[Federal Register: March 12, 1997 (Volume 62, Number 48)]
[Notices]
[Page 11645-11673]

[[Page 11645]]

_______________________________________________________________________

Part VI

Office of Personnel Management

_______________________________________________________________________

Proposed Laboratory Personnel Management Demonstration Project;
Department of the Army, U.S. Army Research Laboratory, Adelphi
Maryland; Notice

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OFFICE OF PERSONNEL MANAGEMENT


Proposed Laboratory Personnel Management Demonstration Project;
Department of the Army, U. S. Army Research Laboratory, Adelphi, MD

AGENCY: Office of Personnel Management.

ACTION: Notice of Intent to Implement Demonstration Project.

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SUMMARY: Title VI of the Civil Service Reform Act, 5 U.S.C. 4703,
authorizes the Office of Personnel Management (OPM) to conduct
demonstration projects that experiment with new and different personnel
management concepts to determine whether such changes in personnel
policy or procedures would result in improved Federal personnel
management.
    Public Law 103-337, October 5, 1994, permits the Department of
Defense (DOD), with the approval of OPM, to carry out personnel
demonstration projects at DOD Science and Technology (S&T) reinvention
laboratories. These projects are to be similar to the demonstration
project at China Lake. The Army is proposing a demonstration project
initially to cover five of its S&T reinvention laboratories. Each of
the laboratories vary in their approaches to classification and
compensation, performance management, and reduction in force. This
proposal is for the U.S. Army Research Laboratory (ARL).

DATES: To be considered, written comments must be submitted on or
before May 20, 1997; public hearings will be scheduled as follows:

1. Thursday, April 17, 1997, at 10:00 a.m., in Adelphi, Maryland.
2. Friday, April 18, 1997, at 10:00 a.m., in Aberdeen Proving Ground,
Maryland.

    At the time of the hearings, interested persons or organizations
may present their written or oral comments on the proposed
demonstration project. The hearings will be informal. However, anyone
wishing to testify should contact the person listed under FOR FURTHER
INFORMATION CONTACT, and state the hearing location, so that OPM can
plan the hearings and provide sufficient time for all interested
persons and organizations to be heard. Priority will be given to those
on the schedule, with others speaking in any remaining available time.
Each speaker's presentation will be limited to ten minutes. Written
comments may be submitted to supplement oral testimony during the
public comment period.

ADDRESSES: Comments may be mailed to Fidelma A. Donahue, U. S. Office
of Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC
20415; public hearings will be held at the following locations:

1. Adelphi--U.S. Army Research Laboratory, Building 205 Auditorium,
2800 Powder Mill Road, Adelphi, Maryland.
2. Aberdeen Proving Ground--Post Theatre, Aberdeen Boulevard &
Frankford Road, Building 3245, Aberdeen Proving Ground, Maryland.

FOR FURTHER INFORMATION CONTACT: (1) on proposed demonstration project:
Mr. Jack R. Wilson, II, U.S. Army Research Laboratory Building 202,
2800 Powder Mill Road, Adelphi, MD 20783-1197, 301-394-1105; (2) on
proposed demonstration project and public hearings: Fidelma A. Donahue,
U.S. Office of Personnel Management, 1900 E Street, NW, Room 7460,
Washington, DC 20415, 202-606-1138.

SUPPLEMENTARY INFORMATION: Since 1966, at least 19 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. The proposed project involves simplified job
classification, broadbanding, a pay for performance (PFP) system,
enhanced hiring flexibilities, modified reduction in force (RIF)
procedures and expanded development opportunities.

Office of Personnel Management.
James B. King,
Director.

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. Experimentation and Revision
III. Personnel System Changes
    A. Broadbanding
    B. Classification
    C. Pay for Performance (PFP)
    D. Hiring and Appointment Authorities
    E. Internal Placements and Pay Setting
    F. Employee Development
    G. Reduction in Force (RIF)
    H. Grievances and Disciplinary Actions
IV. Implementation Training
V. Conversion
VI. Project Duration
VII. Evaluation Plan
VIII. Demonstration Project Costs
IX. Required Waivers to Law and Regulation
Appendix A--ARL Employee Duty Locations
Appendix B--Occupational Series by Occupational Family
Appendix C--Demographics and Union Representation
Appendix D--Performance Management Forms
Appendix E--Project Evaluation

I. Executive Summary

    The proposed project was designed by the Army Research Laboratory
with participation and review by the Department of Defense (DOD) and
the Office of Personnel Management (OPM). The purpose of the project is
to achieve the best workforce for the laboratory mission, adjust the
workforce for change, and improve workforce quality. The project
framework addresses all aspects of the human resources life cycle
model. There are six major areas of change: (a) Enhanced hiring
flexibilities; (b) broadbanding; (c) automated classification, (d) a
pay for performance system, (e) modified reduction in force procedures
and (f) expanded developmental opportunities.
    ARL managers will exercise cost discipline in the development and
execution of this project, which will be tied to in-house costs and
consistent with the Department of the Army (DA) plan to downsize
laboratories. ARL will manage and control its personnel costs to remain
within established in-house budgets. An in-house budget is a
compilation of costs of the many diverse components required to fund
the day-to-day operations of a laboratory. These components generally
include pay of people (labor, benefits, overtime, awards), training,
travel, supplies, non-capital equipment, and other costs depending on
the specific function of the activity.
    Extensive evaluation of the project will be performed by OPM, OSD,
and Department of the Army. The Army has programmed a decision point 5
years into the project for continuance, modification, or rejection of
the demonstration initiatives.
    This plan represents a general description of the major
interventions proposed for the demonstration project. Specific
procedures and regulations will provide details on how the personnel
demonstration project will be implemented.

II. Introduction

A. Purpose

    The purpose of the project is to demonstrate that the effectiveness
of Department of Defense (DOD) laboratories can be enhanced by allowing
greater managerial control over personnel functions and, at the same

[[Page 11647]]

time, expanding the opportunities available to employees through a more
responsive and flexible personnel system. The quality of DOD
laboratories, their people, and products have been under intense
scrutiny in recent years. The perceived deterioration of quality is
believed to be due, in substantial part, to the erosion of control
which line managers have over their human resources. This demonstration
project, in its entirety, attempts to provide managers, at the lowest
practical level, the authority, control, and flexibility needed to
achieve a quality laboratory and quality products through an improved
personnel management system.

B. Problems With the Present System

    The ARL mission is to execute fundamental and applied research to
provide the Army the key technologies and analytical support necessary
to assure supremacy in future land warfare. The ARL vision is a
laboratory preeminent in key areas of science, engineering, and
analysis relevant to land warfare; a staff widely recognized as
outstanding; a laboratory seen by Army users as essential to their
missions; and an intellectual crossroads for the technical community.
ARL products contribute to the readiness of U.S. forces. To achieve
this vision, ARL must hire and retain enthusiastic, innovative, highly-
educated scientists and engineers to meet mission needs; also required
is the ability to hire and retain dynamic, committed technical,
clerical and administrative support personnel.
    ARL finds the current Federal personnel system to be cumbersome,
confusing, and unable to provide the flexibility necessary to respond
to the current mandates of downsizing, restructuring, and possible
closure while trying to maintain a high level of mission excellence.
The present system--a patchwork of laws, regulations, and policies--
often inhibits rather than supports the goals of developing,
recognizing, and retaining the employees needed to realign the
organization with its changing fiscal and production requirements.
    The current Civil Service General Schedule (GS) system has 15
grades with 10 levels each and involves lengthy, narrative, individual
position descriptions, which have to be classified by complex, OPM-
mandated position classification standards. Because these standards
have to meet the needs of the entire federal government, they are
frequently obsolete and often not relevant to the needs of ARL.
Distinctions between levels are often not meaningful. Currently,
standards do not provide for a clear progression beyond the full
performance level, especially for scientific/engineering occupations
where career progression through technical as well as managerial
occupational families is important.
    Performance management systems require additional emphasis on
continuous, career-long development in a work environment characterized
by an ever-increasing rate of change. Since past performance and/or
longevity are the factors on which pay raises are currently assessed,
there is often no positive correlation between compensation and
performance contributions nor value to the organization. These limited
criteria do not take into account the future needs of the organization
nor other culturally relevant criteria which an organization may wish
to use as incentives.
    Finally, current rules on training, retraining and otherwise
developing employee competencies make it difficult to correct skills
imbalances and to prepare current employees for new lines of work to
meet changing mission needs.

C. Changes Required/Expected Benefits

    The proposed demonstration project responds to problems in the
classification system with a broadbanding classification system for GS
employees; to problems in the current performance management system
with a pay for performance system; to problems associated with
downsizing with slightly modified reduction in force processes; and to
problems of skills imbalances and rapidly changing missions with an
enhanced developmental opportunities program.

D. Participating Organizations

    The Army Research Laboratory (ARL) Director is located in Adelphi,
Maryland. ARL employees assigned to the various laboratory directorates
work at the locations shown in Appendix A.

E. Participating Employees and Union Representation

    In determining the scope of the demonstration project, primary
considerations were given to the number and diversity of occupations
within the laboratory and the need for adequate development and testing
of the Pay for Performance (PFP) System. Additionally, current DOD
human resource management design goals and priorities for the entire
civilian workforce were considered. While the intent of this project is
to provide the Laboratory Director with increased control and
accountability for the total workforce, the decision was made to
initially restrict development efforts to General Schedule (GS/GM)
positions.
    To this end, the project will cover all ARL civilian employees
under title 5, United States Code except members of the Senior
Executive Service (SES), employees classified in the Scientific and
Professional (ST) pay plan, and Federal Wage System (FWS) employees. A
decision point has been programmed for the end of two and one half
years of the demonstration project to expand coverage to include FWS.
In the event of expansion to FWS employees, full approval of the
expansion plan will be obtained from the Department of the Army, DOD,
and OPM. Civilian Intelligence Personnel Management System (CIPMS)
employees covered by Title X will be included for performance appraisal
purposes only. They will not be eligible for performance payouts
because they are not contributing funds to the pay pools. Performance
awards for CIPMS employees will follow the procedures currently in
place. Department of the Army and Major Subordinate Command centrally-
funded interns are covered by the plan except for reduction in force
(RIF) purposes. They will compete in a separate competitive area in the
event of RIF. The series to be included in the project are identified
in Appendix B.
    The American Federation of Government Employees (AFGE), the
National Federation of Federal Employees (NFFE), the International
Association of Machinists and Aerospace Workers (IAM/AW), and the
Fraternal Order of Police (FOP) represent many ARL employees. The
laboratory continues to fulfill its obligation to consult or negotiate
with the unions who represent both professional and nonprofessional
employees in accordance with 5 U.S.C. 4703(f) and 7117. Union
representatives have been separately notified about the project. Of the
more than 2600 employees assigned to the laboratory, approximately 600
are represented by labor unions.

F. Project Design

    In December 1993, the ARL Director decided the laboratory needed a
personnel system more like the personnel demonstration project then in
effect at the National Institute for Science and Technology (NIST). A
preliminary plan patterned after the NIST Personnel Demonstration Plan
was developed and shared with the Commanding General, Army Materiel
Command and the Deputy Assistant Secretary of the Army for Research and

[[Page 11648]]

Technology where it received conceptual approval. The ARL Personnel
Demonstration Project Office was then created and became the focal
point for subsequent development efforts. In October 1994, the concept
was briefed to representatives of DOD and other federal agencies. In
November 1994 an Army Personnel Demonstration Team was formed with ARL
designated as the lead. The team's charter was to develop the Army's
Personnel Demonstration Concept Plan. In December 1994, this plan was
approved by the Secretary of the Army.
    In January 1995, ARL established a management structure designed to
oversee the development of the demonstration proposal and to
incorporate the workforce in the design efforts. This was accomplished
by appointing an Executive Steering Committee, establishing a Staff
Members Committee and discussing the project with unions. For most of
1995 various revisions were made to the ARL plan, many of which
resulted from further DA and OSD staffing and coordination. In the
Spring of 1996, the plan was ready for joint DOD and OPM review, which
resulted in additional refinements. During this time, feedback was
provided to ARL employees, through town hall meetings, electronic mail
messages and memoranda, union briefings, and peer group review of draft
implementing documents. The opinions and comments of the workforce have
had a significant impact in the overall design of the demonstration
project.

G. 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 system is
working. ARL will make minor modifications without further notice;
major changes will be published in the Federal Register.

III. Personnel System Changes

A. Broadbanding

    The ARL demonstration project will use a broadbanding approach to
compensation and classification. Such an approach overcomes some of the
problems experienced with the current system. A broadbanding system
will simplify the classification system by reducing the number of
distinctions between levels of work which will facilitate delegating
classification authority and responsibility to line managers.
    The proposed broadbanding scheme will replace the current General
Schedule (GS) grading structure. The broadband levels are designed to
enhance pay progression and to allow for more competitive recruitment
of quality candidates at differing rates within the appropriate pay
band level(s). Competitive promotions will be less frequent and
movement through the pay bands will be a more seamless process than
today's procedure. Like the broadbanding systems used at China Lake and
NIST, advancement within each pay band is based upon performance.
    Occupations at ARL have been grouped into four occupational
families according to similarities in type of work and customary
requirements for formal training or credentials. The common patterns of
advancement within the occupations as practiced at ARL and in the
private sector were also considered. The current occupations and grades
have been examined, and their characteristics and distribution were
used to develop the four occupational families described below:
    1. Engineers and Scientists. This path includes all technical
professional positions, such as engineers, physicists, chemists,
psychologists, metallurgists, mathematicians, and computer scientists.
Ordinarily, specific course work or educational degrees are required
for these occupations. (Pay Plan DB)
    2. E&S Technicians. This path consists of positions that directly
support the various scientific and engineering activities of the
laboratory. Employees in these positions are not required to have
college course work. However, practical, quasi-professional training
and skills in the various aspects of electronic, electrical,
mechanical, chemical or computer engineering are generally required.
(Pay Plan DE)
    3. Administrative. This occupational family contains specialized
functions in such fields as finance, procurement, personnel, public
information, computing, supply, library science, and management
analysis. Special skills in specific administrative fields or special
degrees are normally required. (Pay Plan DJ)
    4. General Support. This occupational family is composed of
positions for which minimal formal education is needed, but for which
special skills, such as office automation, typing, or shorthand may be
required. Clerical work usually involves the processing and maintenance
of records. Assistant work requires knowledge of methods and procedures
within a specific administrative area. Other support functions include
the work of secretaries, guards, and mail clerks. (Pay Plan DK)
    Each occupational family will be composed of discrete pay bands
(levels) corresponding to recognized advancement within the
occupations. These pay bands will replace grades. They will not be the
same for all occupational families. Each occupational family will be
divided into three to five pay bands, each pay band covering the same
pay range now covered by one or more GS grades. A salary overlap,
similar to the current overlap between GS grades, will be maintained.
The salary range of each band begins with step 1 of the lowest grade in
that band and ends with step 10 of the highest grade in the band.
    The specific grouping of GS grades into a particular pay band was
based on a careful examination of grade levels that have proven
difficult for managers, employees and classifiers to distinguish;
current performance levels within occupations; and traditional
laboratory training and career development practices.
    The proposed pay bands for the occupational families and how they
relate to the current GS framework are shown in Figure 1.

BILLING CODE 6325-01-P

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[GRAPHIC] [TIFF OMITTED] TN12MR97.056

BILLING CODE 6325-01-C
    Administrative Pay Band III includes two full performance levels
because not all work assignments in band III will support movement to
the top of the band. Positions that typically support the higher
salaries perform non-supervisory work associated with formulating
programs and policies with laboratory-wide scope and impact. Other
positions perform supervision of operating level programs in one or
more administrative fields. In order to move beyond the equivalent of
the GS-12 Step 10 salary, duty and work assignments must satisfy the
highest level of the criteria in the classification standard for this
pay band.
    Employees will be converted into the occupational family and pay
band which correspond to their GS/GM series and grade. Each employee is
assured an initial place in the system without loss of pay. As the
rates of the General Schedule are increased due to general pay
increases, the minimum and maximum salaries of the pay band levels will
also move up. All employees will receive the general pay increases
given in January of each year. In addition, all employees will be
eligible for future locality pay increases of their geographic area.
(See Section III.E.4. for special provisions for employees in special
rate categories.) Employees can receive additional pay increases based
on their evaluations under the Pay for Performance Management System.
Since pay progression through the pay bands is based on performance,
there will be no scheduled Within-Grade Increases (WGIs) or Quality
Step Increases (QSIs) for employees once the broadbanding system is in
place.
    There are several advantages to broadbanding. It is simpler, less
time consuming, and less costly to maintain. In addition, such a system
is more easily understood by managers and employees, is easily
delegated to managers, coincides with recognized occupational families,
and complements the other personnel management aspects of the
demonstration project.
    The ARL broadbanding plan expands the broadbanding concept used at
China Lake and NIST by creating Pay Band V of the Engineers and
Scientists occupational family. This pay band is designed for senior
technical managers and senior scientists/engineers.
    Current OPM guidelines covering the Senior Executive System and
Scientific and Professional (ST) positions do not fully meet the needs
of ARL. The SES designation is appropriate for executive level
managerial positions whose classification exceeds the GS-15 grade
level. The primary knowledges and abilities of SES positions relate to
supervisory and managerial responsibilities. Positions classified as ST
are designed for bench research scientists and engineers. OPM
guidelines state that the duties and responsibilities of ST positions
must not include any managerial or supervisory responsibility.
    ARL currently has many division chief positions that have
characteristics of both SES and ST classifications. Most division
chiefs in ARL are responsible for supervising other GS-15 positions,
including branch chiefs, non-supervisory researcher engineers and
scientists and in some cases ST positions. Most division chief
positions are classified at the GS-15 level, but some have been
established at the SES level. ARL management considers the primary
requirement for division chiefs to be knowledge of and expertise in the
specific scientific and technology areas related to the mission of
their divisions. The ability to manage, while important, is considered
secondary. Historically, these positions have been filled by employees
who possess primarily scientific/engineering credentials and who are
considered experts in their field by the scientific community. While it
is clear these positions warrant classification beyond the GS-15 level,
attempts to classify most of the positions as SES have been difficult
because the size of the divisions and their location in the
organization are not competitive with other SES level positions.
Classification of the positions as ST is also not an option because the
supervisory responsibilities inherent in division chief positions
cannot be ignored.
    As preeminent scientists and engineers, incumbents of ST positions
are responsible for specific research and development efforts that are
continuing and long range, generally requiring the efforts of a team.
These ST positions usually serve as team leaders which means there is
some responsibility for assigning work, coordinating results, and
redirecting efforts. It is administratively convenient for these
research team leaders to also participate in performance management.
The restriction of including supervisory authorities in ST jobs has
forced ARL to exclude any mention of the team leader responsibilities
in these position descriptions for fear that they will be interpreted
as characteristic of SES

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rather than ST positions. Consequently, ARL has some positions that do
not strictly conform to OPM definitions of either the SES or ST.
    The purpose of Pay Band V is to overcome the difficulties
identified above by creating a category for two types of positions--the
senior technical manager (with full supervisory authority) and the
senior scientist/engineer (less than full supervisory authority).
Current GS-15 division chiefs will convert into the demonstration
project at Pay Band IV. After conversion they will be reviewed against
established criteria to determine if they should be reclassified to Pay
Band V. Other positions possibly meeting criteria for classification to
Pay Band V will be reviewed on a case by case basis. The proposed
salary range is the same as currently exists for ST positions (minimum
of 120% of the minimum rate of basic pay for GS-15 with a maximum of
the basic rate of pay established for level IV of the Executive
Schedule). Vacant positions in Pay Band V will be competitively filled
to ensure that selections are made from among the world's preeminent
researchers and technical leaders in the specialty fields. ARL will
capitalize on the efficiencies that can accrue from central recruiting
by continuing to use the expertise of the Army Materiel Command SES
Office as the recruitment agent. Panels will be created to assist in
filling Pay Band V positions. Panel members will be selected from a
pool of current ARL SES members, ST employees and those in Pay Band V,
and an equal number of individuals of equivalent stature from outside
the laboratory to ensure impartiality, breadth of technical expertise,
and a rigorous and demanding review. The panel will apply criteria
developed largely from the current OPM Research Grade Evaluation Guide
for positions exceeding the GS-15 level. The same procedure will be
used for evaluating senior technical manager positions except the
rating criteria will be adjusted to account for the differences in the
positions, such as greater emphasis on technical program management and
supervisory abilities.
    The final component of Pay Band V is the management of all Pay Band
V assets. Specifically, this includes authority to classify, create, or
abolish positions as circumstances warrant; recruit and reassign
employees in this pay band; set pay and to have their performance
appraised under this project's Pay for Performance System. This
authority will be executed within parameters to be established at the
DA level, to include controls on the numbers of Pay Band V positions
and recruitment/promotion criteria. The specific details regarding the
control and management of Pay Band V assets will be included in the
demonstration's operating procedures. The laboratory wants to
demonstrate increased effectiveness by gaining greater managerial
control and authority, consistent with merit, affirmative action, and
equal employment opportunity principles.

B. Classification

1. Occupational Series
    The present General Schedule classification system has 434
occupational series which are divided into 22 occupational families.
ARL currently has positions in 119 series which fall into 20 families.
The occupational series, which frequently provide well-recognized
disciplines with which employees wish to be identified, will be
maintained. This will facilitate movement of personnel into and out of
the proposed demonstration project. New series, established by OPM, may
be added as needed to reflect new occupations in the workforce.
2. Classification Standards
    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 occupational family and 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 knowledges, skills, and
abilities required. ARL will continue its current practice of using
peer reviews to facilitate the classification process and in some cases
will expand its use to meet the needs of the laboratory.
3. Classification Authority
    The Director, ARL will have delegated classification authority and
may, in turn, redelegate this authority to subordinate management
levels, and ultimately to the lowest level of full supervision in each
organizational segment. Personnel specialists will provide ongoing
consultation and guidance to managers and supervisors throughout the
classification process.
4. Position Descriptions
    Under the proposed classification system, a new position
description will replace the current DA Form 374, Department of the
Army Job Description. 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 data
element information pertinent to the job. Laboratory supervisors will
follow a computer-assisted process to produce position descriptions.
The objectives in developing the new descriptions are to: (1) Simplify
the descriptions and the preparation process through automation; (2)
minimize the amount of writing and time required to create new position
descriptions; and (3) make the position descriptions more useful and
accurate tools for other functions of personnel management, such as
recruitment, reduction in force, performance assessment, and employee
development. Because there is little writing required in the automated
system, supervisory writing style and ability as a hidden consideration
in position classification are eliminated.
5. Specialty Work Codes
    Specialty work codes will be used to further differentiate types of
work and the skills and knowledges required for particular positions
within an occupational family and pay band. Each code represents a
specialization or type of work within the occupation. Supervisors will
select appropriate specialty work codes to describe the work of each
employee through the automated classification process.
6. Automated Classification Process
    Writing the position description is accomplished by completion of
the following steps using an automated system.
    (a) The supervisor enters, by typing free-form, the organizational
location and the employees name. From the menu, the supervisor selects
the appropriate occupational series and title, occupational family, and
pay band corresponding to the level of duties and responsibilities
desired. The user will then select whether the position is a non-
supervisor, team leader or supervisor,
    (b) The supervisor enters a brief description of the primary
purpose of the position by typing free-form at the appropriate point.
From a menu, the supervisor will choose statements pertaining to
operation of a motor vehicle; any unusual physical and travel

[[Page 11651]]

requirements; required financial disclosure statements; and the
position's sensitivity. The system will produce standardized statements
of supervisory or team leader duties and responsibilities. The system
will also produce a statement pertaining to positive education
requirements, or their equivalencies, based on the occupational series
selected.
    (c) From a menu, the supervisor selects up to three specialty work
codes which are appropriate to the job. The specialty work codes are
subsets of the disciplines and describe particular skills and
knowledges related to the kinds of work performed at ARL.
    (d) The supervisor has the option of providing additional position
information by typing free-form at an appropriate point at the end of
the document. This area is to be used when the information addressed by
the purpose of the position, specialty work codes, and functional
classification codes are not completely adequate. The information will
be used primarily to supplement skill and knowledge requirements and to
refine competitive level decisions.
7. Fair Labor Standards Act (FLSA)
    Fair Labor Standards Act exemption and nonexemption determinations
will be made consistent with criteria found in 5 CFR (Code of Federal
Regulations) 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 and the tentative conclusions programmed
into the automated classification system so that the system will be
able to generate the FLSA coverage based upon the user's selection of
occupational family, pay band, and supervisory responsibility.
    As a general rule, the FLSA status can be matched to occupational
family and pay band. For example, positions classified in Pay Band I of
any 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 who meet the
definitions outlined in the OPM General Schedule Supervisory Guide and
who spend 80% or more of the work week on supervisory duties.
Therefore, supervisors/managers in any of the pay bands who meet the
foregoing criteria are exempt from the FLSA.
    The generic position descriptions will not be the sole basis for
the FLSA determination. Each position will be evaluated on a case-by-
case basis by comparing the duties and responsibilities assigned, the
classification standards for each pay band, and the 5 CFR part 551 FLSA
criteria. The final review of the FLSA status will be made by the
Civilian Personnel Operations Center (CPOC) based upon the above-
mentioned material and any supplemental information such as that
contained in established performance objectives.
    The automated classification system will annotate the position
description with a preliminary FLSA determination in accordance with
Figure 2 below.

BILLING CODE 6325-01-P
[GRAPHIC] [TIFF OMITTED] TN12MR97.057

BILLING CODE 6325-01-C
8. Classification Appeals
    An employee may appeal the occupational family, occupational
series, or pay band of his or her position at any time. The employee
may accomplish this by exercising any of the following options: (a) The
employee must formally raise the areas of concern to supervisors in the
immediate chain of command, either verbally or in writing, (b) If the
employee is not satisfied with the supervisory response, the employee
may appeal to the appellate level within DOD or may appeal directly to
OPM, (c) If the employee elects to first appeal to DOD but is not
satisfied with this response, he/she may appeal to the Office of
Personnel Management. Appellate decisions from OPM are final.
    The evaluation of a classification appeal is based on the ARL
Personnel Demonstration Project Classification Standards.

C. Pay for Performance

1. Overview
    The purpose of the Pay For Performance (PFP) System is to provide
an effective, efficient, and flexible method for assessing,
compensating, and managing the laboratory 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 laboratory and quality
products. PFP allows for more employee involvement in the assessment
process, increases communication between supervisor and employee,
promotes a clear accountability of performance, facilitates employee
career progression, provides an understandable basis for salary
changes, and delinks awards from the annual performance appraisal
process. The funds previously allocated for performance-based awards
will be reserved for distribution under a separate laboratory awards
program.
    PFP creates a method to more directly link pay and performance. The
system combines goal setting, tied to corporate objectives, with a
letter grading system. The performance evaluations made under the
demonstration project will ensure that top performers receive pay
increases commensurate with their achievements. The PFP System uses a

[[Page 11652]]

four level summary pattern (Pattern E) under 5 CFR 430.208(d) where a
rating of C is equivalent to fully successful.
    Employees within the laboratory will be placed into pay pools. Base
pay adjustment decisions (i.e., decisions regarding the amounts of
salary increase) are based on the relationship between performance
ratings and present salaries. 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 V of the E&S Occupational
Family. In this case, the maximum rate of base pay will be the basic
rate of pay for level IV of the Executive Schedule.
    Cost discipline is assured within each pay pool by limiting the
total base pay increases to the funds available in the base pay fund in
the pay pool, based on what would have been available in the General
Schedule system from within-grade increases, quality step increases and
within-band promotions. The ARL Director may adjust the amount of funds
assigned to each pay pool as necessary to ensure equity and to meet
unusual circumstances. No changes will be made to locality pay under
the demonstration project and all employees continue to receive general
pay increases.
    The PFP system being proposed differs from the current system in
that all the supervisors in a pay pool will meet to reconcile the
scores given to each employee in the pay pool, with the purpose being
to reach consensus on the type of achievements that warrant particular
scores. After this reconciliation process is completed, final letter
grades are assigned and payout proceeds according to each employee's
final letter rating, score, and current salary.
    The PFP System eliminates within-grade increases, quality step
increases, in band promotions and awards, and replaces them with pay
for performance payouts described above. Other awards such as special
acts will continue to be awarded. The new system also provides the
ability to give bonuses to employees who are at the top of the range in
their pay band. Bonuses differ from pay increases in that they are not
added to base salary but rather are given as a lump sum payment.
    Interns in recognized DA career programs will be appraised semi-
annually until they complete their internships. The second appraisal in
each annual cycle will be considered the rating of record.
2. The PFP Assessment Process
    At the beginning of the assessment cycle, the employee and rater
will collaborate on the development of the employee's performance
objectives, designation of the performance elements and which of these
elements are critical, and their associated weights. An objective is
defined as a statement of specific job responsibilities expected of the
employee during the rating period. These are to be based on the work
unit's mission and goals and should be consistent with the employee's
job description. Performance objectives may be modified and/or changed
as appropriate during the rating cycle. As a general rule, performance
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 changes occur. Performance objectives will be tailored to each
individual employee. Use of generic one size fits all objectives will
be avoided.
    The supervisor and employee will discuss the performance
objectives, which elements are critical, and what weight each carries
in an attempt to reach agreement whenever possible. Disagreements will
be handled through the normal chain of command. Management retains the
right to establish objectives, identify which elements are critical,
and their relative weights. Employees retain their right to grieve any
element they believe is inappropriate through Alternative Dispute
Resolution processes or grievance procedures. It is encouraged that
disagreements be resolved at the beginning of the appraisal period.
    How well work objectives are performed will be measured by a series
of weighted performance elements. Performance elements are defined as
generic critical attributes of job performance that are of sufficient
importance that performance below the minimum standard requires
remedial action and may be the basis for removing the employee from the
position. Specific information on the interrelationships between
objectives and elements will be included in the implementing procedures
for this plan.
    Eight elements have been developed for evaluating the yearly
performance of all laboratory personnel covered by this initiative:
Technical Competence, Cooperation, Communication, Management of Time
and Resources, Customer Relations, Technology Transition, Management/
Leadership, and Supervision/EEO.
    All employees will be rated against the first five performance
elements. Element 6 is optional and is intended for those positions
involving technology transition. Element 7 is optional and is intended
for non-supervisory team leaders or program managers. Elements 7 and 8
are required for all supervisory positions. These eight elements are
described below.
    (1) Technical Competence. Exhibits and maintains current technical
knowledge, skills, and abilities to produce timely and quality work
with the appropriate level of supervision. Makes prompt, technically
sound decisions and recommendations that add value to mission
priorities and needs. For appropriate occupational families, seeks and
accepts developmental and/or special assignments. Adaptive to
technological/organizational change. (Weight range: 15 to 50)
    (2) Cooperation. Accepts personal responsibility for assigned
tasks. Considerate of others views and open to compromise on areas of
difference. Exercises tact and diplomacy and maintains effective
relationships, particularly in immediate work environment and teaming
situations. Readily/willingly gives assistance. Shows appropriate
respect and courtesy. (Weight Range: 5 to 25)
    (3) Communication. Provides or exchanges oral/written ideas and
information in a manner that is timely, accurate and easily understood.
Listens effectively so that resultant actions show understanding of
what was said. Coordinates so that all relevant individuals and
functions are included in, and informed of, decisions and actions.
(Weight Range: 5 to 25)
    (4) Management of Time and Resources. Meets schedules and
deadlines, and accomplishes work in order of priority; generates and
accepts new ideas and methods for increasing work efficiency;
effectively utilizes and properly controls available resources;
supports organization's resource development and conservation goals.
(Weight Range: 15 to 50)
    (5) Customer Relations. Demonstrates care for customers through
respectful, courteous, reliable and conscientious actions. Seeks out,
develops and/or maintains solid working relationships with customers to
identify their needs, quantifies those needs, and develops practical
solutions. Keeps customer informed. Within the scope of job
responsibility, seeks out and develops new programs and/or reimbursable
customer work. (Weight Range: 10 to 50)
    (6) Technology Transition. Seeks out and incorporates outside
technology within internal projects. Implements partnerships for
transition or transfer of technology to other internal working groups,
other government agencies, and/

[[Page 11653]]

or commercial activities. (Weight Range: 5 to 50)
    (7) Management/Leadership. Actively furthers the mission of the
organization. As appropriate, participates in the development and
implementation of strategic and operational plans of the organization.
Exercises leadership skills within the environment. Mentors junior
personnel in career development, technical competence, and
interpersonal skills. Exercises appropriate responsibility for
positions assigned. (Weight Range: 5 to 50)
    (8) Supervision/EEO. Works toward recruiting, developing,
motivating, and retaining quality employees; initiates timely/
appropriate personnel actions, applies EEO/merit principles;
communicates mission and organizational goals; by example, creates a
positive, safe, and challenging work environment; distributes work and
empowers employees. (Weight Range: 25 to 50)
    The performance element titled Technical Competence is a mandatory
critical element for all employees. In addition, all supervisors must
be evaluated against the element titled Supervision/EEO and this must
be identified as critical.
    Other elements may be identified as critical as agreed upon between
the rater and the employee. Generally any performance element that has
been given a weight of 25 or higher should be identified as critical.
Some elements weighted less than 25 (e.g., Communication or
Cooperation) may also be critical; for instance, those that are
considered so important to a particular job that failure to perform at
an acceptable level would result in an overall performance evaluation
of unsatisfactory. Weights on elements must add up to 100.
    Appendix D contains the Performance Objective Worksheet and the
Performance Appraisal form accompanied by a guidance form entitled,
Point Ranges and Performance Element Benchmarks.
    Pay pool managers will review objectives, critical element
designations and weights prior to their implementation to ensure these
are reasonable and fair and in keeping with expectations for each
employee. As a general rule, essentially identical positions will have
the same critical elements and the same weights.
    The rater will provide periodic feedback to the employee on how
well he/she is performing. If the rater judges that the employee is not
performing at an acceptable level on one or more elements, the rater
must alert the employee and document the problem. This feedback will be
provided any time during the rating cycle especially if there is a
problem. A mid-point counseling session is required. Deficiencies
identified will be accompanied by a plan to correct them.
    Employees will provide information on their accomplishments to the
rater at both the mid-point and end of the rating period, similar to
the current Army process. Employees may self-rate their performance
elements and/or they may solicit input from team members, customers,
peers, supervisors in other units, subordinates and other sources which
will permit the rater to fully evaluate the contributions during the
rating period. As a minimum, employees will provide the rater with an
itemized list of their accomplishments during the rating period.
    Employees may also provide information and input to the rater's
supervisor for consideration in the supervisor's appraisal. This
material may go directly to the rater's supervisor but a copy must be
furnished to the rater.
    At the end of the rating period, the rater will score each of the
performance elements by assigning a value between 0 and 100 percent of
the weighted value assigned to each of the elements. The rater arrives
at this score by referring to the performance element benchmarks found
on the reverse of the performance appraisal form. The benchmark
performance standards are written so they describe performance at 100
percent of the element; 70 percent; 50 percent and the Unsatisfactory
level of performance. Using these benchmarks, the rater decides where
on a continuum the performance of the employee fits and assigns a point
value according to that determination. The chart to the right of the
performance element benchmarks will be used to assign the specific
point value. Scores will be summed and a letter rating assigned; i.e.,
85-100 = A, 70-84 = B, 50-69 = C. This rating will become the rating of
record. A total score of 49 or below will result in an unsatisfactory
rating. Failure to achieve at the 50% level of any critical element
will also result in an overall unsatisfactory rating.
    The letter ratings will be used to determine pay or bonus values
and to award additional RIF retention years as shown in Figure 3 below.

BILLING CODE 6325-01-P
[GRAPHIC] [TIFF OMITTED] TN12MR97.058

BILLING CODE 6325-01-C
    After a rating has been assigned, the rater recommends the number
of shares that should be granted. This decision is based on an
evaluation of the employee's current salary and level of performance
(e.g., high B or low A) in

[[Page 11654]]

comparison to similarly situated employees within the pay pool and
overall funding availability. For example, an employee who receives a
score of 84 and a final rating of B, but whose current salary is at the
lower end of his/her pay band might receive the maximum number of
shares (3) permitted for a B rating. In contrast, an employee who
received a score of 85 which warrants a final rating of A, but whose
salary is comparable to or above similar positions in the pay pool
might receive 3 rather than 4 shares. A third example is that an
employee who receives a score of 84 might receive the maximum number of
shares based on the fact that it is a very high B or one point away
from an A. The methods available for determining shares will allow ARL
managers to adjust basic pay by considering differences in performance
levels among employees in terms of comparability within ARL and the pay
pool for similarly situated employees.
    Upon approval of this plan, implementing procedures and regulations
will provide details on this process to employees and supervisors.
3. Performance Which Fails To Meet Expectations
a. Continuing Performance Evaluation
    Informal employee performance reviews will be a continuous process
so that corrective action, to include a Performance Improvement Plan
(PIP), may be taken at any time during the rating cycle. At least one
review will be documented as a formal progress review. Whenever a
supervisor recognizes that an employee's performance is at a level that
could put him/her in danger of receiving an unsatisfactory rating, the
supervisor will discuss the situation with the employee in an effort to
identify the possible reasons for the poor performance.
b. End of Rating Cycle Performance Evaluation
    Employee performance will be formally reviewed at the end of the
rating cycle. If an employee's rating score is below 50 points, or if
the employee fails a critical element, the employee will receive an
unsatisfactory rating. Immediately upon assigning an unsatisfactory
rating, the supervisor will take steps to correct the problem.
c. Improving Performance
    In recognition that personality conflicts sometimes occur between a
supervisor and an employee, or that an employee might be better suited
to another type of work, the supervisor and employee may explore a
temporary assignment to another unit in the organization. The
supervisor is under no obligation to explore this option prior to
taking more formal action.
    If the temporary assignment is not possible or has not worked out,
and the employee continues to perform at an unsatisfactory level or has
received an unsatisfactory rating, written notification will be
provided of the unsatisfactory performance in the element(s) at issue,
and an opportunity to improve will be structured in a Performance
Improvement Plan (PIP). The supervisor will identify the items/actions
which need to be corrected or improved; will outline required time
frames for such improvement; and will provide the employee with any
available assistance, references, training and the like which might
facilitate needed improvements. Progress will be intensively monitored
during this PIP period; all counseling sessions will be documented.
    If the PIP results in a score of 50 or above and/or the critical
element which was failed is now acceptable, no further action is
necessary. If the PIP does not improve performance to an acceptable
level, the supervisor may propose to institute a Last Chance Agreement
(LCA) with the employee. A Last Chance Agreement stipulates that if
performance does not rise to the required level within a specified time
frame the employee will be changed to a lower pay band, reduced in
salary, or released from Federal service. The employee agrees to this
last chance arrangement with the understanding that there are no
grievance or appeal rights if the adverse action eventually has to be
taken. The decision to enter into a last chance agreement is entirely
voluntary on the part of the employee.
    If the PIP does not improve performance to the acceptable level and
the employee elects not to enter into the LCA, the supervisor will take
the appropriate follow-on action, such as change to lower pay band/
occupational family, reduction in pay within the same pay band, or
removal, as indicated by the circumstances of the situation. For the
most part, employees with an unsatisfactory rating will not be
permitted to remain at their current pay band or salary. Reductions in
salary within the same pay band or changes to a lower pay band will be
accomplished with a minimum of a 5% decrease in employee base pay. If
the employee is reduced to a lower pay band, the salary will not exceed
the highest level in that pay band.
4. Pay Pools
    Pay pool structure is under the authority of the laboratory
director. A pay pool must be large enough to constitute a reasonable
statistical sample, i.e., 50 or more. The pay pool manager (for
instance, a directorate or division chief) is delegated yearly pay
adjustment authority. However, a pay pool manager's final decision may
still be subject to higher management review. Supervisors will be
placed in a pay pool separate from their employees.
    The pay pool manager makes final decisions on pay increases and/or
bonuses to individuals based on rater recommendation, the final score
and letter rating, the value of the pay pool resources available, and
the individual's current salary within a given pay band. Pay pool
managers will not prescribe a distribution of rating levels. A pay pool
manager may request approval from the Personnel Management Board (PMB)
(described in VIII.C.) or its designee to grant a pay increase to an
employee that is higher than the compensation formula for that
employee. Examples of employees who might warrant such consideration
are those making extraordinary achievements or those serving as
interns.
    The amount of money available for performance payouts is divided
into two components. The amount of money which can be used for salary
increases within a pool is based upon the money that would have been
available for within-grade increases, quality step increases, and grade
level promotions that are now within the band. In the first year of the
project, this amount will be set at 2.4% of the total of base salaries
in the pay pool. The amount of money to be used for bonus payments is
separately funded within the constraints of the overall awards budget.
In the first year of the project, this amount will be set at 1.1% of
the total of base salaries in the pay pool which reflects the funds
previously available for performance awards. The sum of these two
factors is referred to as the pay pool percentage factor. The Personnel
Management Board will annually review and adjust the pay pool funding
formula, to ensure cost discipline over the life of the demonstration
project.
    Performance pay increases (i.e., base pay increases) will not be
granted to employees at the top of their pay band or in a pay retention
status. In these cases, payouts earned as a function of performance
will be paid as a bonus. In addition, a portion of the projected pay
increase may be paid as bonus instead of base pay if required to keep
the base pay portion of the pay pool from

[[Page 11655]]

exceeding its maximum value (initially 2.4%).
    In making the annual performance payouts under the PFP system, it
will be necessary to determine the amount of that year's pay pool and
share value. As explained above, the amount of the pay pool is the pay
pool percentage (initially 3.5 percent) multiplied by the sum of the
combined base salaries of covered employees. The share value will be
calculated so that a pay pool manager will not exceed the resources
that are available in the pay pool. The value of a share cannot be
exactly determined until the rating and reconciliation process
described below is complete. The estimated share value is about 1% of
salary, but inflated ratings (if they occur) will reduce the value of
the share. (Conversely, lower average ratings will increase the value
of a share.) The share value is expressed as a fraction of base salary.
It is computed by dividing the amount of the pay pool by the sum of
each pay pool member's salary multiplied by his/her earned shares, or

share value = (pay pool value)/(sum of (salary * shares) for each
member).

    Each individual's performance payout is calculated by multiplying
the individual's base salary by the total value of his/her earned
shares expressed as a percentage of base salary, or

Individual performance payout = salary * (earned shares * share value).

    In summary, an individual's performance payout is computed as
follows:

Individual performance payout = SALi * Ni * SV,
where: SV = share value = (pay pool value) / SUM (SALk * Nk); k = 1 to
n
pay pool value = (pay pool percentage factor) * SUM (SALk), k = 1 to n
n = number of employees in pay pool
i = an individual employee
N = Number of shares earned by an employee based on his/her performance
rating (0 to 4)
SAL = An individual's base salary and
SUM = The summation of the entities in parentheses over the range
indicated.

    This formula ensures that a share represents a fixed percentage
salary increase for all employees in a pay pool.
    After the payout and share value calculations have been completed,
the pay pool manager must calculate the proportion of payouts to be
paid as base pay vs bonus. If base pay increases would exceed the
authorized percentage, shares must be paid out as base pay increases up
to the limit, and the remainder paid as a bonus. This base/bonus
proportion will be constant for all uncapped employees. This process
will preserve the principle that all shares maintain equal (percentage)
value, and will ensure that all of the allocated funds are disbursed as
intended.
    Pay pool managers will establish and chair a panel to review
supervisors preliminary ratings and make any necessary adjustments. The
panel will comprise all rating supervisors below the pay pool manager.
The reconciliation process gives raters the opportunity to verify that
their preliminary evaluations and approach to scoring conform with that
of other raters within the pay pool and assures that performance
assessments of employees are comparable and equitable across
organizational lines. In this step, each employee's preliminary
performance element scores are compared and through discussion and
consensus building, final ratings are determined. The reconciliation
process is aimed at determining the relative worth of employee
accomplishments.
    The rationale behind reconciliation is that supervisors within a
pay pool will reach a consensus on the types of achievements that
warrant particular scores. Each panel will develop operating procedures
that will provide for fair and equitable conclusions. If the panel
cannot reach consensus, the pay pool manager makes final decisions.
    A midpoint principle will be used to determine performance pay
increases. This principle is that employees must receive a B rating or
higher in order to cross the midpoint of the pay band range and, once
the midpoint is crossed, the employee must receive a B or better rating
in order to receive a base pay increase. This applies to all employees
in every occupational family and pay band. Any amount of an employee's
performance payout not paid in the form of a base pay increase because
of the midpoint principle will be paid as a bonus.
5. Awards
    While not linked to the pay for performance system, awards will
continue to be given for special acts and other categories as they
occur. Awards may include, but are not limited to, special acts,
patents, suggestions, on-the-spot, and time-off.
    In an effort to foster and encourage team work among its employees,
ARL often gives group awards for special acts or significant
achievement. Under the demonstration project, if such an award is given
a team may elect to distribute the award among themselves. Thus, a team
leader or supervisor may allocate a sum of money to a team for
outstanding completion of a special task, and the team may decide the
individual distribution of the total dollars among themselves.

D. Hiring and Appointment Authorities

1. Qualifications
    The qualifications required for placement into a position in a pay
band within an occupational family will be determined using the OPM
Qualification Standards Handbook for General Schedule Positions. Since
the pay bands are anchored to the General Schedule grade levels, the
minimum qualification requirements for a position will be the
requirements corresponding to the lowest General Schedule grade
incorporated into that pay band. For example, the minimum eligibility
requirements for a position in Pay Band II in the Engineers and
Scientist Occupational Family will be the GS-05 qualification
requirements for the series.
    Selective factors may be established for a position in accordance
with the OPM Qualification Standards Handbook when determined to be
critical to successful job performance. These factors 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 clearly
stated as part of the qualification requirements in vacancy
announcements and recruiting bulletins.
2. Competitive Examining
    Current OPM regulations state that appointment registers will list
the names of eligibles in accordance with their numerical ratings.
However, preference eligibles with a compensable service-connected
disability of 10 percent or more shall be entered at the top of the
register ahead of all others unless the register is for professional
and scientific positions GS-9 and above.
    ARL professional and scientific positions in the demonstration
project have been placed into two occupational families, the Engineers
and Scientists Occupational Family and the Administrative Occupational
Family. The broadbanding concept adopted by ARL groups scientific
positions in grades GS-5 through GS-11 into one pay band (DB-II).
Similarly, GS-5 through GS-10 positions in the Administrative
Occupational Family (DJ-II) have been grouped into one pay band.
    As a result of the ARL broadbanding method, the exception
authorized by OPM for professional and scientific positions will not be
used for DB-II and

[[Page 11656]]

DJ-II pay bands and will only be used for the bands that include
professional and scientific positions at GS-12 and above. Otherwise,
appointment registers for all positions, regardless of occupational
family, will follow the normal practice for listing eligibles in order
of their numerical ratings and observing the existing rules for
preference eligibles.
3. Revisions to Term Appointments
    The laboratory conducts many research and development projects that
range from three to six years. The current four-year limitation on term
appointments imposes a burden on the laboratory by forcing the
termination of some term employees prior to completion of projects they
were hired to support. This disrupts the research and development
process and reduces the laboratory's ability to serve its customers.
    Under the demonstration project, ARL will have the authority to
hire individuals under modified term appointments. These appointments
will be used to fill positions 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. The modified term appointments differ from term
employment as described in 5 CFR part 316 in that they may be made for
a period not to exceed five, rather than four years. The ARL Director
is authorized to extend a term appointment one additional year.
    Employees hired under the modified term appointment authority may
be eligible for conversion to career-conditional appointments. To be
converted, the employee must (1) have been selected for the term
position under competitive procedures, with the announcement
specifically stating that the individual(s) selected for the term
position(s) may be eligible for conversion to career-conditional
appointment at a later date; (2) served two years of continuous service
in the term position; (3) be selected under merit promotion procedures
for the permanent position and (4) have a current rating of B or
better.
    Employees serving under regular term appointments at the time of
conversion to the demonstration project will be converted to the new
modified term appointments provided they were hired for their current
positions under competitive procedures. These employees will be
eligible for conversion to career-conditional appointment if they have
a current rating of B or better and are selected under merit promotion
procedures for the permanent position after having completed two years
of continuous service. Time served in term positions prior to
conversion to the modified term appointment is creditable, provided the
service was continuous. Employees serving under modified term
appointments under this plan will be covered by the plan's pay for
performance system.
4. Voluntary Emeritus Corps
    Under the demonstration project, the laboratory director will have
the authority to offer retired or separated employees voluntary
positions in the laboratory. Voluntary Emeritus Program assignments are
not considered employment by the Federal Government (except for
purposes of injury compensation). Thus, such assignments do not affect
an employee's entitlement to buy-outs or severance payments based on an
earlier separation from Federal Service. The Voluntary Emeritus Corps
will ensure continued quality research while reducing the overall
salary line by allowing higher paid employees to accept retirement
incentives with the opportunity to retain a presence in the scientific
and technical communities. The program will be beneficial during
manpower reductions as senior scientists, engineers, and technicians
accept retirement and return to provide a continuing source of
corporate knowledge and valuable on-the-job training or mentoring to
less-experienced employees.
    To be accepted into the emeritus corps, a volunteer must be
recommended by laboratory managers to the directorate chief. Everyone
who applies is not entitled to an emeritus position. The directorate
chief must clearly document the decision process for each applicant
(whether accepted or rejected) and retain the documentation throughout
the assignment. Documentation of rejections will be maintained for two
years.
    To ensure success and encourage participation, the volunteer's
federal retirement pay (whether military or 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. The volunteers may be
required to submit a financial disclosure form annually and will not be
permitted to participate on any contracts where a conflict of interest
exists. The same rules that currently apply to source selection members
will apply to volunteers.
    An agreement will be established between the volunteer, the
directorate chief, and the Civilian Personnel Operations Center. The
agreement must be finalized before the assumption of duties and shall
include:
    (a) A statement that the voluntary assignment does not constitute
an appointment in the Civil Service, is without compensation, and any
and all claims against the Government because of the voluntary
assignment are waived by the volunteer,
    (b) A statement that the volunteer will be considered a federal
employee for the purpose of injury compensation,
    (c) Volunteer's work schedule,
    (d) Length of agreement (defined by length of project or time
defined by weeks, months, or years),
    (e) Support provided by the laboratory (travel, administrative,
office space, supplies),
    (f) A one page statement of duties and experience,
    (g) A statement providing that no additional time will be added to
a volunteer's service credit for such purposes as retirement, severance
pay, and leave as a result of being a member of the voluntary emeritus
corps,
    (h) A provision allowing either party to void the agreement with
ten working days written notice, and
    (i) The level of security access required (any security clearance
required by the position will be managed by the laboratory while the
volunteer is a member of the emeritus corps).
5. Extended Probationary Period
    A new employee appointed to a nonsupervisory/non-managerial
position in the Engineers and Scientists occupational family must
demonstrate adequate contribution during all cycles of a research
effort for a laboratory manager to render a thorough evaluation. The
current one year probationary period will be extended to three years
for all newly hired permanent career-conditional employees appointed to
positions in that occupational family. The purpose of extending the
probationary period is to allow supervisors an adequate period of time
to fully evaluate an employee's contributions and conduct. The three
year probationary period will apply only to new hires subject to a
probationary period.
    If a probationary employee's performance is determined to be
satisfactory at a point prior to the end of the three year probationary
period, a supervisor has the option of ending the

[[Page 11657]]

probationary period at an earlier date, but not before the employee has
completed one year of continuous service. If the probationary period
for an employee is terminated before the end of the three year period,
the supervisor will develop written rationale for his/her decision and
will elevate it at least one level for review prior to implementing the
action.
    All other existing provisions pertaining to probationary periods
are retained, including limited notice and appeal rights and crediting
prior service. Prior Federal civilian service (including NAF service
and service in temporary or term positions) counts toward completion of
probation when the service is in the Department of Army, is in the same
line of work, and contains or is followed by no more than a single
break in service that does not exceed 30 calendar days.
    In the case of modified-term employees who are converted to
permanent status, the time served under the term appointment counts
toward the required probationary period as long as it is in the same
line of work. If the permanent position is in a different line of work,
the full three-year probationary requirement applies.
6. Supervisory Probationary Period
    Supervisory probationary periods will be made consistent with 5 CFR
part 315, subchapter 315.901 except references to grade will be
indicated as pay band. New supervisors will be required to complete a
one year probationary period for the initial appointment to a
supervisory position. If, during the probationary period, the decision
is made to return the employee to a nonsupervisory position for reasons
solely related to supervisory performance, the employee will be
returned to a comparable position of no lower pay band and pay than the
position from which promoted. Pay will not exceed the maximum rate of
the lower pay band.
    New supervisors who are hired into the E&S occupational family will
only serve under a single one-year probationary period and are not
subject to the three-year probationary period described above. The
reason for this is that the position for which they were hired is
primarily supervisory in nature and performance can adequately be
measured in the one year probationary period.

E. Internal Placement and Pay Setting

1. Promotions
    A promotion is the movement of an employee to a higher pay band
within the same occupational family or to a pay band in a different
occupational family which results in an increase in the employee's
salary. Supervisors may consider promoting employees at any time since
promotions are not tied to the pay for performance system. Progression
within a pay band is based upon performance pay increases; as such,
these actions are not considered promotions and are not subject to the
provisions of this section.
    Promotions will be processed under competitive procedures in
accordance with merit principles and requirements and the local merit
promotion plan. The following actions are excepted from competitive
procedures:
    (a) Re-promotion to a position which is in the same pay band 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 career ladder.
    (e) A temporary promotion or detail to a position in a higher pay
band of 180 days or less.
    (f) Reclassification to include impact of person in the job
promotions.
    (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 not given proper consideration in
a competitive promotion action.
    Upon promotion to a higher pay band, an employee will be entitled
to a 6% increase in base pay or the lowest level in the pay band to
which promoted, whichever is greater. The maximum amount of pay
increase upon promotion will not exceed $5,000. However, on a case-by-
case basis, the Personnel Management Board will approve requests for
promotion beyond the $5,000 limit. Highest previous rate also may be
considered in fixing pay in accordance with the laboratory's pay fixing
policies.
2. Demotions
    A demotion is a placement into a lower pay band within the same
occupational family, or placement into a pay band in a different
occupational family with a lower salary. 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 or at the employee's request, or
placement actions resulting from reduction in force procedures).
Employees demoted for cause are not entitled to pay retention.
Employees demoted for reasons other than cause may be entitled to pay
retention in accordance with the laboratory's pay fixing policies.
3. Pay Fixing Policies and Procedures
    The Director, ARL, will establish pay administration policies which
conform with basic governmental pay fixing policy; however, the ARL
policies will be exempt from Army Regulations or local pay fixing
policies, except where negotiated agreements prevail.
    Highest previous rate (HPR) will be considered in placement actions
for which authorized. Use of HPR will be at the supervisor's
discretion. The pay retention provisions of 5 U.S.C. 5363 and 5 CFR
536.101 will apply to this plan except where waived or modified as
specified in the waiver section. Pay retention may also be granted by
the ARL Director to employees who meet general eligibility
requirements, but do not have specific entitlement by law, provided not
specifically excluded.
    An employee's total monetary compensation paid in a calendar year
may not exceed the basic pay of level I of the Executive Schedule
consistent with 5 U.S.C. 5307 and 5 CFR part 530 subpart B.
    As a general rule, pay will be set at the lowest level in a pay
band. Appointments made above the minimum level will be based upon
superior qualifications of the candidate. A candidate appointed toward
the higher end of a pay band should have qualifications approaching the
lowest General Schedule grade incorporated into the next higher pay
band. For example, a person appointed at the higher end of Pay Band II
in the Engineers and Scientist occupational family would have
education, experience, or a combination of the two approaching the
qualifications of the GS-12 level, which is the lowest General Schedule
grade incorporated into Pay Band III. Appointments above the minimum of
the pay band will be approved at the directorate level.
    Directorates may make full use of recruitment and retention
bonuses, and relocation payments as currently provided for by OPM.

[[Page 11658]]

    When a temporary promotion is terminated, the employee's pay
entitlements will be redetermined based on the employee's position of
record, with appropriate adjustments to reflect pay events during the
temporary promotion, subject to the specific policies and rules
established by ARL. In no case may those adjustments increase the pay
for the position of record beyond the applicable pay range maximum
rate.
4. Staffing Supplements
    Employees assigned to occupational series and geographic areas
covered by special rates will be eligible for a staffing supplement if
the maximum adjusted rate for the banded GS grades to which assigned is
a special rate that exceeds the maximum GS locality rate for the banded
grades. The staffing supplement is added to the base pay, much like
locality rates are added to base pay. The employee's total pay
immediately after implementation of the demonstration project will be
the same as immediately before the demonstration project, but a portion
of the total will be in the form of a staffing supplement. Adverse
action and pay retention provisions will not apply to the conversion
process as there will be no change in total salary. The staffing
supplement is calculated as described below.
    Upon conversion, the demonstration base rate will be established by
dividing the employee's old GS adjusted rate (the higher of special
rate or locality rate) by the staffing factor. The staffing factor will
be determined by dividing the maximum special rate for the banded
grades by the GS unadjusted rate corresponding to that special rate
(step 10 of the GS rate for the same grade as the special rate). The
employee's demonstration staffing supplement is derived by multiplying
the demonstration base rate by the staffing factor minus one. So the
employee's final demonstration special staffing rate equals the
demonstration base rate plus the special staffing supplement; this
amount will equal the employee's former GS adjusted rate.
    Simplified, the formula is this:
Staffing Supplement = demonstration base rate x (staffing factor -1)
Salary upon conversion = demonstration base rate + staffing supplement
(sum will equal existing rate)

[GRAPHIC] [TIFF OMITTED] TN12MR97.055

    Example: In the case of a GS-801-11/03 employee who is receiving a
special salary rate, the salary before the demonstration project is
$42,944. The maximum special rate for a GS-801-11 Step 10 is $51,295
and the corresponding regular rate is $46,523. The staffing factor is
computed as follows:

Staffing Factor = $51,295 <divide> $46,523 = 1.1026
Demonstration Base Rate = $42,944 <divide> 1.1026 = $ 38,948

    Then to determine the staffing supplement, multiply the
demonstration base by the staffing factor minus 1.

Staffing Supplement = $38,948 X .1026 = $ 3,996

    The Staffing Supplement of $3,996 is added to the Demonstration
Base Rate of $38,948 and the total salary is $42,944, which is the
salary of the employee before conversion to the demonstration project.
    If an employee is in a band where the maximum GS adjusted rate for
the banded grades is a locality rate, when the employee is converted
into the demonstration project, the demonstration base rate is derived
by dividing the employee's former GS adjusted rate (the higher of
locality rate or special rate) by the applicable locality pay factor
(for example, in the Washington-Baltimore area, it is currently
1.0711). The employee's demonstration locality-adjusted rate will equal
the employee's former GS adjusted rate.
    The annual pay adjustment for employees in special rate occupations
will require recomputation of the staffing supplement. Employees in
special rate occupations remain entitled to an underlying locality
rate, which may over time supersede the need for a staffing supplement.
If OPM discontinues or decreases a special rate schedule, employees
will be entitled to pay retention. Upon geographic movement, an
employee who receives the special staffing supplement will have the
supplement recomputed. Any resulting reduction in pay will not be
considered an adverse action or a basis for pay retention.
    Established salary including the staffing supplement will be
considered basic pay for the same purposes as a locality rate under 5
CFR 531.606(b), i.e., for purposes of retirement, life insurance,
premium pay, severance pay, and advances in pay. It will also be used
to compute worker's compensation payments and lump-sum payments for
accrued and accumulated annual leave.
5. Simplified Assignment Process
    Today's environment of downsizing and workforce transition mandates
that ARL have increased flexibility to assign individuals. Broadbanding
can be used to address this need. As a result of the assignment to a
more general position description, the organization will have increased
flexibility to assign an employee without a pay change consistent with
the needs of the organization, and the individual's qualifications and
rank or level. Subsequent assignments to projects, tasks, or functions
anywhere within the organization requiring the same level and area of
expertise, and qualifications would not constitute an assignment
outside the scope or coverage of the current position description.
    Such assignments within the coverage of the generic descriptions
are accomplished without the need to process a personnel action. For
instance, a technical expert can be assigned to any project, task, or
function requiring similar technical expertise. This flexibility allows
a broader latitude in assignments and further streamlines the
administrative process and system.
6. Details
    Under this plan employees may be detailed to a position in the same
or lower pay band (or its equivalent in a different occupational
family) for up to one year. Details may be implemented by submitting
one SF 52-B to cover the one year period. As in the current system,
details to duties in a higher pay band for more than 180 days will be
implemented using competitive procedures.

[[Page 11659]]

F. Employee Development

1. Expanded Development Opportunities
    ARL will have the authority to grant sabbaticals to career
employees to permit them to engage in study or uncompensated work
experience that will contribute to their development and effectiveness.
The ARL Expanded Developmental Opportunities Program, to include
sabbaticals, will cover all demonstration project employees. One
developmental opportunity for a sabbatical 3-12 months in duration may
be granted to an employee in any 10-year period. The developmental
opportunity period will not result in loss of (or reduction in) pay,
leave to which the employee is otherwise entitled, or credit for time
of service. Employees will be eligible after completion of seven years
of Federal service. Each opportunity must result in a product, service,
report, or study that will benefit the ARL mission as well as increase
the employee's individual effectiveness. Various learning or
developmental experiences may be considered, such as advanced academic
teaching, study, or research; self-directed or guided study; and on-
the-job work experience with a public, private commercial, or private
nonprofit organization. The positions of employees on expanded
developmental opportunities may be backfilled (i.e., with temporarily
promoted employees or with term employees). However, that position or
its equivalent must be made available to the employee returning from
the expanded development opportunity.
2. Critical Skills Training
    Training is an essential component of an organization that requires
continuous acquisition of advanced and specialized knowledge. Degree
training in the academic environment of laboratories is also a critical
tool for recruiting and retaining employees with or requiring critical
skills. Constraints under current law and regulation limit degree
payment to shortage occupations. In addition, current government-wide
regulations authorize payment for degrees based only on recruitment or
retention needs. Degree payment is not permitted for non-shortage
occupations involving critical skills.
    ARL proposes to expand the authority to provide degree or
certificate payment for purposes of meeting critical skill
requirements, to ensure continuous acquisition of advanced specialized
knowledge essential to the organization, and 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. In addition, this
proposal will be implemented consistent with 5 U.S.C. 4107(b)(2).
3. Appraisals for Employees on Expanded Development Opportunities
Training
     Expanded development opportunities generally fall into two general
categories: classroom and developmental (on-the-job training).
Developmental assignments should be treated as any other temporary
assignment that continues for 120 days or more. A performance plan is
established and the incumbent receives a special or annual rating upon
completion. Assignments that involve classroom work are covered by one
of two options. The first is to render a rating as soon as the employee
returns to the position and completes 120 days under a performance
plan. The second is to render a rating for the classroom performance.
Procedures for this option will follow those currently in place for
Department of Army's Long Term Training (LTT) Program. Employees
availing themselves of expanded development opportunities are eligible
to be considered for pay for performance increases as appropriate.
4. Employee Development Panels
    Each directorate (or equivalent organizational unit) will create an
Employee Development Panel which will be chaired by the directorate
chief. The purpose of the panel is to review, evaluate, and make
decisions on applications for any expanded developmental opportunities
described in this plan or in related Human Resources Development Plans.
Because opportunities for training and development will be limited by
budgetary considerations, the panel must determine which training is
most important to the successful accomplishment of the mission, both
present and future.
    The directorate chief will oversee panel meetings, ensuring that
all panel member comments and recommendations receive equal
consideration in the selection process and that decisions are made
based on majority vote. The directorate chief will provide written
feedback to each person who has applied, including reasons for
nonselection when that is the panel's decision. Panels will elicit
feedback from mentors and mentees and will put these before the panel
for consideration. Applicants must show a direct relationship of their
training request to the ARL mission and will outline what return on
investment will be realized if the training is approved. Supervisors
will be asked to provide their recommendations to the panel and will
include a statement concerning the applicant's potential and his/her
ability to apply the knowledges gained. Once selected, the employee
must sign a service obligation agreement which provides for serving in
the government three times the length of the training period. If he/she
voluntarily leaves the government before the service obligation is
completed the employee is liable for repayment.

G. Reduction In Force (RIF)

    When an employee in the ARL Demonstration Project is faced with
separation or downgrading due to lack of work, shortage of funds,
reorganization, insufficient personnel ceiling, the exercise of
reemployment or restoration rights, or furlough for more than 30
calendar days or more than 22 discontinuous days, RIF procedures will
be used.
    The procedures in 5 CFR part 351 and OPM RIF regulations will be
followed with slight modifications pertaining to competitive areas,
broadbanding, assignment rights, and calculation of adjusted service
computation date.
    A separate competitive area will be established for each
occupational family; within each occupational family, separate
competitive areas will be established by duty location. Within each
competitive area, competitive levels will be established consisting of
all positions in the same occupational series and pay band which are
similar enough in duties, qualifications, and working conditions that
the incumbent of one position can perform successfully the duties of
any other position in the competitive level without unduly interrupting
the work program.
    An employee may displace another employee by bump or retreat to one
band below the employee's existing band. A preference eligible with a
compensable service-connected disability of 30% or more may retreat to
positions two bands (or equivalent to five grades) below his/her
current band.
    Reductions in force are accomplished using the existing procedures,
the retention factors of tenure, veterans preference, length of
service, and performance ratings, in that order. However, the
additional RIF service credit for performance based on the last three
ratings of record during the

[[Page 11660]]

preceding four years will be applied as follows: Rating A adds 10
years, Rating B adds 7 years, Rating C adds 3 years, and Rating U (or
an overall rating of unsatisfactory) adds no credit for retention. The
additional years of service credit are added, not averaged. Ratings
given under non-demonstration systems will be converted to the
demonstration rating scheme and provided the equivalent rating credit.
    In some cases, an employee may not have three annual performance
ratings of record. In these situations, service credit will be given on
the basis of assumed ratings of C. If, however, an employee has ratings
from another system but not three demonstration project ratings, the
last three actual ratings will be translated into demonstration project
ratings. Ratings older than five years will not be used.
    An employee who has received a written decision to demote him/her
to a lower pay band because of unacceptable performance, competes in
RIF from the position to which he/she will be/has been demoted.
Employees who have been demoted for unacceptable performance, and as of
the date of the issuance of the RIF notice have not received a
performance rating in the position to which demoted, will receive a
presumed fully successful rating for purposes of RIF credit.
    An employee who has received an improved rating following a PIP
will have the improved rating considered as the current annual
performance rating of record.
    An employee with a current annual performance rating of U has
assignment rights only to a position held by another employee who has a
U rating. An employee who has been given a written decision of removal
because of unacceptable performance will be placed at the bottom of the
retention register for their competitive level.
    Modified term appointment employees are in Tenure Group III for
reduction in force purposes. Reduction in force procedures are not
required when separating these employees when their appointments
expire.

H. Grievances and Disciplinary Actions

    Except where specifically waived or modified in this plan, adverse
actions procedures under 5 CFR part 752 remain unchanged; however, the
demonstration project will enhance the use of Alternative Dispute
Resolution (ADR) and Last Chance Agreements (LCA).

IV. Implementation Training

    An extensive training program is planned for every employee in the
demonstration project and associated support personnel. Training will
be tailored to fit the requirements of every employee included and will
fully address employee concerns to ensure everyone has a comprehensive
understanding of the program. In addition, leadership training will be
provided to all managers and supervisors as the new system places more
responsibility and decision-making authority on their shoulders.
    Training requirements will vary from an overview of the new system
to a more detailed package for laboratory managers on the new
classification system; to very specific instructions for both civilian
and military supervisors, managers, and others who provide personnel
and payroll support; to an employee handbook to be provided to each
covered ARL employee. Training will begin within the 90 days just prior
to implementation.

V. Conversion

A. Conversion to the Demonstration Project

    Initial entry into the demonstration project will be accomplished
through a full employee protection approach that ensures each employee
an initial place in the appropriate pay band without loss of pay.
Employees serving under regular term appointments at the time of the
implementation of the demonstration project will be converted to the
modified term appointment if all requirements in III.D.3., Revisions to
Term Appointments, have been satisfied. Position announcements, etc.
will not be required for these term appointments. An automatic
conversion from current GS/GM grade and pay into the new broadband
system will be accomplished. Each employee's initial total salary under
the demonstration project will equal the total salary received
immediately before conversion. Special conversion rules apply to
special rate employees as described in III.E.4., Staffing Supplements.
Employees who enter the demonstration project later by lateral
reassignment or transfer will be subject to parallel pay conversion
rules. If conversion into the demonstration project is accompanied by a
geographic move, the employee's GS pay entitlements in the new
geographic area must be determined before performing the pay
conversion.
    Employees who are on temporary promotions at the time of conversion
will be converted to a pay band commensurate with the grade of the
position to which temporarily promoted. At the conclusion of the
temporary promotion, the employee will revert to the pay band which
corresponds to the grade of record. When a temporary promotion is
terminated, pay will be determined as described in III.E.3., Pay Fixing
Policies and Procedures. The only exception will be if the original
competitive promotion announcement stipulated that the promotion could
be made permanent; in these cases actions to make the temporary
promotion permanent will be considered and, if implemented, will be
subject to all existing priority placement programs.

B. Conversion or Movement From a Project Position to a General Schedule
Position

    If a demonstration project employee is moving to a General Schedule
(GS) position not under the demonstration project, or if the project
ends and each project employee must be converted back to the GS system,
the following procedure will be used to convert the employee's project
pay band to a GS-equivalent grade and the employee's project rates of
pay to GS-equivalent rates of pay. The converted GS grade and GS rates
of pay must be determined before movement or conversion out of the
demonstration project and any accompanying geographic movement,
promotion, or other simultaneous action. For conversions upon
termination of the project and for lateral reassignments, the converted
GS grade and rates will become the employee's actual GS grade and rates
after leaving the demonstration project (before any other action). For
transfers, promotions, and other actions the converted GS grade and
rates 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 rates were actually
in effect immediately before the employee left the demonstration
project.
1. Grade-Setting Provisions
    An employee in a pay band corresponding to a single GS grade is
converted to that grade. An employee in a pay band corresponding to two
or more grades is converted to one of these grades according to the
following rules:
    a. The employee's adjusted rate of basic rate 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 range in
(1) the GS base schedule, (2) the locality rate schedule for the
locality pay area in which the position is

[[Page 11661]]

located, or (3) the appropriate special rate schedule for the
employee's occupational series, as applicable.) If the series is a two-
grade interval series, only odd-numbered grades are considered below
GS-11.
    b. If the employee's adjusted project rate equals or exceeds the
applicable step 4 rate of the highest GS grade in the band, the
employee is converted to that grade.
    c. If the employee's adjusted project rate is lower than the
applicable step 4 rate of the highest grade, the adjusted rate is
compared with the step 4 rate of the second highest grade in the
employee's pay band. If the employee's adjusted rate equals or exceeds
step 4 rate of the second highest grade, the employee is converted to
that grade.
    d. This process is repeated for each successively lower grade in
the band until a grade is found in which the employee's adjusted
project rate equals or exceeds the applicable step 4 rate of the grade.
The employee is then converted at that grade. If the employee's
adjusted rate is below the step 4 rate of the lowest grade in the band,
the employee is converted to the lowest grade.
    e. Exception: If the employee's adjusted project rate exceeds the
maximum rate of the grade assigned under the above-described step 4
rule but fits in the rate range for the next higher applicable grade
(i.e., between step 1 and step 4), then the employee shall be converted
to that next higher applicable grade.
    f. Exception: An employee will not be converted to 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 undergone a reduction in band.
2. Pay-Setting Provisions
    An employee's pay within the converted GS grade is set by
converting the employee's demonstration project rates of pay to GS
rates of pay in accordance with the following rules:
    a. The pay conversion is done before any geographic movement or
other pay-related action that coincides with the employee's movement or
conversion out of the demonstration project.
    b. An employee's adjusted rate of basic pay under the project
(including any locality payment or staffing supplement) is converted to
a GS-adjusted rate on the highest applicable rate range for the
converted GS grade. (For this purpose, a GS rate range includes a rate
range in (1) the GS base schedule, (2) an applicable locality rate
schedule, or (3) an applicable special rate schedule.)
    c. If the highest applicable GS rate range is a locality pay rate
range, the employee's adjusted project rate 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 basic pay would be the GS base rate
corresponding to the converted GS locality rate (i.e., same step
position). (If this employee is also covered by a special rate schedule
as a GS employee, the converted special rate will be determined based
on the GS step position. This underlying special rate will be basic pay
for certain purposes for which the employee's higher locality rate is
not basic pay.)
    d. If the highest applicable GS rate range is a special rate range,
the employee's adjusted project rate 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 basic pay will be the GS rate corresponding to the converted special
rate (i.e., same step position).
3. Conversion of Rating Levels
    In the event an employee leaves the demonstration project or if the
project is terminated, the performance ratings given under the
demonstration project pay for performance rating system will be
converted to an appropriate non-demonstration system. For purposes of
conversion, a rating of C under this plan equates to Summary Level 3
outlined in 5 CFR 430.208.
4. 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).

VI. Project Duration

    Public Law 103-337 removed any mandatory expiration date for this
demonstration project. The project evaluation plan adequately addresses
how each intervention will be comprehensively evaluated for at least
the first 5 years of the demonstration project. Major changes and
modifications to the interventions can be made through announcement in
the Federal Register and would be made if formative evaluation data
warranted. At the 5 year point, the entire demonstration project will
be reexamined for either: (a) permanent implementation, (b) change and
another 3-5 year test period, or (c) expiration.

VII. Evaluation Plan

    Chapter 47 (Title 5 U.S.C.) requires that an evaluation system be
implemented to measure the effectiveness of the proposed personnel
management interventions. An evaluation plan for the entire laboratory
demonstration program covering 24 DOD laboratories was developed by a
joint OPM/DOD Evaluation Committee. A comprehensive evaluation plan was
submitted to the Office of Defense Research & Engineering in 1995 and
subsequently approved (Proposed Plan for Evaluation of the Department
of Defense S&T Laboratory Demonstration Program, Office of Merit
Systems Oversight & Effectiveness, June 1995). The overall evaluation
effort will be coordinated and conducted by OPM's Personnel Resources
and Development Center (PRDC). The primary focus of the evaluation is
to determine whether the waivers granted result in a more effective
personnel system than the current as well as an assessment of the costs
associated with the new system.
    The present personnel system with its many rigid rules and
regulations is generally perceived as an impediment to mission
accomplishment. The demonstration project is intended to remove some of
those barriers and therefore, is expected to contribute to improved
organizational performance. While it is not possible to prove a direct
causal link between intermediate and ultimate outcomes (improved
personnel system performance and improved organizational
effectiveness), such a linkage is hypothesized and data will be
collected and tracked for both types of outcome variables.
    An intervention impact model will be used to measure the
effectiveness of the various personnel system changes or interventions.
Additional measures will be developed as new interventions are
introduced or existing interventions modified consistent with expected
effects. Measures may also be deleted when appropriate. Activity
specific measures may also be developed to accommodate specific needs
or interests which are locally unique. Appendix E represents an
overview of the Evaluation Model. More detailed information about the
evaluation model is available upon request.
    The evaluation model for the demonstration project identifies
elements critical to an evaluation of the effectiveness of the
interventions. The

[[Page 11662]]

overall evaluation approach will also include consideration of context
variables that are likely to have an impact on project outcomes; e.g.,
Human Resources Management regionalization, downsizing, cross-service
integration, and the general state of the economy. However, the main
focus of the evaluation will be on intermediate outcomes, i.e., the
results of specific personnel system changes which are expected to
improve human resources management. The ultimate outcomes are defined
as improved organizational effectiveness, mission accomplishment, and
customer satisfaction.
    Data from a variety of different sources will be used in the
evaluation. Information from existing management information systems
supplemented with perceptual data will be used to assess variables
related to effectiveness. Multiple methods provide more than one
perspective on how the demonstration project is working. Information
gathered through one method will be used to validate information
gathered through another.
    Confidence in the findings will increase as they are substantiated
by the different collection methods. The following types of data will
be collected as part of the evaluation: (1) Workforce data; (2)
personnel office data; (3) employee attitudes and feedback using
surveys, structured interviews, and focus groups; (4) local activity
histories; and (5) core measures of laboratory effectiveness.

VIII. Demonstration Project Costs

A. Step Buy-Ins

    Under the current pay structure, employees progress through their
assigned grade in step increments. Since this system is being replaced
under the demonstration project, employees will be awarded that portion
of the next higher step they have completed up until the effective date
of implementation. As under the current system, supervisors will be
able to withhold these partial step increases if the employee's
performance falls below fully successful.
    Rules governing Within-Grade Increases (WGI) under the current Army
performance plan will continue in effect until the implementation date.
Adjustments to the employees base salary for WGI equity will be
computed effective the date of implementation to coincide with the
beginning of the first formal PFP assessment cycle. WGI equity will be
acknowledged by increasing base salaries by a prorated share based upon
the number of weeks an employee has completed towards the next higher
step. Payment will equal the value of the employee's next WGI times the
proportion of the waiting period completed (weeks completed in waiting
period/weeks in the waiting period) at the time of conversion.
Employees at step 10 on the date of implementation will not be eligible
for WGI equity adjustments since they are already at the top of the
step scale.

B. Cost Discipline

    An objective of the demonstration project is to ensure in-house
budget discipline. A baseline will be established at the start of the
project and salary expenditures will be tracked yearly. Implementation
costs, including the step buy-in costs detailed above, will not be
included in the cost discipline evaluations.
    The Personnel Management Board will annually track personnel cost
changes and determine if adjustments are required to achieve the
objective of cost discipline.

C. Personnel Management Board

    ARL will create a Personnel Management Board to oversee and monitor
the implementation and operation of the demonstration project. Its
specific functions are outlined below. The Board will be chaired by the
Deputy Director and consist of the Chief of Staff, Associate for
Science and Technology, the senior ranking civilian in each directorate
and center within the laboratory and the Program Manager for the ARL
Personnel Demonstration Project. EEO, Legal, Human Resources Office,
appropriate union representatives and the Staff Members Committee (SMC)
Chair will serve as non-voting advisors on the board. The board will be
responsible for:
    (a) Determining the composition of the PFP pay pools in accordance
with the established guidelines,
    (b) Providing guidance to pay pool managers,
    (c) Overseeing disputes in pay pool issues,
    (d) Overseeing the civilian pay budget,
    (e) Monitoring award pool distribution by organization,
    (f) Reviewing hiring and promotion salaries, to include approving
promotions over $5,000,
    (g) Conducting classification review and oversight; monitoring and
adjusting classification practices and deciding broad classification
issues,
    (h) Approving major changes in position structure,
    (i) Addressing issues associated with multiple pay systems during
the demonstration project,
    (j) Assessing the need for changes to demonstration project
procedures and policies,
    (k) Ensuring in-house budget discipline.

D. Developmental Costs

    Costs associated with the development of the demonstration project
system include software automation, training, and project evaluation.
All funding will be provided through the Army Science and Technology
budget. The projected annual expenses for each area is summarized in
Figure 4 below. Project evaluation costs will continue for at least the
first 5 years and may continue beyond.

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IX. Required Waivers to Law and Regulation

A. Waivers to Title 5 United States Code

    Chapter 31, section 3111: Acceptance of volunteer service.
    Chapter 33, section 3324: Appointments to Positions Classified
Above GS-15.
    Chapter 33, section 3341: Details.
    Chapter 41, section 4107 (a) (1), (2), (b) (1), (3): Restriction on
Degree Training.
    Chapter 43, section 4301 (3): Definition of unacceptable
performance.
    Chapter 43, section 4302-4303: This waiver applies to the extent
that the term ``grade level'' is replaced with ``pay band''.
    Chapter 51, sections 5101-5111: Purpose, definitions, basis,
classification of positions, review, authority--This waiver applies to
the extent that white collar employees will be covered by broadbanding.
Pay category determination criteria for Federal Wage System positions
remain unchanged.
    Chapter 53, sections 530l; 5302 (1), (8) and (9); 5303; and 5304:
Pay comparability system. (This waiver applies only to the extent
necessary to allow (1) demonstration project employees, except
employees in band V of the engineers and scientists occupational
family, to be treated as General Schedule employees, (2) basic rates of
pay under the demonstration project to be treated as scheduled rates of
basic pay, and (3) employees in band V of the engineers and scientists
occupational family to be treated as SES and ST employees for the
purposes of these provisions.)
    Chapter 53, section 5305: Special rates.
    Chapter 53, sections 5331-5336: General Schedule pay rates.
    Chapter 53, section 5362: Grade retention.
    Chapter 53, section 5363: Pay retention. (This waiver applies only
to the extent necessary to (1) allow demonstration project employees to
be treated as General Schedule employees, and (2) provide that pay
retention provisions do not apply to conversions from General Schedule
special rates to demonstration project pay, as long as total pay is not
reduced.)
    Chapter 55, section 5545 : Night, standby, irregular, and hazardous
duty differential. (This waiver applies only to the extent necessary to
allow demonstration project employees to be treated as General Schedule
employees. This waiver does not apply to employees in band V of the
engineers and scientists occupational family.)
    Chapter 57, sections 5753, 5754, and 5755: Recruitment and
relocation bonuses, retention allowances, and supervisory differentials
(This waiver applies only to the extent necessary to allow (1)
employees and positions under the demonstration project to be treated
as employees and positions under the General Schedule and (2) employees
in band V of the engineers and scientists occupational family to be
treated as SES and ST employees)
    Chapter 59, section 5941: Allowances based on living costs and
conditions of environment; employees stationed outside continental
United States or Alaska. (This waiver applies only to the extent
necessary to provide that COLA's paid to employees under the
demonstration project are paid in accordance with regulations
prescribed by the President (as delegated to OPM).)
    Chapter 75, section 7512(3): Adverse actions. (This provision is
waived only to the extent necessary to replace ``grade'' with ``pay
band.'')
    Chapter 75, section 7512 (4): Adverse actions. (This waiver applies
only to the extent necessary to provide that adverse action provisions
do not apply to conversions from General Schedule special rates to
demonstration project pay, as long as total pay is not reduced.)

B. Waivers to Title 5. Code of Federal Regulations

    Part 300, sections 300.601 through 300.605: Time in grade
restrictions. Time in grade restrictions are eliminated in the
Demonstration project.
    Part 308.101 through 308.103: Volunteer Service.

    Part 316, section 301 (Term Appointments for more than 4 years).
    Part 316, section 303 (Converting Terms to Status).
    Part 335, section 103: Covering the length of details and temporary
promotions.
    Part 351, section 351.402(b): Competitive area.
    Part 351, section 351.403: Competitive Level. (This waiver applies
only to the extent necessary to replace ``grade'' with ``pay band''.)
    Part 351, sections; 351.504 as it relates to years of credit;
351.701 to the extent that employee bump and retreat rights will be
limited to one pay band except in the case of 30% preference eligible.

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    Part 430, Section 207 (d): Definition of Unacceptable Performance.
    Part 432: Modified to the extent that an employee may be removed,
reduced in band level with a reduction in pay or reduced in pay without
a reduction in band level based on unacceptable performance. Also
modified to redefine unacceptable performance.
    Part 511, subpart A, General Provisions, and subpart B, Coverage of
the General Schedule.
    Part 511, section 511.601: Classification Appeals modified to the
extent that white collar positions established under 5 U.S.C. 4703,
although specifically excluded from Title V, are covered by the
classification appeal process outlined in this section, as amended
below.
    Part 511, section 511.603(a): Right to appeal--substitute band for
grade.
    Part 511, section 511.607(b): Non-Appealable Issues--add to the
list of issues which are neither appealable nor reviewable, the
assignment of series under 5 U.S.C. 4703 to appropriate career paths.
    Part 530, subpart C: Special salary rates.
    Part 531, subparts B, D, and E: Determining The Rate of Basic Pay,
Within-Grade Increases, and Quality Step Increases.
    Part 531, subpart F: Locality-Based Comparability Payments. (This
waiver applies only to the extent necessary to allow (1) demonstration
project employees, except employees in band V of the engineers and
scientists occupational family, to be treated as General Schedule
employees, (2) basic rates of pay under the demonstration project to be
treated as scheduled annual rates of pay, and (3) employees in band V
of the engineers and scientists occupational family to be treated as
SES and ST employees for the purposes of these provisions.)
    Part 536, Grade retention.
    Part 536, section 536.104: Pay Retention. (This waiver applies only
to the extent necessary to provide that pay retention provisions do not
apply to conversions from General Schedule special rates to
demonstration project pay, as long as total pay is not reduced.)
    Part 536, sections 536.205 (b)(3), (c) and (d): Determination of
the rate of basic pay. (These provisions are waived only to the extent
necessary to replace ``grade'' with ``pay band''.)
    Part 550, section 550.703: Severance Pay. (This provision is waived
only 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: Hazardous duty differential, definition
of ``employee''. (This waiver applies only to the extent necessary to
allow demonstration project employees to be treated as General Schedule
employees. This waiver does not apply to employees in band V of the
engineers and scientists occupational family.)
    Part 575, subparts A, B, C, and D: Recruitment Bonuses, Relocation
Bonuses, Retention Allowances, and Supervisory Differentials. (This
waiver applies only to the extent necessary to allow (1) employees and
positions under the demonstration project to be treated as employees
and positions under the General Schedule and (2) employees in band V of
the engineers and scientists occupational family to be treated as SES
and ST employees for the purposes of these provisions.)
    Part 591, subpart B: Cost-of-Living Allowances and Post
Differential-Nonforeign Areas. (This waiver applies only to the extent
necessary to allow (1) demonstration project employees to be treated as
employees under the General Schedule and (2) employees in band V of the
engineers and scientists occupational family to be treated as SES and
ST employees for the purposes of these provisions.)
    Part 752, section 752.401 (a)(3): Adverse actions. (This provision
is waived only to the extent necessary to replace ``grade'' with ``pay
band.'')
    Part 752, section 752.401 (a)(4): Adverse actions. (This provision
applies only to the extent necessary to provide that adverse action
provisions do not apply to conversions from General Schedule special
rates to demonstration project pay, as long as total pay is not
reduced.)

Appendix A--ARL Employee Duty Locations (as of 17 JUN 96) (Totals
Include SES, ST and FWS Employees)

                              ARL Employees
------------------------------------------------------------------------
                         Duty location                             Total
------------------------------------------------------------------------
Seoul, Korea...................................................        1
Fort Rucker, AL................................................        3
Redstone Arsenal, AL...........................................        4
Fort Huachuca, AZ..............................................        4
Newark, DE.....................................................        1
Wilmington, DE.................................................       58
Hurlbert Field, FL.............................................        1
MacDill AFB, FL................................................        1
Orlando, FL....................................................        4
Atlanta, GA....................................................       14
Fort Benning, GA...............................................        4
Fort Gordon, GA................................................        2
Tripler Army Hospital, HI......................................        1
Scott Air Force Base, IL.......................................        1
Fort Knox, KY..................................................        2
APG, MD........................................................      929
Adelphi, MD....................................................      873
Baltimore, MD (JHU)............................................        9
Gaithersburg, MD...............................................        3
LaPlata, MD (Blossom Point)....................................        4
Watertown, MA..................................................       26
Warren, MI.....................................................        5
St. Louis, MO..................................................        3
Fort Monmouth, NJ..............................................      190
Picatinny, NJ..................................................        6
White Sands Missile Range, NM..................................      272
Fort Bragg, NC.................................................        1
Akron, OH......................................................        1
Cleveland, OH..................................................       52
Fairview Park, OH..............................................        1
Fort Sill, OK..................................................        8
Austin, TX.....................................................        1
Fort Bliss, TX.................................................        1
Fort Hood, TX..................................................        9
Alexandria, VA.................................................        1
Arlington, VA..................................................        1
Fort Belvoir, VA...............................................       81
Newport News, VA...............................................       50
Vint Hill Farms Station, VA....................................        1
Woodbridge, VA.................................................        2
Fort Lewis, WA.................................................        1
                                                                --------
    Total......................................................    2,631
------------------------------------------------------------------------

Appendix B: Occupational Series by Occupational Family

I. Engineers & Scientists

0180  Psychologist
0401  General Biological Science
0413  Physiology
0471  Agronomy
0690  Industrial Hygiene
0801  General Engineering
0803  Safety Engineering
0806  Materials Engineering
0810  Civil Engineering
0819  Environmental Engineering
0830  Mechanical Engineering
0840  Nuclear Engineering
0850  Electrical Engineering
0854  Computer Engineering
0855  Electronics Engineering
0861  Aerospace Engineering
0892  Ceramic Engineering
0893  Chemical Engineering
0894  Welding Engineering
0896  Industrial Engineering
0899  Engineering & Architecture Student Trainee
1301  General Physical Science
1306  Health Physics
1310  Physics
1320  Chemistry
1321  Metallurgy
1340  Meteorology
1386  Photographic Technology
1399  Physical Science Student Trainee
1515  Operations Research
1520  Mathematics
1529  Mathematical Statistician
1550  Computer Science
1599  Mathematics & Statistics Student Trainee

II. E&S Technician

0181  Psychology Aid & Technician
0802  Engineering Technician
0818  Engineering Drafting

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0856  Electronics Technician
1152  Production Control
1311  Physical Science Technician
1341  Meteorological Technician
1601  General Facilities & Equipment
1670  Equipment Specialist

III. Administrative

0018  Safety & Occupational Health Management
0028  Environmental Protection Specialist
0080  Security Administration
0101  Social Science
0170  History
0201  Personnel Management
0205  Military Personnel Management
0212  Personnel Staffing
0221  Position Classification
0230  Employee Relations
0235  Employee Development
0260  Equal Employment Opportunity
0301  Miscellaneous Administration & Program
0334  Computer Specialist
0340  Program Management
0341  Administrative Officer
0343  Management & Program Analysis
0346  Logistics Management
0391  Telecommunications
0501  Financial Administration & Program
0505  Financial Management
0510  Accounting
0511  Auditing
0560  Budget Analysis
0905  General Attorney
0950  Paralegal Specialist
1001  General Arts & Information
1020  Illustrating
1035  Public Affairs
1060  Photography
1071  Audio Visual Production
1082  Writing & Editing
1083  Technical Writing & Editing
1084  Visual Information
1101  General Business & Industry
1102  Contracting
1170  Realty
1222  Patent Attorney
1410  Librarian
1412  Technical Information Services
1640  Facilities Management
654  Printing Management
1811  Criminal Investigating
1910  Quality Assurance
2001  General Supply
2003  Supply Program Management
2010  Inventory Management
2101  Transportation Specialist
2130  Traffic Management

IV. General Support

0081  Fire Protection & Prevention
0083  Police
0085  Security Guard
0086  Security Clerical & Assistance
0303  Miscellaneous Clerk & Assistant
0304  Information Receptionist
0305  Mail & File
0318  Secretary
0322  Clerk Typist
0326  Office Automation Clerical & Assistant
0332  Computer Operation
0335  Computer Clerk & Assistant
0342  Support Services Administration
0344  Management Clerical & Assistant
0361  Equal Opportunity Assistant
0392  General Telecommunications
0503  Financial Clerical & Assistance
0525  Accounting Technician
0561  Budget Clerical & Assistant
0986  Legal Clerk & Technician
1087  Editorial Assistance
1105  Purchasing
1106  Procurement Clerical & Assistance
1411  Library Technician
1702  Education & Training Technician
2005  Supply Clerical & Technician
2102  Transportation Clerk & Assistant

Appendix C--Demographics and Union Representation (As of 17 June 1996)

SCIENTISTS & ENGINEERS.........................................      56%
E&S TECHNICIANS................................................       9%
ADMINISTRATIVE.................................................      18%
GENERAL SUPPORT................................................      12%
EXCEPTED SERVICE...............................................       5%
OCCUPATIONAL SERIES............................................      119
DUTY LOCATIONS.................................................       41
VETERANS.......................................................      23%


    The following unions have been notified about the project:

Adelphi, Maryland--AFGE Local 2 Fraternal Order of Police
Aberdeen Proving Ground, Maryland--AFGE Local 3176 IAM/AW Local 2424
Fort Monmouth, New Jersey--NFFE Local 476
White Sands Missile Range, New Mexico--NFFE Local 2049
Cleveland, Ohio--AFGE Local 2182

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[FR Doc. 97-6170 Filed 3-10-97; 8:45 am]
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