specialist (Pay Plan DS): This occupational family
includes such positions as logistics management specialists, equipment
specialists, computer specialists, and telecommunications specialists.
Employees in these positions may or may not require specific course
work or educational degrees. Six bands have been established for this
occupational family:
(1) Band I is a student trainee developmental track covering GS-1,
step 1, through GS-4, step 10.
(2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-8, step 10.
(3) Band III is a developmental/full performance track covering GS-
9, step 1, through GS-10, step 10.
(4) Band IV is a full performance track covering GS-11, step 1,
through GS-12, step 10.
(5) Band V is a senior specialist track covering GS-12, step 1,
through GS-13, step 10.
(6) Band VI is an expert specialist track covering GS-14, step 1,
through GS-15, step 10.
d. Business Professional and Program Management (Pay Plan DA): This
occupational family includes such positions as program managers,
program acquisition specialists, budget officers, financial managers,
accountants, administrative officers, human resources specialists, and
management analysts. Employees in these positions may or may not
require specific course work or educational degrees. Six bands have
been established for this occupational family:
(1) Band I is a student trainee developmental track covering GS-1,
step 1, through GS-4, step 10.
(2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-8, step 10.
(3) Band III is a developmental/full performance track covering GS-
9, step 1, through GS-10, step 10.
(4) Band IV is a full performance track covering GS-11, step 1,
through GS-12, step 10.
(5) Band V is a senior specialist track covering GS-12, step 1,
through GS-13, step 10.
(6) Band VI is an expert specialist track covering GS-14, step 1,
through GS-15, step 10.
e. Administrative Support (Pay Plan DG): This occupational family
is composed of positions for which specific course work or an
educational degree is not required. Clerical work usually involves the
processing and maintenance of records. Assistant work requires
knowledge of methods and procedures within a specific administrative
area. This family includes such positions as secretaries, office
managers, office automation clerks, security technician, safety
technician, library technician and budget/program/computer assistants.
Six bands have been established for this occupational family:
(1) Band I includes entry-level/developmental positions covering
GS-1, step 1, through GS-3, step 10.
(2) Band II \*\ includes developmental and low-range full-
performance positions covering GS-4, step 1, through GS-5, step 10.
(3) Band III \*\ includes mid-range full-performance technicians/
assistants/secretaries covering GS-5, step 1, through GS-6, step 10.
(4) Band IV \*\ includes high-range full-performance technicians/
assistants/secretaries covering GS-6, step 1, through GS-7, step 10.
(5) Band V includes senior technicians/assistants/secretaries
covering GS-8, step 1, through GS-9, step 10.
(6) Band VI includes expert technicians/assistants/secretaries
covering GS-10, step 1, through GS-11, step 10.

\*\ Band III overlaps with band II and IV. These bands replicate a
feature used by the Navy's ``China Lake'' project.

f. The Supervision and Management pay band includes all employees
performing supervisory functions. This pay band is not applicable to
team leaders. To be classified to these pay bands the supervisor must
perform the full range of supervisory duties. To meet the full range of
supervisory duties the supervisor must perform 3 of the first 4, and a
total of 6 or more of the following:

[[Page 8539]]

(1) Plan work and prepare performance plans covering work to be
accomplished by subordinates, set and adjust short-term priorities, and
prepare schedules for completion of work;
(2) Assign work to subordinates based on priorities, selective
consideration of the difficulty and requirements of assignments, and
the capabilities of employees;
(3) Evaluate work performance of subordinates and recommend
official performance ratings;
(4) Give advice, counsel, or instruction to employees on both work
and administrative matters;
(5) Interview candidates for positions in the unit; recommend
appointment, promotion, or reassignment to such positions;
(6) Hear and resolve complaints from employees, referring group
grievances and more serious unresolved complaints to a higher level
supervisor or manager;
(7) Effect minor disciplinary measures, such as warnings and
reprimands, recommending other action in more serious cases;
(8) Identify developmental and training needs of employees,
providing or arranging for needed development and training;
(9) Find ways to improve production or increase the quality of the
work directed; and
(10) Make appropriate distinctions in levels of performance while
equitably applying performance standards.
A supervisory position cannot be established on the basis of only
one subordinate position. These pay bands can include any series.
(1) Band II is a supervision and management track covering GS-6,
step 1, through GS-8, step 10.
(2) Band III is a supervision and management track covering GS-9,
step 1, through GS-12, step 10.
(3) Band IV is a supervision and management track covering GS-13,
step 1, through GS-14, step 10.
(4) Band V is a supervision and management track covering GS-14,
step 1, through GS-15, step 10.
(5) Band VI is reserved for those S&E professional positions
classified above GS-15.

\*\ Band IV overlaps with band V. These bands replicate a feature
used by the NAVSEA Warfare Centers' STRL demonstration project.

2. Pay Band Design
The demonstration project pay bands for the occupational families
and how they relate to the current GS and NSPS framework are shown in
Figure 1.
[GRAPHIC] [TIFF OMITTED] TN14FE11.000

[[Page 8540]]

3. Above GS-15 Positions
The pay banding plan for the Supervision and Management pay
schedule includes a pay band VI to provide the ability to accommodate
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.
The degree to which the laboratory plans to participate in this concept
and develop classification, compensation and performance management
policy, guidance, and implementation processes will be based on the
final outcome of the DoD evaluation. Additional guidance will be
included in NAWCAD/NAWCWD internal issuances.

B. Classification

The flexibilities in this Classification section are similar in
nature to the authority granted to the Naval Ocean Systems Center, San
Diego, California 92152 and the Naval Weapons Center, China Lake,
California 93555, 45 FR 26504, April 18, 1980.
1. Occupational Series
The present GS classification system has over 400 occupational
series, which are divided into 23 occupational groupings. The covered
organizations currently have positions in approximately 132
occupational series that fall into 21 occupational groupings. All
positions listed in Appendix B will be in the classification structure.
Provisions will be made for including other occupations in response to
changing missions.
2. Classification Standards and Position Descriptions
The present system of OPM classification standards will be used for
the identification of proper series and occupational titles of
positions within the demonstration project. Current OPM position
classification standards will not be used to grade positions in this
project. However, the grading criteria in those standards will be used
as a framework to develop new and simplified standards for the purpose
of pay band determinations. The objective is to record the essential
criteria for each pay band within each occupational family by stating
the characteristics of the work, the responsibilities of the position,
and the competencies required. New position descriptions will replace
the current job descriptions. The classification standard for each pay
band will serve as an important component in the new position
description, which will also include position-specific information, and
provide selective placement factors and other data element information
pertinent to the job.
Specialty area codes (SAC) written as narrative descriptions and
assigned a specific identification code may be used to further
differentiate types of work and the competencies required for
particular positions within an occupational family and pay band. Each
code represents a specialization or type of work within the occupation.
3. Fair Labor Standards Act
Fair Labor Standards Act (FLSA) exemption and non-exemption
determinations will be consistent with criteria found in 5 CFR part
551. All employees are covered by the FLSA unless they meet the
criteria for exemption. The duties and responsibilities outlined in the
classification standards for each pay band will be compared to the FLSA
criteria. As a general rule, the FLSA status can be matched to
occupational family and pay band as indicated in Figure 2. For example,
positions classified in Pay Band I of the S&E occupational family are
typically nonexempt, meaning they are covered by the overtime
entitlements prescribed by the FLSA. An exception to this guideline
includes supervisors/managers whose primary duty meets the definitions
outlined in the OPM GS Supervisory Guide. Therefore, supervisors/
managers in any of the pay bands who meet the foregoing criteria are
exempt from the FLSA. Supervisors with classification authority will
make the determinations on a case-by-case basis by comparing assigned
duties and responsibilities to the classification standards for each
pay band and the 5 CFR part 551 FLSA criteria. Additionally, the advice
and assistance of the servicing Human Resources Office (HRO) and the
servicing Human Resources Service Center (HRSC) can be obtained in
making determinations. The benchmark position descriptions will not be
the sole basis for the determination; the actual duties performed are
the controlling criteria. Exemption criteria will be narrowly construed
and applied only to those employees who clearly meet the spirit of the
exemption.

[[Page 8541]]

[GRAPHIC] [TIFF OMITTED] TN14FE11.001

N--Non-Exempt from FLSA; E--Exempt from FLSA; N/E--Exemption status
determined on a case-by-case basis.

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

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

C. Mission Aligned Objectives and Compensation

1. Overview
The purpose of mission aligned objectives and compensation is to
directly link the work of the employee to the mission of the
organization and provide a mechanism for recognizing the impact of the
employee's accomplishments and contributions to help achieve that
mission. It also provides an effective, efficient, and flexible method
for assessing, compensating, and managing the covered organization's
workforce. It is essential for the development of a highly productive
workforce and to provide management at the lowest practical level, the
authority, control, and flexibility needed to achieve a quality
organization and meet mission requirements. Mission aligned objectives
and compensation allows for more employee involvement in the assessment
process, strives to increase communication between supervisor and
employee, promotes a clear accountability of performance, facilitates
employee career progression, and provides an understandable and
rational basis for pay changes by linking mission directly to both
annual evaluations and compensation outcomes.
The mission aligned objectives and compensation system uses annual
payouts that are based on the employee's accomplishments and
contributions to mission

[[Page 8542]]

accomplishment rather than within-grade increases, quality step
increases, promotions from one grade to another where both grades are
now in the same pay band (i.e., there are no within-band promotions)
and performance awards. In addition to objectives, other factors that
can be considered in determining overall payout include organizational
performance, team performance, or a combination of individual
performance, contribution, and/or compensation. If elements other than
the employee's individual accomplishments and contributions against
their objectives and their compensation will be taken into
consideration this must be a part of the written performance plan. The
employee must be advised of the applicability of these factors within
the same time requirements as the individual mission objectives. The
normal rating period will be one year. Objectives, representing joint
efforts of employees and their supervisors, must be in place within 30
days from the beginning of each rating period and the minimum rating
period will be 90 days. First-time hires into demonstration project
positions must have plans in place within 30 days of the effective date
of their entry into the demonstration project and current demonstration
project employees who change positions during the performance year
should have their plans updated with new objectives no later than 30
days after assignment to the new position. Mission aligned compensation
and rewards payouts can be in the form of increases to base pay and/or
in the form of bonuses that are not added to base pay but rather are
given as a lump sum cash bonus. Other awards such as special acts,
time-off awards, etc., will be retained separately from the pay-for-
performance payouts.
Employee's who do not meet the 90-day minimum requirement will be
ineligible for a normal rating and will be given a presumptive rating.
They may receive only the general pay increase and they may also
receive title 5 cash awards if appropriate.
The system will have the flexibility to be modified, if necessary,
as more experience is gained under the project. The flexibilities in
this Mission Aligned Objectives and Compensation section are similar in
nature to the authority granted to: (1) The Naval Ocean Systems Center,
San Diego, California 92152 and the Naval Weapons Center, China Lake,
California 93555, 45 FR 26504, April 18, 1980, and (2) the Army
Research Laboratory (ARL), 65 FR 3500, January 21, 2000.
2. Individual Mission Objectives (IMO)
Individual mission objectives will be directly related to achieving
the mission of the employee's organization. They define a target level
of activity, expressed as a tangible, measurable objective, against
which actual achievement can be compared. These objectives will
specifically identify what is expected of the employee during the
rating period and will typically consist of three to ten results-
oriented statements. It is expected that these objectives will also
incorporate important behavioral practices such as teamwork and
cooperation where they are key to successful accomplishment of the
assignment. A Supervision/EEO objective is mandatory for all managers/
supervisors. The employee and his/her supervisor will jointly develop
the employee's individual mission objectives at the beginning of the
rating period. These are to be reflective of the employee's duties/
responsibilities, pay band and pay level in the band as well as the
mission/organizational goals and priorities. Objectives will be
reviewed annually and revised upon changes in pay reflecting increased
responsibilities commensurate with pay increases. Use of generic one-
size-fits-all objectives will be avoided, as individual mission
objectives are to define an individual's specific responsibilities and
expected accomplishments for the performance year. In contrast, rating
benchmarks as described in the next paragraph will identify
characteristics, against which the accomplishment of objectives will be
measured. As a part of this demonstration project, training focused on
overall organizational objectives and the development of individual
mission objectives will be held for both supervisors and employees.
Individual mission objectives may be jointly modified, changed or
deleted as appropriate during the rating cycle. As a general rule,
objectives should only be changed when circumstances outside the
employee's control prevent or hamper the accomplishment of the original
objectives. It is also appropriate to change objectives when mission or
workload shifts occur.
All objectives are critical. A critical mission objective is
defined as an attribute of job performance that is of sufficient
importance that achievement below the minimally acceptable level
requires remedial action and may be the basis for removing an employee
from his/her position. Non-critical objectives will not be used. Each
of the objectives may be assigned a weight, which reflects its
importance in accomplishing an individual's mission objectives. The
minimum weight assigned may not be less than 10%. The sum of the
weights for all of the elements must equal 100. At the beginning of the
rating period, higher level managers will review the objectives and
weights assigned to employees within the pay pool, to verify
consistency and appropriateness
3. Rating Benchmarks
Rating benchmarks define characteristics that will be used to
evaluate the employee's success in accomplishing his/her individual
mission objectives. The use of characteristics for scoring purposes
helps to ensure comparable scores are assigned while accommodating
diverse individual objectives. A single set of rating benchmarks for
each band or rating benchmarks by career stage may be used for
evaluating the annual performance of all NAWCAD and NAWCWD personnel
covered by this plan. An example of each type of benchmark is shown at
Appendices D and E. The set of benchmarks used may evolve over time,
based on experience gained during each rating cycle. This evolution is
essential to capture the critical characteristics the organization
encourages in its workforce toward meeting individual and
organizational objectives. This is particularly true in an environment
where technology and work processes are changing at an increasingly
rapid pace. The Personnel Management Board will annually review the set
of benchmarks and set them for the entire organization before the
beginning of the rating period.
4. Performance Feedback and Formal Ratings
The most effective means of communication is person-to-person
discussion between supervisors and employees of requirements,
performance goals, and desired results. Employees and supervisors alike
are expected to actively participate in these discussions for optimum
clarity regarding expectations and identify potential obstacles to
meeting goals. In addition, employees should explain (to the extent
possible) what they need from their supervisor to support goal
accomplishment. The timing of these discussions will vary based on the
nature of work performed, but will occur at least at the mid-point and
end of the rating period. The supervisor and employee will discuss job
performance and accomplishments in relation to the expectations in the
mission aligned objectives. At least one review, normally the mid-point
review, will be documented as a formal progress review. More frequent,
task specific,

[[Page 8543]]

discussions may be appropriate in some organizations. In cases where
work is accomplished by a team, team discussions regarding goals and
expectations will be appropriate. The employee may provide a statement
of his/her accomplishments to the supervisor at both the mid-point and
end of the rating period.
At the end of the rating period, following a review of the
employee's accomplishments, the supervisor will rate each of the
individual mission objectives. Benchmark performance standards will be
developed that describe the level of performance associated with a
score. Using these benchmarks, the supervisor decides where the
achievements and contributions of the employee most closely match the
benchmarks and assigns an appropriate score. It should be noted that
these scores are not discussed with the employee or considered final
until all scores are reconciled and approved by the Pay Pool Manager.
The rating scores will then be multiplied by the objective-weighting
factor to determine the weighted score expressed to two decimal points.
The weighted scores for each objective will then be totaled to
determine the employee's overall appraisal score and rounded to a whole
number as follows: if the first two digits to the right of the decimal
are .51 or higher, it will be rounded to the next higher whole number;
if the first two digits to the right of the decimal are .50 or lower,
then the decimal value is truncated.
The covered STRL organizations will use a five-level rating
methodology with associated payout point ranges in which level five
signifies the highest level of performance. The rater will prepare and
recommend the rating, number of payout points, and the distribution of
the payout between base pay increase and bonus, as applicable, for each
employee. These recommendations will then be reviewed by the pay pool
panel to ensure equitable rating criteria and methodologies have been
applied to all pay pool employees. The final determination of the
rating, number of payout points, and payout distribution will be a
function of the pay pool panel process and will be approved by the Pay
Pool Manager. The criteria used to determine the number and
distribution of payout points to assign an employee may include
assessment of the employee's contribution towards achieving the
mission, the employee's type and level of work, the employee's current
compensation and the criticality of their contribution to mission
success, consideration of specific achievements, or other job-related
significant accomplishments or contributions. The proposed rating and
payout point schema is:

------------------------------------------------------------------------
Rating Description Payout points
------------------------------------------------------------------------
5................................. Exceptional......... 5, 6
4................................. Exceeds Mission 3, 4
Expectations.
3................................. Mission Success..... 0, 1, 2
2................................. Partial Mission 0
Success.
1................................. Unacceptable........ 0
------------------------------------------------------------------------

Employees with a total score of two or above will receive the
equivalent of the authorized GS January general pay increase (GPI).
Employees with a score of one will not receive the January GPI. A
rating of one or below will result in a rating of Unacceptable, and the
employee will not receive the January GPI and will require
administrative action to address the performance deficiency. A score of
one or below on a single objective will also result in a rating of
Unacceptable.
Employees in receipt of a Letter of Warning of Unacceptable
Performance at the end of the performance year will have their rating
deferred until the end of the improvement period. At the end of the
improvement period, the supervisor will assign a final rating and
submit it to the pay pool panel for consideration.
5. Pay Pools
Following the initial scoring of each employee by the rater, the
rating officials in an organizational unit, along with their next level
of supervision, will review and compare recommended ratings to ensure
consistency and equity of the ratings. In this step, each employee's
individual mission objectives, accomplishments, preliminary scores, and
pay are compared. Through discussion and consensus building, consistent
and equitable ratings are reached. Managers will not prescribe a
distribution of ratings. The Pay Pool Manager will then chair a final
review with the rating officials who report directly to him or her to
validate these ratings and resolve any scoring issues. If consensus
cannot be reached in this process, the Pay Pool Manager makes all final
decisions. After this reconciliation process is complete, ratings are
finalized. Payouts proceed according to each employee's final rating
and payout distribution. Upon approval of this plan, implementing
procedures and regulations will provide details on this process to
employees and supervisors.
The covered organizations' employees will be placed into pay pools.
Neither the Pay Pool Manager, supervisors, or pay pool panel members
within a pay pool will in any way recommend or participate in setting
their own rating or individual payout except for the normal employee
self-assessment process. Pay pools are combinations of organizational
units (e.g., level 3 competencies (divisions), level 4 competencies
(branches), and level 5 competencies (sections)), functional categories
or other groupings of employees that are defined for the purpose of
determining payouts under the mission aligned objectives and
compensation system. The guidelines in the next paragraph are provided
for determining pay pools. These guidelines will normally be followed.
However, the Executive Directors of the covered organizations may
deviate from the guidelines if there is a compelling need to do so.
The Executive Directors of the covered organizations will establish
pay pools. Typically, pay pools will have between 35 and 300 employees.
A pay pool should be large enough to encompass a reasonable
distribution of ratings but not so large as to compromise rating
consistency. Large pay pools may use sub pay pools subordinate to the
pay pool due to the size of the pay pool population, the complexity of
the mission, or other similar criteria. Pay pool panel members will not
serve on pay pools where their own ratings and payouts are determined.
Supervisors and non-supervisors may be placed in separate pay pools.
Decisions regarding the amount and distribution of the payouts are
based on the employee's most recent rating of record for the
performance year, the criteria listed in section III.C.4 above, the
type and nature of the funding available to the pay pool, and the
number of payout points assigned by the pay pool. Additional guidance
on pay pool design and composition will be included in NAWCAD/NAWCWD
internal issuances.
Funds within a pay pool available for performance payouts are
calculated from anticipated pay increases under the existing system and
divided into two components, base pay and bonus. The funds within a pay
pool used for base pay increases are those that would have been
available from within-grade increases, quality step increases and
promotions under the GS system (excluding the costs of promotions still
provided under the pay banding system). This amount will initially be
defined based on historical data and will initially be set at no less
than 2.4% of total base pay annually. The funds

[[Page 8544]]

available to be used for bonus payouts are funded separately within the
constraints of the organization's overall award budget. This amount
will initially be defined based on historical data and will initially
be set at no less than one percent of total base pay annually. As
changes in the demographics of the workforce or other exigencies occur,
adjustments may be made to these two factors. The sum of these two
factors is referred to as the pay pool percentage factor. The Personnel
Management Board will annually review the pay pool funding and
recommend adjustments to the Executive Directors to ensure cost
discipline over the life of the demonstration project. Cost discipline
is assured within each pay pool by limiting the total base pay increase
to the funds allocated by the Personnel Management Board.
6. Performance Payout Determination
The payout an employee will receive is based on the total
performance rating from the mission aligned objectives and compensation
assessment process. An employee will receive a payout as a percentage
of base pay. This percentage is based on the number of payout points
that equates to their final appraisal score.
The value of a payout point cannot be exactly determined until the
rating and reconciliation process is completed and all scores are
finalized. The payout point value is expressed as a percentage. The
formula that computes the value of each payout point uses base pay
rates and is based on:
a. The sum of the base pay of all the employees in the pay pool
times the pay pool percentage factor;
b. The employee's base pay;
c. The number of payout points awarded to each employee in the pay
pool; and
c. The total number of payout points awarded in the pay pool.

This formula assures that each employee within the pool receives a
payout point amount equal to all others in the same pool who are at the
same rate of base pay and receiving the same score. The formula is
shown in Figure 3.
[GRAPHIC] [TIFF OMITTED] TN14FE11.002

An individual payout is calculated by first multiplying the payout
points earned by the payout point value and multiplying that product by
base pay. An adjustment is then made to account for locality pay or
staffing supplement. A Pay Pool Manager is accountable for staying
within pay pool limits and final decisions on base pay increases and/or
bonuses to individuals based on rater recommendations, the final score,
the pay pool funds available, and the employee's base pay.
7. Base Pay Increases and Bonuses
The amount of money available for the performance payouts is
divided into two components, base pay increases and bonuses. The base
pay and bonus funds are based on the pay pool funding formula
established annually. Once the individual performance amounts have been
determined, the next step is to determine what portion of each payout
will be in the form of a base pay increase as opposed to a bonus
payment. The payouts made to employees from the pay pool may be a mix
of base pay and bonus, such that all of the allocated funds are
disbursed. To continue to provide performance incentives while also
ensuring cost discipline, base pay increases may be limited or capped.
Certain employees will not be able to receive the projected base pay
increase due to base pay caps. Base pay is capped when an employee
reaches the maximum rate of base pay in an assigned pay band or when a
control point applies (see below). Also, for employees receiving
retained rates above the applicable pay band maximum, the entire
performance payout will be in the form of a bonus payment.
When capped, the total payout an employee receives will be in the
form of a bonus versus the combination of base pay and bonus. Bonuses
are cash payments and are not part of the base pay for any purpose
(e.g., lump sum payments of annual leave on separation, life insurance,
and retirement). The maximum base pay rate under this demonstration
project will be the unadjusted base pay rate of GS-15, Step 10, except
for employees in Pay Band VI of the Supervision and Management pay
schedule.
8. Extraordinary Achievement Allowance (EAA)
a. NAWCAD and NAWCWD will employ an Extraordinary Achievement
Allowance designed to optimize organizational effectiveness. An EAA is
defined as a temporary monetary allowance up to 25 percent of base pay,
which, when added to an employee's rate of base pay, may not exceed the
rate of basic pay for Executive Level IV. It is paid on either a bi-
weekly basis concurrent with normal pay days or as a lump sum following
completion of a designated contribution period, or combination of
these, at the discretion of the Executive Director/Commanding Officer
of the appropriate Naval Air Warfare Center. It is not base pay for any
purpose, e.g., retirement, life insurance, severance pay, promotion, or
any other payment or benefit calculated as a percentage of base pay.
The EAA will be available to certain employees whose present
contributions are worthy of a higher career level and whose level of
achievement is expected to continue at the higher career level for at
least one year.
b. Award of the EAA will generally be appropriate 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 base pay opportunities are available, or externally
imposed limits make changes to higher career levels unavailable, and
(4) when the approval time required to effect the action will
unreasonably delay appropriate compensation for the employee's
achievements 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.
c. To be eligible for EAA, employees must meet the criteria below:
(1) Employees in the S&E, Technical, and Business Professional and
Program Management career tracks are eligible for the EAA if their
contribution to the

[[Page 8545]]

organization is deemed worthy, as determined by the appropriate NAWC
Executive Director/Commander.
(2) Employees may receive an EAA for up to five years. The EAA
authorization will be reviewed and reauthorized as necessary, but at
least annually at the time of the Mission Aligned Objectives and
Compensation System appraisal through nomination by the Pay Pool
Manager and approval by the appropriate Executive Director/Commander.
(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 EAA 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 EAA
is neither appealable nor grievable.
All other details regarding nomination, termination, reduction,
allocation, and budget determination will be stipulated by internal
business rules, policies, or procedures established by the Personnel
Management Board.
9. Pay Growth Within a Pay Band
As a compensation management tool the Personnel Management Board
may establish pay ranges appropriate for a group or class of positions
within a pay band or pay bands. Advancement of pay beyond the assigned
pay range will generally require approval above the Pay Pool Manager
prior to finalizing the pay pool decisions. The request must
demonstrate that the complexity and responsibility of the position have
substantially changed and the duties of the position are expected to
continue at this level in the future thus warranting assignment of the
position to a higher pay range. Control points may apply in every
occupational family and pay band. Additional guidance will be included
in NAWCAD/NAWCWD internal issuances.
10. Awards
To provide additional flexibility in motivating and rewarding
individuals and groups, some portion of the performance award budget
will be reserved for special acts and other categories as they occur.
Awards may include, but are not limited to, special acts, patents,
invention awards, suggestions, on-the-spot, and time-off. The funds
available to be used for traditional title 5 U.S.C. awards are
separately funded within the constraints of the organization's budget.
While not directly linked to the Mission Aligned Objectives and
Compensation system, this additional flexibility is important to
encourage outstanding accomplishments and innovation in achieving the
diverse mission of the covered organizations. Additionally, to foster
and encourage teamwork among its employees, organizations may give
group awards. Thus, a team leader may recommend and a supervisor may
allocate a sum of money to a team for outstanding performance.
The NAWCAD and NAWCWD Commanders will have the authority to grant
special act awards to covered employees of up to $25,000 IAW the
criteria of SECNAVINST 12451.3. This authority may be delegated to the
Executive Directors of the covered organizations.
11. General Pay Increase
Employees who receive an unacceptable rating of record will not
receive performance payouts or any portion of the general pay increase
and as a result will ``migrate'' downward in the pay band. This occurs
because the rate of base pay in a pay band increases as the result of
the general pay increase (5 U.S.C. 5303). If their performance rating
continues as Unacceptable, employees who reach the bottom of the
overlapping pay scales (they remain identified in the higher
classification level as long they are covered in that range) will cross
the line into the next lower classification level without specific
adverse or performance based action. This migration is necessary for an
employee whose performance over a period of time has been deficient
enough to merit the employee's placement in lower level duties/
responsibilities where new opportunities for acceptable performance
exist, Clearly the employee who has experienced several performance
evaluations and who, in each case, has been given a year to demonstrate
improvement has been provided equal or better ``due process'' than the
obviously unsatisfactory employee who is accorded immediate adverse or
performance-based action procedures and downgraded or removed after the
required 30-day notice period. Further, it should be noted that in
these instances the employee's pay will remain constant, the downward
migration results from the need to comply with statutory pay levels.
Adverse or performance-based action procedures will cover demotion
between levels or removal where performance is clearly so
unsatisfactory as to preclude retention in the current pay band or as
an employee.
12. Requests for Reconsideration
An employee may request reconsideration of the rating-of-record
received under the mission aligned objectives and compensation system.
A rating of record or job objective rating may be reconsidered by
request of an employee only through the process specified in this
subpart and implementing issuances. This process will be the sole and
exclusive agency administrative process for employees to request
reconsideration of a rating of record. Consistent with this part, Pay
Pool Managers will make the decision on reconsiderations of rating of
record. In cases where the Pay Pool Manager is also the first line
supervisor or rating official, the request for reconsideration will be
referred to a different Pay Pool Manager or higher level supervisor
above the Pay Pool Manager. Pay Pool Managers' decisions are final. A
payout point assignment determination, payout distribution
determination, or any other payout matter will not be subject to the
reconsideration process or any other agency administrative grievance
system.
In the event a reconsideration or negotiated grievance decision
results in an adjusted rating of record the revised rating will be
referred to the Pay Pool Manager for recalculation of the employee's
performance payout amount and distribution. Any adjustment to base pay
will be retroactive to the effective date of the performance payout.
Base pay adjustments will be based on the payout point range
appropriate for the adjusted rating of record. Payout point values for
the adjusted rating of record will reflect the payout point value paid
to other members across the pay pool for that rating cycle. Decisions
made through the reconsideration process or a negotiated grievance
procedure will not result in recalculation of the payout made to other
employees in the pay pool.
13. Adverse Actions
Except where specifically waived or modified in this plan, adverse
action procedures under 5 CFR part 752 remain unchanged.

D. Hiring Authority

Competitive service positions will be filled through Merit
Staffing, direct-hire authority, or Delegated Examining.
1. Qualifications
The qualifications required for placement into a position in a pay
band within an occupational family will be determined using the OPM
``Operating Manual: Qualifications Standards for General Schedule
Positions.'' Since the

[[Page 8546]]

pay bands are anchored to the GS grade levels, the minimum
qualification requirements for a position will be the requirements
corresponding to the lowest GS grade incorporated into that pay band.
For example, for a position in the S&E occupational family Pay Band II,
individuals must meet the basic requirements for a GS-5 as specified in
the OPM ``Qualification Standard for Professional and Scientific
Positions.''
Selective factors may be established for a position in accordance
with the OPM's ``Operating Manual: Qualifications Standards for General
Schedule Positions,'' when determined to be critical to successful job
performance. These factors will become part of the minimum requirements
for the position, and applicants must meet them in order to be
eligible. If used, selective factors will be stated as part of the
qualification requirements in vacancy announcements and recruiting
bulletins.
2. Delegated Examining
NAWCAD and NAWCWD propose to demonstrate a streamlined examining
process for both permanent and non-permanent positions. This authority
will be supported by the applicable servicing Human Resource Offices
and Human Resources Service Centers in accordance with the Department
of Navy's common business processes, systems, and tools. The ``Rule of
Three'' will be eliminated. When there are no more than 15 qualified
applicants and no preference eligibles, all eligible applicants are
immediately referred to the selecting official without rating and
ranking. Rating and ranking will be required only when the number of
qualified candidates exceeds 15 or there is a mix of preference and
non-preference applicants. Statutes and regulations covering veterans'
preference will be observed in the selection process and when rating
and ranking are required. If the candidates are rated and ranked, a
random number selection method will be used to determine which
applicants will be referred when scores are tied after the rating
process. Veterans will be referred ahead of non-veterans with the same
score. Additional guidance on operating processes will be included in
NAWCAD/NAWCWD internal issuances.
3. Distinguished Scholastic Achievement Appointment Authority (DSAA)
for Scientific and Engineering Positions
The covered organizations will use the Distinguished Scholastic
Achievement Appointment Authority. The DSAA uses an alternative
examining process, which provides the authority to appoint individuals
with undergraduate or graduate degrees through the doctoral level to
professional positions up to the equivalent of GS-12 (DP-04 or DS-04/
05). This enables the covered organizations 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: Qualifications 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 for professional
occupations, etc.
4. Legal Authority
For actions taken under the auspices of the demonstration project,
the legal authority, Public Law 103-337, as amended, will be used. For
all other actions, the nature of action codes and legal authority codes
prescribed by OPM, DoD, or DON will continue to be used.
5. Expanded Term Appointments
NAWCAD and NAWCWD conduct a variety of projects that range from
three to six years. The current four-year limitation on term
appointments, as described in 5 CFR part 316, often forces the
termination of term employees prior to completion of projects they were
hired to support. This disrupts the research and development process
and affects the organization's ability to accomplish the mission and
serve its customers. Under the demonstration project, the covered
organizations will have authority to hire individuals under a modified
term appointment for a period of more than one year but not more than
five years when the need for an employee's services is not permanent.
These appointments may be extended one additional year, for a total of
6 years. The Executive Directors are authorized to extend term
appointments. Employees hired under the modified term appointment
authority are in a non-permanent status, but may be eligible for
conversion to career-conditional or career 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 may be eligible for conversion to a career-
conditional or career appointment at a later date; (2) served a minimum
of two years of continuous service in the term position; and (3) be
performing at the acceptable level of performance with a current rating
of record of Mission Success or higher.
6. Extended Probationary Period
The purpose of extending the probationary period and trial period
is to allow supervisors an adequate period of time to fully evaluate an
employee's ability to complete a cycle of work and to fully assess an
employee's contribution and conduct.
a. Competitive Service
NAWCAD and NAWCWD will implement an extended initial probationary
period for competitive service employees. The one-year probationary
period will be extended to three years for newly appointed career-
conditional, career employees and the one-year trial period will be
extended to three years for newly appointed term employees to positions
classified to series in the Science and Engineering, Business and
Program Management, and Technical Specialist occupational families. For
employees in positions classified to series in the S&E Technician and
Administrative Support occupational families the one-year probationary
period will be extended to two years for newly appointed career-
conditional, career employees and the one-year trial period will be
extended to two years for newly appointed term employees. The term
newly appointed includes conversion to new appointments, including
conversions from term appointments and the excepted service, for this
purpose.
Employees who have completed an initial probationary or trial
period prior to their conversion into the NAWC STRL will not be
required to serve a new or extended initial probationary or trial
period. Employees who are serving an initial probationary or trial
period upon conversion into the NAWC's STRL will serve the time
remaining on their initial probationary period or trial and may have
their initial probationary or trial period extended in accordance with
the demonstration project regulation and implementing issuances.
If a probationary or trial employee's performance is determined to
be Mission Success or higher and the supervisor expects that the
Mission Success or higher performance will continue into the future,
the supervisor has the option of ending the probationary or trial
period at an earlier date, but not before the employee has

[[Page 8547]]

completed one year of continuous service. If the probationary or trial
period is terminated before the end of the two- or three-year period,
the immediate supervisor will provide written reasons for his/her
decision to the next level of supervision for concurrence prior to
implementing the action.
Aside from extending the time period for all newly appointed
career-conditional, career and term employees all other features of the
initial probationary period as defined in 5 CFR part 315 and trial
period as described in 5 CFR part 316 are retained including the
potential to remove an employee without providing the full substantive
and procedural rights afforded a non-probationary employee.
b. Excepted Service
NAWCAD and NAWCWD will implement an extended initial trial period
for excepted service employees who are appointed on a permanent or
conditional basis or who are given a time-limited appointment lasting
three or more years. The trial period will be three years for newly
appointed excepted service employees to positions classified to series
in the Science and Engineering, Business and Program Management, and
Technical Specialist occupational families. For employees in positions
classified to series in the S&E Technician and Administrative Support
occupational families the trial period will be extended to two years
for newly appointed excepted service employees. The term newly
appointed includes conversion to new appointments for this purpose.
Employees who have completed an initial trial period prior to their
conversion into the NAWC STRL will not be required to serve a new or
extended initial trial period. Employees who are serving an initial
trial period upon conversion into the NAWC's STRL will serve the time
remaining on their initial trial period and may have their initial
trial period extended in accordance with the demonstration project
regulation and implementing issuances.
If a trial employee's performance is determined to be Mission
Success or higher and the supervisor expects that the Mission Success
or higher performance will continue into the future, prior to the end
of the two- or three-year trial period, a supervisor has the option of
ending the trial period at an earlier date, but not before the employee
has completed one year of continuous service. If the trial period is
terminated before the end of the two- or three-year period, the
immediate supervisor will provide written reasons for his/her decision
to the next level of supervision for concurrence prior to implementing
the action.
7. Termination of Probationary Employees
Probationary employees may be terminated when they fail to
demonstrate proper conduct, technical competency, and/or acceptable
performance for continued employment, and for conditions arising before
employment. When a supervisor decides to terminate an employee during
the probationary period because his/her work performance or conduct is
unacceptable, the supervisor shall terminate the employee's services by
written notification stating the reasons for termination and the
effective date of the action. The information in the notice shall, at a
minimum, consist of the supervisor's conclusions as to the inadequacies
of the employee's performance or conduct, or those conditions arising
before employment that support the termination.
8. Supervisory Probationary Periods
NAWCAD and NAWCWD will implement an extended supervisory
probationary period. The probationary period for new supervisors will
be two years. Except for the increased length, supervisory probationary
periods will be made consistent with 5 CFR part 315. Employees who have
successfully completed an initial probationary period for supervisory
positions will not be required to complete an additional two-year
probationary period for initial appointment to a supervisory position.
Employees who are serving an initial supervisory probationary period
upon conversion into the NAWC's STRL will serve the time remaining on
their initial supervisory probationary period and may have their
supervisory probationary period extended in accordance with the
demonstration project regulation and implementing issuances. If, during
this probationary period, the decision is made to return the employee
to a non-supervisory position for reasons related to supervisory
performance and/or conduct, the employee will be returned to a
comparable position of no lower base pay than the position from which
promoted or reassigned immediately prior to the supervisory assignment.
9. Volunteer Emeritus Corps
a. NAWCAD and NAWCWD will implement a Voluntary Emeritus Corps.
Under the demonstration project, the Executive Directors of the covered
organizations will have the authority to offer retired or separated
employees voluntary positions. This authority may be delegated only to
members of the Senior Executive Service (SES). Voluntary Emeritus Corps
assignments are not considered employment by the Federal government
except for purposes of injury compensation. Thus, such assignments do
not affect an employee's entitlement to buyouts or severance payments
based on an earlier separation from Federal service. To be accepted
into the Volunteer Emeritus Corps, a volunteer must be recommended by a
NAWCAD or NAWCWD manager to the NAWCAD or NAWCWD Executive Director or
an SES member to whom this authority has been delegated. Not everyone
who applies is entitled to an emeritus position. The responsible
official will document acceptance or rejection of the applicant. For
acceptance, documentation must be retained throughout the assignment.
For rejection, documentation will be maintained for two years.
b. To ensure success and encourage participation, the volunteer's
Federal retirement pay (whether military or civilian) will not be
affected while serving in a voluntary capacity. Retired or separated
Federal employees may accept an emeritus position without a break or
mandatory waiting period. Voluntary Emeritus Corps volunteers will not
be permitted to monitor contracts on behalf of the Government or to
participate on any contracts or solicitations where a conflict of
interest exists. The volunteers may be required to submit a financial
disclosure form annually. The same rules that currently apply to source
selection members will apply to volunteers. An agreement will be
established among the volunteer, the responsible official, and the
servicing HRO. The agreement must be finalized before the assumption of
duties and shall include:
(1) A statement that the voluntary assignment does not constitute
an appointment in the Civil Service is without compensation, and the
volunteer waives any claims against the Government based on the
voluntary assignment;
(2) A statement that the volunteer will be considered a Federal
employee only for the purpose of injury compensation;
(3) The volunteer's work schedule;
(4) Length of agreement (defined by length of project or time
defined by weeks, months, or years);
(5) Support provided by the organization (travel, administrative
support, office space, and supplies);
(6) A statement of duties;
(7) A statement providing that no additional time will be added to
a volunteer's service credit for such

[[Page 8548]]

purposes as retirement, severance pay, and leave as a result of being a
volunteer;
(8) A provision allowing either party to void the agreement with
two working days written notice;
(9) The level of security access required by the volunteer (any
security clearance required by the position will be managed by the
employing organization);
(10) A provision that any publication(s) resulting from his/her
work will be submitted to the NAWCAD or NAWCWD Executive Director for
review and approval;
(11) A statement that he/she accepts accountability for loss or
damage to Government property occasioned by his/her negligence or
willful action;
(12) A statement that his/her activities on the premises will
conform to the regulations and requirements of the organization;
(13) A statement that he/she will not release any sensitive or
proprietary information without the written approval of the employing
organization and further agrees to execute additional non-disclosure
agreements as appropriate, if required, by the nature of the
anticipated services; and,
(14) A statement that he/she agrees to disclose any inventions made
in the course of work performed at the NAWCAD or NAWCWD. The NAWCAD or
NAWCWD Executive Director has the option to obtain title to any such
invention on behalf of the U.S. Government. Should the NAWCAD or NAWCWD
Executive Director elect not to take title, the NAWCAD or NAWCWD shall,
at a minimum, retain a non-exclusive, irrevocable, paid-up, royalty-
free license to practice or have practiced the invention worldwide on
behalf of the U.S. Government.
Exceptions to the provisions in this procedure may be granted by
the NAWCAD or NAWCWD Executive Director on a case-by-case basis.
10. Direct Hire Authority for Scientists and Engineers With Advanced
Degrees for Scientific and Engineering Positions
a. Background
The NAWCAD and NAWCWD Laboratories have an urgent need for direct
hire authority to appoint qualified candidates possessing an advanced
degree to permanent and temporary scientific and engineering positions.
The market is extremely competitive with industry and academia for the
small supply of highly-qualified and security clearable candidates with
a Masters Degree or PhD in science or engineering. There are 35,000
scientists and engineers employed in the DoD laboratories; 27% hold
Masters Degrees, while 10% are in possession of a PhD The NAWCAD and
NAWCWD Laboratories jointly employ 5974 scientists and engineers; 29%
holding Masters Degrees, while 4% are in possession of a PhD Over the
next five years, the NAWCAD and NAWCWD Laboratories plan to hire
approximately 2,240 of the country's best and brightest scientists and
engineers (S&Es) just to keep pace with attrition. This number does not
include the impact that several actions such as the Base Realignment
and Closure of weapons and armament work to China Lake, California that
will result in a need to hire additional scientists and engineers above
normal attrition levels. 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 U.S. institutions.
For instance, in 2006, 20% of Masters 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 hiring
candidates possessing a PhD and accelerating the hiring process. For
instance, under a similar authority found in the NDAA for FY 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.
This authority will be administered by the servicing Human
Resources Office and Human Resources Service Center in accordance with
the Department of Navy's common business processes, systems, and tools
and be consistent with veterans' preference and merit system
principles. Use of this appointing authority must comply with veterans'
preference and merit systems principles when recruiting and appointing
candidates with advanced degrees to covered occupations. 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.
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.
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 09. 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.
b. Definitions
(1) Scientific and engineering positions are defined as all
professional positions in scientific and engineering occupations (with
a positive education requirement) utilized by the laboratory.
(2) An advanced degree is a Master's or higher degree from an
accredited college or university in a field of scientific or
engineering study directly related to the duties of the position to be
filled.
(3) Qualified candidates are defined as candidates who:
(a) 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;
(b) Possess an advanced degree; and
(c) Meet any selective factors.
(4) The term ``employee'' is defined by Section 2105 of title 5,
U.S.C.
11. Non-citizen Hiring
Where Executive Orders or other regulations limit hiring non-
citizens to the excepted service, both NAWCAD and NAWCWD will have the
authority to approve the hiring of non-citizens into competitive
service positions when qualified U.S. citizens are not available, and
the candidate meets all applicable immigration and security
requirements. 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 NAWCAD and NAWCWD Executive
Director/Commanding Officer or approving manager, as delegated by the
appropriate Center Executive Director/Commanding Officer. This
authority may only be delegated to members of the Senior Executive
Service (SES).

[[Page 8549]]

E. Internal Placement

1. Employees Hired From Outside the NAWC STRL
Employees entering into the NAWC from non-STRL pay systems or from
other Federal activities not as the result of a mass organizational
conversion will be moved into the demonstration project in the career
path and at the level and pay consistent with the duties and
responsibilities of the STRL position and individual qualifications.
When an employee is permanently placed (except by conversion under
section V.A or by promotion under section II.E.2) in an STRL position
from a GS or FWS position through a management-directed action (except
for actions taken for misconduct or unacceptable performance),
including a management directed reassignment or realignment, or any
placement as a result of a reduction in force (RIF), or placement via
the Priority Placement Program (PPP), Reemployment Priority List (RPL),
or Interagency Career Transition Assistance Plan (ICTAP), the employee
will receive a WGI adjustment. The WGI adjustment is calculated based
on the number of calendar days between the effective date of the
employee's last equivalent increase and the date of conversion into
NSPS, regardless of the number of days in a non-pay status (if any).
The maximum adjustment may not exceed a full WGI.
An employee who enters into an STRL position from a GS or FWS
position through an employee-initiated reassignment, promotion, or
change to lower grade may, at the discretion of the authorized
management official, also receive a WGI adjustment equivalent increase
as described in the paragraph above. The decision to grant this
increase will be reviewed and approved by an official who is at a
higher level than the official who made the initial decision.
In either case, this increase occurs before any other discretionary
reassignment increases provided under the STRL, may not cause the
employee's base salary to exceed the maximum rate of the assigned pay
band, and is in addition to any other discretionary reassignment
increase the employee may be eligible to receive.
2. Promotion
A promotion is the movement of an employee to a higher pay band in
the same occupational family or to a higher pay band in a different
occupational family. It also includes movement of an employee currently
covered by a non-demonstration project personnel system to a
demonstration project position in a pay band with a higher level of
work. Positions with known promotion potential to a specific band
within an occupational family will be identified when they are filled.
Not all positions in an occupational family will have promotion
potential to the same band. Movement from one occupational family to
another will depend upon individual competencies, qualifications, and
the needs of the organization. Supervisors may consider promoting
qualified employees at any time, since promotions are not directly tied
to the mission aligned objectives and compensation system. Progression
within a pay band is based upon performance base pay increases; as
such, these actions are not considered promotions and are not subject
to the provisions of this section. Promotions will follow Merit System
Principles and basic Federal merit promotion policy that provides for
competitive and non-competitive promotions.
To be promoted competitively or non-competitively from one band to
the next, an employee must meet the minimum qualifications for the job
and have a current rating of record of Mission Success or better or
equivalent under a different performance appraisal system. If an
employee does not have a current performance rating, the employee will
be treated the same as an employee with a rating of record of Mission
Success as long as there is no documented evidence of less than
acceptable performance.
Higher pay band or higher level of work means a pay band designated
to be a higher level of work than an employee's currently assigned
band, based on the demonstration classification structure and career
progression patterns, either within or across varying pay schedules and
career groups, regardless of the specific earning potential of the
band. When moving from a non-demonstration position to a demonstration
position, the band of the demonstration position is determined to be at
a higher level of work than the grade or level of the non-demonstration
position based on application of the demonstration classification
structure and career progression patterns. Additional guidance will be
included in NAWCAD/NAWCWD internal issuances.
3. 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, or from a non-
demonstration project position to a demonstration project position at a
comparable level of work, on either a temporary or permanent basis. The
employee must meet the qualifications requirements for the occupational
family and pay band. When an employee is reassigned either within his/
her current pay band or to a comparable pay band, an authorized
management official will set pay at an amount no less than the
employee's current base pay.
Comparable pay band or comparable level of work means pay bands
with the equivalent level of work, based on the demonstration
classification structure and career progression patterns, within and
across varying pay schedules and career groups, regardless of the
specific earning potential of the bands. When moving from a non-
demonstration position to a demonstration position, the band of the
demonstration position is determined to be at a comparable level of
work to the grade or level of the non-demonstration position based on
application of the demonstration classification structure and career
progression patterns. Additional guidance will be included in NAWCAD/
NAWCWD internal issuances.
4. Demotion or Placement in a Lower Pay Band
A demotion is the placement of an employee into a lower pay band or
movement from a non-demonstration project position to a demonstration
project position at a lower level of work. Demotions may be for cause
(performance or conduct) or for reasons other than cause (e.g., erosion
of duties, reclassification of duties to a lower pay band, application
under competitive announcements, at the employee's request, or
placement actions resulting from RIF procedures).
Lower pay band or lower level of work means a pay band designated
to be a lower level of work than an employee's currently assigned band,
based on the demonstration classification structure and career
progression patterns, either within or across varying pay schedules and
career groups, regardless of the specific earning potential of the
band. When moving from a non-demonstration position to a demonstration
position, the band of the demonstration position is determined to be at
a lower level of work than the grade or level of the non-demonstration
position based on application of the demonstration classification
structure and career progression patterns. Additional guidance will be
included in NAWCAD/NAWCWD internal issuances.

[[Page 8550]]

5. Simplified Assignment Process
Today's environment of downsizing and workforce fluctuations
mandates that the organization have maximum flexibility to assign
duties and responsibilities to individuals. Pay banding can be used to
address this need, as it enables the organization to have maximum
flexibility to assign an employee with or without a change in base pay,
within broad descriptions, consistent with the needs of the
organization and the individual's qualifications and level. Subsequent
assignments to projects, tasks, or functions anywhere within the
organization requiring the same level, area of expertise, and
qualifications would not constitute an assignment outside the scope or
coverage of the current position description. For instance, a technical
expert could be assigned to any project, task, or function requiring
similar technical expertise. Likewise, a manager could be assigned to
manage any similar function or organization consistent with that
individual's qualifications. This flexibility allows broader latitude
in assignments and further streamlines the administrative process and
system.
6. Details and Temporary Promotions
NAWCAD and NAWCWD will implement an Expanded Detail and Temporary
Promotion Authority providing the authority (1) to effect details up to
one year to specified positions at the same or similar level; and (2)
to effect details or temporary promotions to a higher pay band position
up to one year within a 24-month period without competition. The
specifics of these authorities will be stipulated by local business
rules, policies, or procedures as organizational experience dictates.
7. Exceptions to Competitive Procedures
The following actions are exceptions to competitive procedures:
a. Re-promotion to a position which is in the same pay band or GS
equivalent and occupational family as the employee previously held on a
permanent basis within the competitive service.
b. Promotion, reassignment, demotion, transfer, or reinstatement to
a position having promotion potential no greater than the potential of
a position an employee currently holds or previously held on a
permanent basis in the competitive service.
c. A position change permitted by reduction-in-force procedures.
d. Promotion without current competition when the employee was
appointed through competitive procedures to a position with a
documented target level.
e. A temporary promotion, or detail to a position in a higher pay
band, up to one year in a 24-month period.
f. A promotion due to the reclassification of positions based on
accretion (addition) of duties.
g. A promotion resulting from the correction of an initial
classification error or the issuance of a new classification standard.
h. Consideration of a candidate who did not receive proper
consideration in a competitive promotion action.
Additional guidance will be included in NAWCAD/NAWCWD internal
issuances.

F. Pay Administration

1. General
Pay administration policies will be established by the Personnel
Management Board. These policies will be exempt from DON pay setting
policies, but will conform to basic governmental pay setting policy
except for flexibilities contained herein. Employees whose performance
is acceptable will receive the full annual general pay increase and the
full locality pay. The covered organizations may make full use of
recruitment, retention, and relocation incentive payments as provided
for by OPM. Pay retention will follow current law and regulations at 5
U.S.C. 5362 and 5363 and 5 CFR part 536, except as described in this
regulation and waived or modified in section IX, the waiver section of
this plan. Pay band retention will not be used in this demonstration
project.
2. Locality Pay
Employees with a performance rating of Partial Mission Success or
better will be entitled to the locality pay authorized for their
official duty station in accordance with 5 CFR 531 subpart F. Employees
with a performance rating of Unacceptable will be entitled to only the
locality pay increase; they cannot receive any other pay increase or
award. 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 and, thus, a higher or
lower adjusted base pay.
3. Pay and Compensation Ceilings
An employee's total monetary compensation paid in a calendar year
may not exceed the base pay of Level I of the Executive Schedule
consistent with 5 U.S.C. 5307 and 5 CFR part 530 subpart B. In
addition, each pay band will have its own pay ceiling, just as grades
do in the GS. Base pay rates for the various pay bands will be directly
keyed to the GS rates, except for the Pay Band VI of the Supervision
and Management pay schedule. Other than where a retained rate applies,
base pay will be limited to the maximum base pay payable for each pay
band.
4. Pay Setting for Appointment
Employees whose appointment to a demonstration project position is
their initial appointment to the Federal service may have pay set at
the lowest base pay in the band or anywhere within the 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, or any combination thereof
that is pertinent to the position in which the employee is being
placed. Both national and local labor market conditions and pay rates
may also be taken into consideration to ensure that the Warfare Centers
are able to compete for the talent, skills, abilities, and competencies
needed to enable them to remain on the cutting edge of science and
technology. Guidance on pay setting for new hires will be established
by the Personnel Management Board. Highest Previous Rate (HPR) will be
considered in placement actions authorized under rules similar to the
HPR rules in 5 CFR 531.221. Use of HPR will be at the supervisor's
discretion, but if used, HPR is subject to policies established by the
Personnel Management Board.
5. Pay Setting for Promotion
The minimum base pay increase upon promotion to a higher pay band
will be 6% or the minimum base pay rate of the new pay band, whichever
is greater. The maximum amount of the pay increase may not exceed 20%,
or other such amount as established by the Personnel Management Board.
The maximum base pay increase for promotion may be exceeded when
necessary to allow for the minimum base pay increase. For employees
covered by a staffing supplement, the demonstration extended base pay
is considered base pay for promotion calculations. When a temporary
promotion is terminated, the employee's pay entitlements will be re-
determined based on the employee's position of record, with appropriate
adjustments to reflect pay events during the temporary promotion,
subject to the

[[Page 8551]]

specific policies and rules established by the Personnel Management
Board. The Personnel Management Board may establish additional pay
setting policies for promotions, including increasing the promotion
amount beyond 20% with the approval of the NAWCAD and NAWCWD Commanders
or Executive Directors. In no case may those adjustments increase the
base pay for the position of record beyond the applicable maximum base
pay for the pay band.
6. Pay Setting for Reassignment
a. Covered organizations may choose to adopt the flexibility to pay
an increase in base pay upon reassignment. If adopted, such an increase
will be subject to the specific guidelines established by the Personnel
Management Board and will not exceed 5% as a cost containment measure.
A reassignment may be effected without a change in base pay. Employees
may be eligible for an increase to base pay upon temporary or permanent
reassignment as described in section III.E.3. A decision to increase an
employee's base pay under this section will be based upon clear
Personnel Management Board business rules that will define criteria
necessary to justify a 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.
b. When an employee is reassigned within his/her current pay band
or to a comparable pay band, an authorized management official will set
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 and including 5%. If
the employee's current base pay exceeds the maximum of the new pay
band, no increase can be provided. 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 changes to ensure fairness and consistency across the
workforce.
7. Pay Setting for Demotion or Placement in a Lower Pay Band
Employees demoted for cause (performance or conduct) are not
entitled to pay retention and will receive a minimum of a 5% decrease
in base pay or the minimum rate of the lower pay band whichever is
greater. Employees demoted for reasons other than cause (e.g., erosion
of duties, reclassification of duties to a lower pay band, application
under competitive announcements, at the employee's request, or
placement actions resulting from RIF procedures) may be entitled to pay
retention in accordance with the provisions of 5 U.S.C. 5363 and 5 CFR
part 536, except as waived or modified in sections III.F.11 and IX of
this plan.
Employees, who receive an unacceptable rating, do not receive
performance payouts or the general pay increase. This action may result
in base pay that is identified in a lower pay band. This occurs because
the minimum rate of base pay in a pay band increases as the result of
the general pay increase (5 U.S.C. 5303) while the employee's pay does
not change. The employee will be placed in the lower pay band and their
salary will remain unchanged. This situation (a reduction-in-band level
with no reduction in pay as a result of an unacceptable rating) will
not be considered an adverse performance based action.
8. Staffing Supplements
At the time of conversion or OPM approval of a new SSR that would
be applicable to covered employees, the NAWCAD and NAWCWD may
incorporate the use of special salary rates (SSR) in demonstration
project pay ranges. Currently there are no NSPS Targeted Local Market
Supplements in use by NAWCAD or NAWCWD so no employees converting from
NSPS will be affected if staffing supplements are not implemented at
conversion. If staffing supplements are adopted, either at the time of
conversion or later, NAWCAD and NAWCWD will implement them via an
extension to the demonstration pay ranges and a supplement to a covered
employee's salary. Employees assigned to occupational categories and
geographic areas where GS SSRs 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
Personnel Management Board may establish additional policies and
provide guidance on the use and application of the staffing supplement
including provisions for in band adjustments and limiting application
of this feature to fewer occupations than covered by the GS SSR. An
extension to the demonstration pay ranges will be used to extend the
maximum salary of the pay band for those occupations for which a
staffing supplement is approved. The increase of an employee's base pay
into this extension will be determined by the annual performance
assessment and payout, there is no automatic entitlement to a staffing
supplement. Only if an employee's annual assessment and associated
payout would cause their base pay to fall within the area of the
staffing supplement extension to the pay range for the pay band would
they be paid at this level.
The extension to the pay range will be the maximum special salary
rate for the banded grades. An employee's base pay is increased by the
standard locality increase until the base pay exceeds the maximum GS
basic pay for the banded grades. If the employee's base pay will exceed
the maximum GS basic pay for the banded grades then the staffing
supplement will be applied when authorized. The staffing supplement
percent will be set equal to the locality percent and the staffing
supplement and payout is calculated as shown in the following example.

------------------------------------------------------------------------

-------------------------------------------------------------------------
Scenario:
Top of regular RUS pay range is $74,628.
NAWC has adopted a pay scale extension for RUS 2210s and 0856s.
Top of extended pay range is $78,445 (equal to the relevant GS RUS
SSR).
A RUS 0856 employee is at top of normal pay scale. Their pay before
payout is:

STRL base pay = $65,371.
STRL locality pay = $9,257 (Locality % = 14.16%, same as GS).
STRL adjusted base pay = $74,628.

This employee receives a performance rating of Exceeds Mission
Expectations (4) and receives 3 payout points. The distribution of the
payout is 70% salary and 30% bonus. Each payout point is valued at 2%.
New base pay calculation:

65371 * (1 + (3 * .02 * .7) = 68116.582; rounded to 68117.
(base pay increase after payout = 3 payout points * 2% pay point value *
70% allocated to salary. Note the remainder will be paid as bonus.)
RUS locality percent = 14.16%.
Staffing supplement percent = 14.16%.

[[Page 8552]]

Staffing supplement calculation:

68117 * .1416 = 9645.3672; rounded to 9645.

(new base pay * staffing supplement percent).
New adjusted base pay calculation:

68117 + 9645 = $77,672.

(new base pay + staffing supplement).
------------------------------------------------------------------------

If the pay scale extension is discontinued or reduced either
because the GS SSR has been discontinued or reduced, for NAWC budgetary
constraints, or other NAWC managerial decisions, the employees
receiving a staffing supplement will receive retained pay. There will
be no change in the adjusted base pay when placed on pay retention.
9. Educational Pay Adjustment
NAWCAD and NAWCWD will establish an educational base pay adjustment
which is separate from the incentive pay process and may not cause the
employee's pay to exceed the maximum base pay rate of his or her
assigned pay band. An educational pay adjustment is defined as an
increase in an employee's base pay by other than the incentive pay
process within the employee's current band level to an amount which
does not exceed the top of the band. The educational pay adjustment may
be used to adjust the 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 pay of graduate level Student Career Experience Program
(SCEP) students or employees who have obtained an advanced degree,
e.g., a PhD in a field related to the work of their position or the
mission of their organization. An employee may receive an educational
base pay adjustment or a reassignment base pay increase but not both at
the same time.
10. Developmental Promotions
NAWCAD and NAWCWD will employ developmental promotions to achieve
compensation growth commensurate to an employee's progression while in
developmental assignments. A developmental promotion is an increase to
base pay that may be provided to employees participating in NAWCAD and
NAWCWD training programs or in other developmental capacities as
determined by Personnel Management Board policy. Developmental
promotions recognize growth and development in the acquisition of job
related competencies combined with successful performance of job
objectives. The use of developmental promotions is limited to (1)
employees in a developmental pay band of a non-supervisory pay schedule
and who are in developmental or trainee level positions; and (2)
employees in positions which are assigned to a Student Career
Experience Program (SCEP).
Standards by which developmental promotion increases are provided
and criteria by which additional base pay increases will be determined
will be established and documented in internal business rules,
policies, or procedures. The amount of the developmental promotion
increase generally will not exceed 20 percent of an employee's base pay
The decision to grant a developmental promotion exceeding 20 percent of
an employee's base pay must be made on a case-by-case basis and
approved by the appropriate Executive Director/Commanding Officer or
their delegate as established by internal business rules, policies, or
procedures. This authority may be delegated only to members of the
Senior Executive Service (SES). The amount of the developmental
promotion 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 rule,
policy, or procedure. To qualify for a developmental promotion, an
employee must have a rating of record of Mission Success or better. A
developmental promotion may be awarded to an employee who does not have
a rating of record if an authorizing official conducts a performance
assessment and determines that the employee is performing at the
Mission Success level or better. This performance assessment does not
constitute a rating of record. If an employee has a current performance
rating below Mission Success and the supervisor believes the employee's
performance has improved to the Mission Success level or better; the
employee has demonstrated this improved performance for 90 days or
more; and it is expected that this level of performance will continue,
the supervisor may conduct a performance assessment and forward it to
the Pay Pool Manager for approval. If the Pay Pool Manager concurs with
the supervisor's assessment then the employee may be given a
developmental promotion. There is no entitlement to an additional
assessment beyond the annual assessment; this decision is totally at
managerial discretion. If an additional assessment is made, it is not a
rating of record and there will be no retroactive pay changes
associated with it.
A developmental promotion increase may not be granted unless an
employee is in a pay and duty status under the NAWCAD/NAWCWD STRL
demonstration project on the effective date of the increase.
11. Pay Retention
Pay retention will follow current law and regulations at 5 U.S.C.
5362 and 5363, and 5 CFR part 536, except as waived or modified in the
Staffing Supplements section and section IX of this plan. Pay band
(grade) retention does not apply under this demonstration project. The
NACWAD or NAWCWD Executive Director may also grant pay retention to
employees who meet general eligibility requirements, but do not have
specific entitlement by law, provided they are not specifically
excluded.

G. Employee Development

1. Expanded Developmental Opportunity Program
The Expanded Developmental Opportunity Program will be available to
all demonstration project employees. Expanded developmental
opportunities complement existing developmental opportunities such as
long-term training, rotational job assignments, and developmental
assignments to DON/DoD, and self-directed study via correspondence
courses and local colleges and universities. Each developmental
opportunity must result in a product, service, report, or study that
will benefit the NAWCAD or NAWCWD or customer organization as well as
increase the employee's individual effectiveness. The developmental
opportunity period will not result in loss of (or reduction) in base
pay, leave to which the employee is otherwise entitled, or credit for
service time. The positions of employees on expanded developmental
opportunities may be back-filled (i.e., with temporarily assigned,
detailed, or promoted employees or with term employees). However, that
position or its equivalent must be made available to the employee upon
return from the developmental period. The Personnel Management Board
will provide written guidance for employees on application procedures
and develop a process that will be used to review and evaluate
applicants for development opportunities.
a. Sabbaticals
The Executive Directors of the covered organizations have the

[[Page 8553]]

authority to grant paid or unpaid sabbaticals to all career employees.
The purpose of a sabbatical will be to permit an employee to engage in
study or uncompensated work experience that will benefit the
organization and contribute to the employee's development and
effectiveness. Each sabbatical must result in a product, service,
report, or study that will benefit the NAWCAD or NAWCWD mission as well
as increase the employee's individual effectiveness. Various learning
or developmental experiences may be considered, such as advanced
academic teaching; research; self-directed or guided study; and on-the-
job work experience.
One paid sabbatical of up to twelve months in duration or one
unpaid sabbatical of up to six months in a calendar year may be granted
to an employee in any seven-year period. Employees will be eligible to
request a sabbatical after completion of seven years of Federal
service. Employees approved for a paid sabbatical must sign a service
obligation agreement to continue in service in the covered
organizations for a period of three times the length of the sabbatical.
If an employee voluntarily leaves the covered organizations before the
service obligation is completed he/she is liable for repayment of
expenses incurred by the covered organizations that are associated with
training during the sabbatical. Expenses do not include salary costs.
The Executive Directors of the covered organizations have the authority
to waive this requirement. Criteria for such waivers will be addressed
in the operating procedures. Specific procedures will be developed for
processing sabbatical applications upon implementation of the
demonstration project.
b. Critical Skills Training (Training for Degrees)
The Executive Directors of the covered organizations 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 acquiring critical skills. Academic degree training
will ensure continuous acquisition of advanced specialized knowledge
essential to the organization and 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 those decisions are fully documented. Employees
approved for degree training must sign a service obligation agreement
to continue in service in the covered organizations for a period of
three times the length of the training period. If an employee
voluntarily leaves the NAWCAD or NAWCWD before the service obligation
is completed, he/she is liable for repayment of expenses incurred by
the covered organizations related to the critical skills training.
Expenses do not include salary costs. The Executive Directors of the
covered organizations have the authority to waive this requirement.
Criteria for such waivers will be addressed in the STRL internal
operating procedures.

H. Reduction-in-Force (RIF) Procedures

RIF procedures will be used when an employee faces separation or
downgrading due to lack of work, shortage of funds, reorganization,
insufficient personnel ceiling, the exercise of re-employment or
restoration rights, or furlough for more than 30 calendar days or more
than 22 discontinuous days. The procedures in 5 CFR part 351 will
generally be followed with some modifications pertaining to the
competitive areas, assignment rights, the addition of a performance
sub-group and grade/pay band retention. Modified term appointment
employees are in Tenure Group III for RIF purposes. RIF procedures are
not required when separating these employees when their appointments
expire.
1. Competitive Areas
Separate RIF competitive areas for demonstration and non-
demonstration project employees will be established at each geographic
location. Within the demonstration project separate competitive areas
may be established for each demonstration occupational family.
Demonstration supervisors will be placed in the competitive area for
their occupational family but in separate competitive levels within
that career field. Bumps and retreats will occur only within the same
competitive area and only to positions for which the employee meets all
qualification standards including medical and/or physical
qualifications.
Within each competitive area, competitive levels will be
established based on the occupational family, pay band, series and SAC
so that positions are similar enough in duties and qualifications that
employees can perform the duties and responsibilities of any other
position in the competitive level upon assignment to it, without any
loss of productivity beyond what is normally expected. For S&E
competitive levels the Warfare Centers may also choose to use the OPM
classification functional code as a defining element.
2. Assignment Rights
An employee may displace another employee by bump or retreat to one
pay band below the employee's existing pay band. A preference eligible
with a compensable service-connected disability of 30 percent or more
may retreat to positions two pay bands below his/her current band.
3. Crediting Performance in RIF
Reductions in force are accomplished using the existing procedures
with the retention factors of: Tenure, veterans' preference,
performance, and length of service, in that order. The performance
subgroup will be based on the most recent three ratings of record
during the preceding four years. There will be three groupings within
the performance subgroup: Mission Superior (H), Mission Success (S) and
Mission Deficiency (L). The most recent ratings of records will be
combined to determine the performance subgroup. The High subgroup will
include those employees who have consistently demonstrated superior
performance. The Mission Success subgroup will include the next level
of demonstrated performance and the Mission Deficiency subgroup will
include those who have failed to achieve expected levels of performance
for one or more years. Additional guidance on determining performance
subgroups will be included in NAWCAD/NAWCWD internal issuances.
Employees who have been rated under different patterns of summary
rating levels and have at least the equivalent of a rating of record of
three will receive RIF appraisal credit for the non-demonstration
performance ratings equivalent to Mission Success based on the
demonstration project's modal score for the employee's competitive
area. If the employee received less than the equivalent of Mission
Success then that rating will be compared to the demonstration project
one or two rating and best fit chosen. Additional guidance on ratings
equivalency will be included in NAWCAD/NAWCWD internal issuances.
In some cases, an employee may not have three ratings of record. If
an

[[Page 8554]]

employee has fewer than three annual ratings of record, then for each
missing rating, RIF appraisal credit will be based on the demonstration
project's modal score for the most recently completed appraisal period
on record for the employee's competitive area. For an employee who has
no ratings of record, all credit will be based on the repeated use of a
single modal rating from the most recently completed appraisal period
on record for the employee's competitive area.
An employee who has received a written decision that his/her
performance is unacceptable has no bump or retreat rights. An employee
who has been demoted for unacceptable performance, and as of the date
of the issuance of the RIF notice has not received a performance rating
in the position to which demoted, will receive the same credit granted
for a Level 3 rating of record. An employee with a current unacceptable
rating of record has assignment rights only to a position held by
another employee who has an unacceptable rating of record.

IV. Implementation Training

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

V. Movement Into and Out of the Demonstration Project

A. Conversion From NSPS to the Demonstration Project

1. Placement Into Demonstration Project Pay Plans and Pay Bands
The employee's NSPS occupational series, pay plan, pay band, and
supervisory code will be considered upon converting into the
demonstration project as follows:
a. Determine the appropriate demonstration project pay plan.
Employees will be converted into a pay plan based on the occupational
series of their position. There is a separate pay plan 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.
b. Determine the appropriate pay band. The appropriate pay band
will be determined by establishing the corresponding demonstration
project pay band for the employee's NSPS position using demonstration
project pay band definitions, classification standards, and guidance.
Once the demonstration project pay band has been determined, the
employee's position will be placed in the demonstration project pay
band. In cases where a demonstration project pay band overlaps more
than one NSPS pay band, placement will be made using demonstration
project pay band definitions and classification criteria to determine
the appropriate pay band in which to place the position.
2. 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 2010, which prohibits a loss of or decrease
in pay upon transition from NSPS, employees converting to the
demonstration project will retain the adjusted salary (as defined in 5
CFR 9901.304) from their NSPS permanent position at the time the
position converts. Upon conversion, the retained NSPS adjusted salary
may not exceed Level IV of the Executive Schedule plus 5 percent. If
the employee's base 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.
NAWCAD and NAWCWD do not have any employees who are covered by an
NSPS targeted local market supplement (TLMS) but if such coverage
occurs between the date of this FRN and conversion to the demonstration
project such employees will no longer be covered by a TLMS. Instead
they may receive a locality or similar supplement (e.g., a staffing
supplement), or pay retention, if applicable. The adjusted base pay
will not change upon conversion.
Once converted, employees may receive other adjustments and/or
differentials, as applicable, as described in this regulation or an
implementing issuance.
3. 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.
4. Transition Equity
During the first the 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 merits 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 performance 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.

[[Page 8555]]

During the first 18 months following conversion, management may
approve promotions of less than 6% or increases in base pay of not more
than 20% percent provided the adjustment does not cause the employee's
base pay to exceed the maximum rate of his or her assigned pay band.
The employee's performance must warrant an adjustment and these actions
will be limited to those necessary to mitigate compensation inequities
that are directly related to the transition/conversion from NSPS to the
demonstration project. For instance, inappropriate ``leap-frogging'' of
more senior employees by more junior employees when the inversion of
compensation levels are not warranted by performance or mission
accomplishment outcomes. The Personnel Management Board will establish
policy and guidance for this provision and this guidance will be
included in NAWCAD/NAWCWD internal issuances.
5. Converting Employees on NSPS Term and Temporary Appointments
a. Employees serving under term appointments at the time of
conversion to the demonstration project will be converted to a modified
term appointment 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 NSPS Valued Performer, demonstration
Mission Success, or equivalent level under another system. Additional
guidance will be included in NAWCAD/NAWCWD internal conversion
issuances.
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 for employees
who do not meet the above criteria may be granted after conversion in
accordance with the provision of this regulation.
b. Employees serving under temporary appointments under NSPS when
their organization converts to the demonstration project will be
converted 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.
6. Probationary Periods
a. Initial probationary period. 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.
Employees who are serving an initial probationary period upon
conversion from NSPS will serve the time remaining on their initial
probationary period and may have their initial probationary period
extended in accordance with the demonstration project regulation and
implementing issuances.
b. 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.

B. 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 NAVAIR STRL demonstration project via movement of
their positions using an appropriate Nature of Action Code. Employees'
positions will be classified based upon the position classification
criteria and pay band definitions under the laboratory demonstration
project rules and their pay, upon conversion, maintained under
applicable pay setting rules.

C. Movement Out of the NAVAIR STRL Demonstration Project

1. Termination of Coverage Under the NAVAIR STRL Demonstration Project
Pay Plans
In the event employees' coverage under the NAVAIR STRL
demonstration project pay plans is terminated, employees move with
their demonstration project positions to another system applicable to
NAVAIR 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.
2. Determining a GS-equivalent Grade and GS-equivalent Rate of Pay for
Pay Setting Purposes When a NAVAIR Employee's Coverage by a
Demonstration Project Pay Plan Terminates or the Employee Voluntarily
Exits the NAVAIR STRL Demonstration Project
a. 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 in effect immediately
before the employee left the demonstration project.
b. 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:
(1) The employee's adjusted base pay under the demonstration
project (including any locality payment or staffing supplement) is
compared with step 4 rates in the highest applicable GS rate range. For
this purpose, a GS rate range includes a rate in:
(a) the GS base schedule;
(b) the locality rate schedule for the locality pay area in which
the position is located; or

[[Page 8556]]

If the series is a two-grade interval series, only odd-numbered grades
are considered below GS-11.

(2) If the employee's adjusted base pay under the demonstration
project equals or exceeds the applicable step 4 adjusted base pay rate
of the highest GS grade in the band, the employee is converted to that
grade.
(3) If the employee's adjusted base pay under the demonstration
project is lower than the applicable step 4 adjusted base pay rate of
the highest grade, the adjusted base pay under the demonstration
project is compared with the step 4 adjusted base pay rate of the
second highest grade in the employee's pay band. If the employee's
adjusted base pay under the demonstration project equals or exceeds the
step 4 adjusted base pay rate of the second highest grade, the employee
is converted to that grade.
(4) This process is repeated for each successively lower grade in
the band until a grade is found in which the employee's adjusted base
pay under the demonstration project 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.
(5) 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.
c. 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:
(1) The pay conversion is done before any geographic movement or
other pay-related action that coincides with the employee's movement or
conversion out of the demonstration project.
(2) An employee's adjusted base pay under the demonstration project
(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:
(a) the GS base schedule,
(b) an applicable locality rate schedule, or
(c) an applicable special rate schedule.
(3) If the highest applicable GS rate range is a locality pay rate
range, the employee's adjusted base pay under the demonstration project
is converted to a GS locality rate of pay. If this rate falls between
two steps in the locality-adjusted schedule, the rate must be set at
the higher step. The converted GS unadjusted rate of base pay would be
the GS base rate corresponding to the converted GS locality rate (i.e.,
same step position).
(4) If the highest applicable GS rate range is a special rate
range, the employee's adjusted base pay under the demonstration project
is converted to a special rate. If this rate falls between two steps in
the special rate schedule, the rate must be set at the higher step. The
converted GS unadjusted rate of base pay will be the GS rate
corresponding to the converted special rate (i.e., same step position).
(d) 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.
3. Supervision and Management Pay Band VI Employees
The Above GS-15 Position concept is currently being evaluated by
DoD management for its effectiveness; continued applicability to the
current STRL scientific, engineering, and technology workforce needs;
and appropriate allocation of billets based on mission requirements.
The nature and extent of the conversion out of the demonstration
project process for employees in these positions will be determined by
the final DoD guidance. Additional guidance may be included in NAWCAD/
NAWCWD internal issuances.
4. 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.
5. Within-Grade Increase--Equivalent Increase Determinations
Service under the demonstration project is creditable for within-
grade increase purposes upon conversion back to the GS pay system.
Performance pay increases (including a zero increase) under the
demonstration project are equivalent increases for the purpose of
determining the commencement of a within-grade increase waiting period
under 5 CFR 531.405(b).

D. Personnel Administration

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

E. Automation Support

1. General
One of the major goals of the demonstration project is to
streamline the personnel processes to increase cost effectiveness.
Automation must play an integral role in achieving that goal. Without
the necessary automation to support the interventions proposed for the
demonstration project, optimal cost benefit cannot be realized. In
addition, adequate information to support decision-making must be
available to managers if line management is to assume greater authority
and responsibility for human resources management. Automation to
support the demonstration project is required at the DON and DoD level,
(in the form of changes to the Defense Civilian Personnel Data System)
to facilitate processing and reporting of demonstration project
personnel actions, and may be ultimately required by the Naval Air
Warfare Centers to assist in processing of a variety of personnel-
related actions in order to facilitate management processes and
decision-making.
2. Defense Civilian Personnel Data System (DCPDS)
DCPDS is the Department of Defense's authoritative personnel data
system and program of record and, as such, will be the system of choice
for the STRL labs.

F. Experimentation and Revision

Many aspects of a demonstration project are experimental.
Modifications may be made from time to time as experience is gained,
results are analyzed, and conclusions are reached on how the new system
is working. DoDI 1400.37, July 28, 2009, provides

[[Page 8557]]

instructions for adopting other STRL flexibilities, making minor
changes to an existing demonstration project, and requesting new
initiatives.

VI. Project Duration

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

VII. Evaluation Plan

A. Overview

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

B. Evaluation Model

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

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

C. Evaluation

A modified quasi-experimental design will be used for the
evaluation of the STRL Personnel Demonstration Program. Because most of
the eligible laboratories are participating in the program, a 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. In so doing, the confidence of overall
findings will be strengthened as the different collection methods
substantiate each other.
Both quantitative and qualitative data will be used when evaluating
outcomes. The following data will be collected:
(1) Workforce data;
(2) Personnel office data;
(3) Employee attitude surveys;
(4) Focus group data;
(5) Local site historian logs and implementation information;
(6) Customer satisfaction surveys; and
(7) Core measures of organizational performance.
The evaluation effort will consist of two phases, formative and
summative

[[Page 8558]]

evaluation, covering at least five years to permit inter- and intra-
organizational estimates of effectiveness. The formative evaluation
phase will include baseline data collection and analysis,
implementation evaluation, and interim assessments. The formal reports
and interim assessments will provide information on the accuracy of
project operation, and current information on impact of the project on
veterans and protected groups, Merit System Principles, and Prohibited
Personnel Practices. The summative evaluation will focus on an overall
assessment of project outcomes after five years. The final report will
provide information on how well the HR system changes achieved the
desired goals, which interventions were most effective, and whether the
results can be generalized to other Federal installations.

VIII. Demonstration Project Costs

A. Cost Discipline

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

B. Developmental Costs

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

Table 1--Projected Development Costs
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
FY10 FY11 FY12 FY13 FY14
----------------------------------------------------------------------------------------------------------------
Software Development & Automation................... $150 $650 $200 $150 $100
Training Development & Workforce Training........... 300 1,000 400 100 100
Project Evaluation.................................. 0 0 100 100 100
-----------------------------------------------------------
Totals.......................................... 450 1,650 700 350 300
----------------------------------------------------------------------------------------------------------------

IX. Required Waivers to Law and Regulation

Public Law 106-398 gave the DoD the authority to experiment with
several personnel management innovations. In addition to the
authorities granted by the law, the following are waivers of law and
regulation that will be necessary for implementation of the
demonstration project. In due course, additional laws and regulations
may be identified for waiver request. The following waivers and
adaptations of certain title 5 U.S.C. and title 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 adopting or incorporating any law or regulation enacted,
adopted, or amended after the effective date of this demonstration
project.

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

Chapter 5, section 552a: Records. Waive to the extent required to
clarify that volunteers under the Voluntary Emeritus Corps are
considered employees of the Federal Government for purposes of this
section.
Chapter 31, section 3111: Acceptance of volunteer service. Waive to
allow for a Volunteer Emeritus Corps in addition to student volunteers.
Chapter 33, subchapter I--Examination, Certification, and
Appointment: Waived except for sections 3302, 3321, and 3328to allow
for direct hire authority for scientists and engineers with advanced
degrees for professional positions.
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, subchapter 1, section 3318(a): Competitive Service,
Selection from Certificate. Waived in its entirety to eliminate the
requirement for selection using the ``rule of three.'' Veterans'
preference provisions remain unchanged.
Chapter 33, section 3321: Competitive Service; Probationary Period.
This section waived to the extent necessary to replace grade with ``pay
band level'' and allow probationary periods of up to 3 years.
Chapter 33, section 3341: Details. Waived as necessary to extend
the time limits for details.
Chapter 35, section 3502: Waived to the extent to allow for
performance retention subgroups and 3502(c) waived in its entirety.
Chapter 41, section 4108(a)-(c): Waived to the extent necessary to
require the employee to continue in the service of the covered
organizations for the period of the required service and to the extent
necessary to permit the Executive Director of the covered
organizations, to waive in whole or in part a right of recovery.
Chapter 43, section 4302: Waived to the extent necessary to
substitute ``pay band'' for ``grade.''
Chapter 43, section 4303: Waived to the extent necessary to (1)
substitute ``pay band'' for ``grade'' and (2) provide that moving to a
lower pay band as a result of not receiving the general pay increase
because of poor performance is not an action covered by the provisions
of sections 4303(a)-(d).
Chapter 43, section 4304(b)(1) and (3): Responsibilities of the
OPM. Waived in its entirety to remove the responsibilities of the OPM
with respect to the performance appraisal system.
Chapter 45, section 4502: Limitation of cash awards to $10K. Waived
to allow NAWCAD and NAWCWD Commanders to approve awards up to $25K.
Chapter 51 Classification, section 5101-5112: Purpose; Definitions,
application; Determination of applicability; Basis for grading
positions; Standards for classification of positions; Basis for
classifying positions; Classification of positions; Classification of
positions above GS-15; Review of classification of positions,
Revocation and restoration of authority to classify positions, and
General authority of the Office of Personnel Management:--Waived to the
extent that white collar employees will be covered by pay banding and
to the extent that classification appeals will be decided by

[[Page 8559]]

the NAWC Executive Director with final appeal to the Department of
Defense.
Chapter 53, sections 5301, 5302(1), (8) and (9), 5303, and 5304:
Pay Comparability System. Waived to the extent necessary to allow (1)
demonstration project employees to be treated as GS employees, (2)
basic rates of pay under the demonstration project to be treated as
scheduled rates of pay, and (3) the demonstration project pay system to
be adjusted by the GS annual adjustments to pay schedules.
Chapter 53, section 5305: Special Pay Authority. Waived to the
extent necessary to allow for use of a staffing supplement in lieu of
the special pay authority.
Chapter 53, sections 5331-5336: GS Pay Rates. Waived in its
entirety to allow for the demonstration project's pay banding system
and pay provisions.
Chapter 53, sections 5361-5366: Grade and Pay Retention. Waived to
the extent necessary to: (1) Replace ``grade'' with ``pay band;'' (2)
allow demonstration project employees to be treated as GS employees;
(3) provide that an employee on pay retention whose rating of record is
``Unacceptable'' is not entitled to 50 percent of the amount of the
increase in the maximum rate of base pay payable for the pay band of
the employee's position; (4) provide that pay retention does not apply
to reduction in base pay due solely to the reallocation of
demonstration project pay rates in the implementation of a staffing
supplement; (5) allow no provision of grade or pay band retention under
this demonstration project and (6) allow demonstration project
employees receiving a staffing supplement to retain the adjusted base
pay if the staffing supplement is discontinued or reduced. This waiver
applies to ST employees only if they move to a GS-equivalent position
within the demonstration project under conditions that trigger
entitlement to pay retention.
Chapter 55, section 5542(a)(1)-(2): Overtime rates; computation.
Waived to the extent necessary to provide that the GS-10 minimum
special rate (if any) for the special rate category to which a project
employee belongs is deemed to be the ``applicable special rate'' in
applying the pay cap provisions in 5 U.S.C. 5542.
Chapter 55, section 5545(d): Hazardous duty differential. Waived to
the extent necessary to allow demonstration project employees to be
treated as GS employees.
Chapter 55, section 5547(a)-(b): Limitation on premium pay. Waived
to the extent necessary to provide that the GS-15 maximum special rate
(if any) for the special rate category to which a project employee
belongs is deemed to be the ``applicable special rate'' in applying the
pay cap provisions in 5 U.S.C. 5547.
Chapter 57, section 5753, 5754, and 5755: Recruitment and
relocation, bonuses, incentives, and supervisory differentials. Waived
to the extent necessary to allow employees and positions under the
demonstration project to be treated as employees and positions under
the GS.
Chapter 59, section 5941: Allowances based on living costs and
conditions of environment; employees stationed outside continental U.S.
or Alaska. Waived to the extent necessary to provide that cost-of-
living allowances paid to employees under the demonstration project are
paid in accordance with regulations prescribed by the President (as
delegated to OPM).
Chapter 75, sections 7501(1), 7511(a)(1)(A)(ii), and
7511(a)(1)(C)(ii): Adverse Actions--Definitions. Waived to the extent
necessary to allow for up to a three-year probationary period and to
permit termination during the extended probationary period without
using adverse action procedures for those employees serving a
probationary period under an initial appointment except for those with
veterans' preference.
Chapter 75, section 7512(3): Adverse actions. Waived to the extent
necessary to replace ``grade'' with ``pay band.''
Chapter 75, section 7512(4): Adverse actions. Waived to the extent
necessary to provide that adverse action provisions do not apply to (1)
conversions from GS special rates or NSPS Targeted Local Market
Supplements to demonstration project pay, as long as total pay is not
reduced and (2) reductions in pay due to the removal of a supervisory
or team leader pay adjustment upon voluntary movement to a non-
supervisory or non-team leader position.

B. Waivers to Title 5, CFR

Part 293, subpart D: Personnel Records. Employee Performance File
System Records. Waived to the extent necessary to be consistent with
the demonstration project's mission aligned objectives and compensation
system and to allow definition and establishment of its automated
system of records and retention requirements.
Part 300, sections 300.601 through 300.605: Time-in-Grade
restrictions. Waived to eliminate time-in-grade restrictions in the
demonstration project.
Part 308, sections 308.101 through 308.103: Volunteer service.
Waived to allow for a Voluntary Emeritus Corps in addition to student
volunteers.
Part 315, section 315.801(a), 315.801(b)(1), (c), and (e), and
315.802(a) and (b)(1): Probationary period and Length of probationary
period. Waived to the extent necessary to allow for up to a three-year
probationary period and to permit termination during the extended
probationary period without using adverse action procedures for those
employees serving a probationary period under an initial appointment
except for those with veterans' preference.
Part 315, section 315.901: Statutory requirement. Waived to the
extent necessary to replace ``grade'' with ``pay band.''
Part 315, section 315.905 Length of the probationary period. Waived
to the extent necessary to allow for a two-year supervisory/managerial
probationary period.
Part 316, section 316.301: Purpose and duration. Waived to the
extent necessary to allow for term appointments for more than four
years.
Part 316, section 316.303: Tenure of term employees. Waived to the
extent necessary to allow term employees to acquire competitive status.
Part 316, section 316.304: Trial Period. Waived to the extent
necessary to allow for up to a three-year trial period.
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: Order of selection from certificates.
Waived to the extent necessary to eliminate the requirement for
selection using the ``rule of three.''
Part 335, section 335.103: Agency promotion programs. Waived to the
extent necessary to extend the length of details and temporary
promotions without requiring competitive procedures.
Part 337, section 337.101(a): Rating applicants. Waived to the
extent necessary to allow referral without rating when there are 15 or
fewer qualified candidates and no qualified preference eligibles.
Part 340, subpart A, subpart B, and subpart C: Other than Full-Time
Career Employment. These subparts are waived

[[Page 8560]]

to the extent necessary to allow a Volunteer Emeritus Corps.
Part 351, section 351.401: Determining retention standing. Waived
to the extent necessary to allow use of performance subgroups in
determining retention standing.
Part 351, section 351.402(b): Competitive area. Waived to the
extent necessary to allow separate competitive areas for demonstration
and non-demonstration project employees and to allow separate
competitive areas for each demonstration occupational family.
Part 351, section 351.403: Competitive level. Waived to the extent
necessary to replace ``grade'' with ``pay band'' and to allow use of
demonstration project criteria, such as specialty area code, to be used
in the definition of competitive levels.
Part 351, section 351.501: Order of retention--competitive service.
Waived as necessary to allow use of performance subgroups in
determining retention standing and allow no additional years of service
based on performance.
Part 351, section 351.502: Order of retention--excepted service.
Waived as necessary to allow use of performance subgroups in
determining retention standing and allow no additional years of service
based on performance.
Part 351, section 351.504: Credit for performance. Waived as
necessary to allow for use of performance subgroups rather than adding
years of service based on performance.
Part 351, section 351.701: Assignment involving displacement.
Waived to the extent that bump and retreat rights are limited to one
pay band with the exception of 30 percent preference eligibles who are
limited to two bands (or equivalent of five grades), and to limit the
assignment rights of employees with an unacceptable current rating of
record to a position held by another employee with an unacceptable
rating of record.
Part 410, section 410.309: Agreements to continue in service.
Waived to the extent necessary to allow the Executive Directors of the
covered organizations to determine requirements related to continued
service agreements.
Part 430, subpart B: Performance Appraisal for GS, Prevailing Rate,
and Certain Other Employees. Waived to the extent necessary to be
consistent with the demonstration project's mission aligned objectives
and compensation system.
Part 430, section 430.208(a)(1) and (2): Rating Performance. 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, Performance based reduction-in-grade and removal actions:
Modified to the extent that an employee may be removed, reduced in pay
band level with a reduction in pay, reduced in pay without a reduction
in pay band level and reduced in pay band level without a reduction in
pay based on unacceptable performance. Also, modified to delete
reference to critical element. For employees who are reduced in pay
band level without a reduction in pay, Sections 432.105 and 432.106(a)
do not apply.
Part 432, section 432.102: Coverage. Waived to the extent that the
term ``grade'' is replaced with ``pay band.''
Part 432, section 432.104: Addressing unacceptable performance.
References to ``critical elements'' are deleted as all elements are
critical and adding that the employee may be ``reduced in pay band
level, or pay, or removed'' if performance does not improve to an
acceptable level during a reasonable opportunity period.
Part 432, section 432.105(a)(2): Proposing and taking action based
on unacceptable performance: Waive ``If an employee has performed
acceptably for 1 year'' to allow for ``within two years from the
beginning of a PIP.''
Part 451, subpart A, section 451.103(c)(2): Waived with respect to
performance awards under the NAVAIR Extraordinary Achievement Allowance
and demo incentive awards authority.
Part 451, subpart A, section 451.106 and 451.107: Waived to allow
the NAWCAD and NAWCWD Commanders authority to grant special act awards
to covered employees of up to $25,000.
Part 511, subpart A, subpart B, and subpart F: Classification
within the General Schedule. Waived in its entirety.
Part 530, subpart C: Special Rate Schedules for Recruitment and
Retention. Waived in its entirety to allow for staffing supplements.
Part 531, subpart B.: Determining Rate of Basic Pay. Waived to the
extent necessary to allow for pay setting, including educational pay
adjustments and pay for performance under the provisions of the
demonstration project.
Part 531, subparts D and E: Within-Grade Increases, and Quality
Step Increases. Waived in its entirety.
Part 531, subpart F: Locality-Based Comparability Payments. Waived
to the extent necessary to allow (1) demonstration project employees,
except employees in Pay Band VI of the Supervision and Management pay
schedule, to be treated as GS employees and (2) base rates of pay under
the demonstration project to be treated as scheduled annual rates of
pay.
Part 536: Grade and Pay Retention. Waived to the extent necessary
to (1) replace ``grade'' with ``pay band;'' (2) provide that pay
retention provisions do not apply to conversions from GS special rates
to demonstration project pay, as long as total pay is not reduced, and
to movement from a supervisory position to a non-supervisory position,
as long as total pay is not reduced; (3) allow demonstration project
employees to be treated as GS employees; (4) provide that pay retention
provisions do not apply to movements to a lower pay band as a result of
not receiving the general increase due to an annual performance rating
of ``Unacceptable;'' (5) provide that an employee on pay retention
whose rating of record is ``Unacceptable'' is not entitled to 50
percent of the amount of the increase in the maximum rate of base pay
payable for the pay band of the employee's position; (6) allow no
provision of grade or pay band retention under this demonstration
project; (7) provide that pay retention does not apply to reduction in
base pay due solely to the reallocation of demonstration project pay
rates in the implementation of a staffing supplement and (8) allow
demonstration project employees receiving a staffing supplement to
retain the adjusted base pay if the staffing supplement is discontinued
or reduced. This waiver applies to ST employees only if they move to a
GS equivalent position within the demonstration project under
conditions that trigger entitlement to pay retention.
Part 550, sections 550.105 and 550.106: Bi-weekly and annual
maximum earnings limitations. Waived to the extent necessary to provide
that the GS-15 maximum special rate (if any) for the special rate
category to which a project employee belongs is deemed to be the
``applicable special rate'' in applying the pay cap provisions in 5
U.S.C. 5547.
Part 550, section 550.703: Definitions. Waived to the extent
necessary to modify the definition of ``reasonable offer'' by replacing
``two grade or pay levels'' with ``one band level'' and ``grade or pay
level'' with ``band level.''
Part 550, section 550.902: Definitions. Waived to the extent
necessary to allow demonstration project employees to be treated as GS
employees. This waiver does not apply to employees in Pay Band V of the
S&E occupational family.
Part 575, subparts A, B, C, and D: Recruitment Incentives,
Relocation Incentives, Retention Incentives. Waived to the extent
necessary to allow

[[Page 8561]]

employees and positions under the demonstration project covered by pay
banding to be treated as employees and positions under the GS.
Part 591, subpart B: Cost-of-Living Allowance and Post
Differential--Non-foreign Areas. Waived to the extent necessary to
allow (1) demonstration project employees to be treated as employees
under the GS and (2) employees in Band V of the S&E occupational family
to be treated as ST employees for the purposes of these provisions.
Part 752, sections 752.101, 752.201, 752.301 and 752.401: Principal
statutory requirements and Coverage. Waived to the extent necessary to
allow for up to a three-year probationary period and to permit
termination during the extended probationary period without using
adverse action procedures for those employees serving a probationary
period under an initial appointment except for those with veterans'
preference.
Part 752, section 752.401: Coverage. Waived to the extent necessary
to replace ``grade'' with ``pay band,'' and to provide that a reduction
in pay band level is not an adverse action if it results from the
employee's rate of base pay being exceeded by the minimum rate of base
pay for his/her pay band.
Part 752, section 752.401(a)(4): Coverage. Waived to the extent
necessary to provide that adverse action provisions do not apply to (1)
conversions from GS special rates or NSPS Targeted Local Market
Supplements to demonstration project pay, as long as total pay is not
reduced and (2) movement from a supervisory pay band to a non-
supervisory pay band as long as total pay is not reduced.

Appendix A: NAWCAD and NAWCWD Duty Locations

------------------------------------------------------------------------
GSA geographic location code Duty location
------------------------------------------------------------------------
011716073....................... Hoover, AL
011730089....................... Huntsville, AL
012585089....................... Redstone Arsenal, AL
040530019....................... Tucson, AZ
040620027....................... Yuma, AZ
060543073....................... Camp Pendleton, CA
060675029....................... China Lake, CA
060860073....................... Coronado, CA
061077029....................... Edwards AFB, CA
061090025....................... El Centro, CA
061264073....................... Fallbrook, CA
061880031....................... Lemoore, CA
062090013....................... Martinez, CA
062194073....................... Miramar Naval Air Sta., CA
062250053....................... Monterey, CA
062341073....................... Naval Air Station, CA
062622111....................... Oxnard AFB, CA
062700037....................... Pasadena, CA
062861073....................... Point Loma Complex, CA
062862111....................... Point Mugu, CA
062890111....................... Port Hueneme, CA
063260073....................... San Diego, CA
063397111....................... San Nicolas Island, CA
090260011....................... Groton, CT
110010001....................... Washington, DC
110400001....................... Wash Navy Yard, DC
120000091....................... Okaloosa Cnty, FL
120485031....................... Cecil Field, FL
120935091....................... Eglin A.F.B., FL
121130001....................... Gainesville, FL
121510031....................... Jacksonville, FL
121972031....................... Mayport, FL
122070113....................... Milton, FL
122156033....................... Naval Air Station, FL
122161095....................... Naval Warfare Center, FL
122162031....................... Naval Aviation Depot, FL
122164031....................... Naval Air Station, FL
122360095....................... Orlando, FL
122490033....................... Pensacola, FL
122811085....................... Sewalls Point, FL
122950057....................... Tampa, FL
130280121....................... Atlanta, GA
133015039....................... Kings Bay, GA
153500003....................... Kaneohe, HI
158206003....................... Pearl Harbor Naval Base, HI
173595097....................... Great Lakes, IL
181055101....................... Crane, IN
182210097....................... Indianapolis, IN
221690071....................... New Orleans, LA
231150005....................... Brunswick, ME
240840017....................... Indian Head, MD
241096037....................... Patuxent River, MD
241364037....................... Saint Inigoes, MD
241480009....................... Solomons, MD
250478017....................... Hanscom Fields, MA
281590075....................... Meridian, MS
297080510....................... St Louis, MO
320090001....................... Fallon, NV
330360013....................... New London, NH
341580029....................... Lakehurst, NJ
342095029....................... Naval Air Warfare Center, NJ
362840103....................... Huntington, NY
370885049....................... Cherry Point, NC
371670051....................... Fayetteville, NC
371685051....................... Fort Bragg, NC
372330133....................... Jacksonville, NC
372894049....................... Marine Corps Air Station, NC
392090113....................... Dayton, OH
399165113....................... Wright Patterson AFB, OH
404725109....................... Tinker AFB, OK
421230055....................... Chambersburg, PA
421657089....................... Coolbaugh Township, PA
422063091....................... Dresher, PA
424800071....................... Manheim, PA
425698101....................... Philadelphia, PA
425699041....................... Naval Support Activity, PA
426540101....................... Philadelphia, PA
426600003....................... Pittsburgh, PA
428475089....................... Tobyhanna, PA
429420111....................... Windber, PA
440136005....................... Naval Base, RI
450140013....................... Beaufort, SC
451040045....................... Greenville, SC
470092031....................... Arnold AFB, TN
471660157....................... Millington, TN
472470031....................... Tullahoma, TN
480150375....................... Amarillo, TX
480260439....................... Arlington, TX
481550273....................... Corpus Christi, TX
481730113....................... Dallas, TX
482450439....................... Fort Worth, TX
483700273....................... Kingsville, TX
491560049....................... Provo, UT
510000013....................... Arlington, VA
510702810....................... Damneck Nav Fac, VA
511220059....................... Herndon, VA
511686710....................... Naval Base, VA
511687013....................... Arlington, VA
511720700....................... Newport News, VA
511760710....................... Norfolk, VA
511822810....................... Oceana Nav Air Sta, VA
511906013....................... Pentagon, VA
512010153....................... Quantico, VA
512540810....................... Virginia Beach, VA
512564001....................... Wallops Island, VA
512690199....................... Yorktown, VA
530105035....................... Bangor, WA
531960033....................... Seattle, WA
532508029....................... Whidbey Island NAS, WA
GM9000000....................... Stuttgart, Germany
GQ0100000....................... Agana, GUAM
JA0600000....................... Atsugi, Japan
JA2600000....................... Futemma, Japan
JA3800000....................... Iwakuni, Japan
JA3825000....................... Iwakuni Marine Corps Air Stn, Japan
JA3950000....................... Kadena AF Okinawa, Japan
JA5615000....................... Okinawa Island, Japan
NO6000000....................... Oslo, Norway
------------------------------------------------------------------------

BILLING CODE 5001-06-P

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Appendix B: Occupational Series by Occupational Family

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Appendix D: Individual Pay Band Level Rating Benchmarks Examples

These are examples for illustration purposes only, the actual
benchmarks may be different from what is shown here. These are an
example showing a benchmark for each pay band level in an
occupational family:

Scientific and Engineering (S&E) (Pay Plan DP)

Example Rating Benchmarks

Band II

Level 3:
With guidance, effectively achieved the stated
objective.
With guidance, organized and prioritized own tasks to
deliver the objective, adjusting work plans and overcoming obstacles
as necessary.
Demonstrated high standards of personal and
professional conduct and represented the organization or work unit
effectively.
Level 5:

Additions at the Level 5:

Contributed results beyond what was expected; results
were far superior in quality, quantity, timeliness and/or impact to
the stated objective.
Exhibited the highest standards of professionalism.

Band III

Level 3:
Effectively achieved the stated objective, anticipating
and overcoming significant obstacles. Adapts established methods and
procedures when needed.
Results were technically sound, accurate, thorough,
documented, and met applicable authorities, standards, policies,
procedures and guidelines.
Planned, organized prioritized, and scheduled own work
activities to deliver the objective in a timely and effective
manner, making adjustments to respond to changing situations and
anticipating and overcoming difficult obstacles as necessary.
Demonstrated high standards of personal and
professional conduct and represented the organization or work unit
effectively.
Level 5:

Additions at the Level 5:

Contributed results beyond what was expected; results
were far superior in quality, quantity, and/or impact to the stated
objective to what would be expected at this level.
Exhibited the highest standards of professionalism.

Appendix E: Career Stage Rating Benchmarks Examples

These are examples for illustration purposes only, the actual
benchmarks may be different from what is shown here. These are an
example showing benchmarks by career stage, which may cover multiple
pay band levels in multiple occupational families:

Example Rating Benchmarks

Career Stage: Journey.
Objective Rating: 1.
Performance Standard:
Failed to achieve all or part of the stated critical
element; or
Failed to provide products that were sound, accurate,
thorough and documented, and regularly failed to meet applicable
authorities, standards, policies, procedures and guidelines; or
Failed to plan, organize, prioritize, and schedule own
work activities to deliver the critical element in a timely and
effective

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manner. Relied on others to frequently assist with or redo work
assignments; or
Demonstrated poor cooperation or inability to work with
others.
Career Stage: Journey.
Objective Rating: 3.
Performance Standard:
Effectively accomplished the stated critical element by
achieving results that were technically sound, accurate, thorough,
and documented and met applicable authorities, standards, policies,
procedures and guidelines.
Planned, organized, prioritized and scheduled own work
activities to deliver the critical element in a timely and effective
manner, making adjustments to respond to changing situations as
necessary.
Demonstrated high standards of teamwork and
cooperation.
Career Stage: Journey.
Objective Rating: 5.
Performance Standard:
(Measured in addition to the above)
Achieved outcomes and results that are far superior in
quality, quantity, timeliness and/or impact to what would ordinarily
be expected at this level.
Accomplishments and outcomes were of such magnitude
that they contributed to the organization exceeding its mission
goals and objectives for the year.
Persisted in overcoming obstacles and put forth extra
effort to accomplish difficult assignments.
Represented the organization or work unit effectively
through model team cooperation.
[FR Doc. 2011-3094 Filed 2-11-11; 8:45 am]
BILLING CODE 5001-06-P