AFGE Comments on NSPS Proposed Regulations

Monday June 30, 2008

The Department of Defense (DoD) and the Office of Personnel Management (OPM) have issued proposed regulations revising the National Security Personnel System (NSPS), a human resources management system for DoD, as originally authorized by the National Defense Authorization Act for Fiscal Year 2004 and amended by the National Defense Authorization Act for Fiscal Year 2008. The proposed regulation governs compensation, classification and performance management under NSPS.

After going through the Meet and Confer process, and dealing with several lawsuits and court rulings, we realized that we could not trust DoD to design or administer the new system properly. Our skepticism is confirmed now that DoD has issued new rules and once again proved that it is less than sincere in making the National Security Personnel System (NSPS) fair and transparent.

Thanks to those of you who submitted your comments opposing these regulations. Below are the comments that AFGE submitted.

June 20, 2008

Department of Defense

Office of Personnel Management

5 CFR Part 9901

RIN 3206-AL62

Docket Number NSPS-OPM-2008-0081

National Security Personnel System

Comments on Proposed Rule published May 22, 2008, Submitted by the American Federation of Government Employees (AFGE) AFL-CIO

Thank you for the opportunity to comment on these proposed regulations regarding the National Security Personnel System (NSPS). Both as AFGE and as a member of the United Department of Defense Workers Coalition (UDWC), we have commented before on the previous NSPS regulations and the various DoD and Component Issuances. The objections we raised in those previous comments remain our objections to these current proposed regulations insofar as our concerns have not been satisfactorily addressed. These comments also serve as our response in accordance with our National Consultation rights.

It appears clear to us that a primary goal of DoD has been and continues to be to limit as much as possible its obligation to bargain with the exclusive representatives chosen by its employees. Over the years, OPM has been an enabler in helping DoD meet this goal. It is interesting to see the change from very sparse regulations in November 2005, explicitly written to limit bargaining, to very detailed regulations today, also written to limit bargaining in the new collective bargaining environment created by Congress.

On March 9, 2004, then OPM Director Kay Coles James sent then Secretary of Defense Donald Rumsfeld a letter criticizing the draft NSPS regulations drawn up by DoD as having too much “excessive and unnecessary detail.” In that memo, Director James said:

In point of fact, the issuance of broad “enabling” regulations will give you far more internal flexibility as you implement NSPS. Once those enabling regulations are published in the CFR, you will be in a position to issue as many standardized, detailed internal NSPS implementing directives as and when you see fit, including the document you have provided us for comment – generally without further public comment, formal collaboration with unions, or OPM approval.

At the time of this letter, we were dealing with a law that said that the “Meet and Confer” process over the regulations and “continuing collaboration” were the only way that employee organizations were to be involved in the design, implementation and adjustment of NSPS. DoD and OPM proposed a labor relations system that allowed implementing issuances, the “standardized, detailed internal NSPS implementing directives” referred to in the James letter, to override existing collective bargaining agreements and otherwise bar bargaining. So, with the goal of minimizing, if not eliminating, collective bargaining, the proposed regulations were published with almost no details whatsoever.

We objected to going through the statutory Meet and Confer process dealing only with meaningless generalities in the regulations. The actual details of the system came out later in Implementing Issuances, which DoD held to be not only non-negotiable, but to override previously negotiated agreements. The sparse details in the prior regulations of November 1, 2005 were a blatant and calculated attempt to limit or eliminate bargaining.

Now we jump ahead to the present and the passage of section 1106 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181, January 28, 2008) (NDAA 2008). In that law, Congress removed the authority of DoD and OPM to create a new labor relations system and restored the collective bargaining rights of 5 U.S.C. Chapter 71. No longer could DoD avoid bargaining by promulgating sparse regulations and detailed issuances.

The NDAA 2008, in section 1106 (b), speaks about the ways that the system, as amended by the law, can be implemented. It may be implemented, “…through rules promulgated jointly by the Secretary of Defense and the Director of the Office of Personnel Management after notice and opportunity for public comment or through Department of Defense rules or internal agency implementing issuances.” The law goes on to say that rules jointly promulgated by OPM and DoD shall be treated as major rules for the purpose of section 801 of title 5, United States Code, and, if they are uniformly applicable to all organizational or functional units included in NSPS, they shall be treated in the same manner as government-wide rules for the purpose of collective bargaining.

A mere four years ago, Director James warned Secretary Rumsfeld about regulations that contain the details of the system compared with broad regulations that contain few details:

In contrast, if issued in its present form, the NSPS proposal will be as rigid and inflexible as the system we are trying to transform. Its excessive and unnecessary detail, once locked in regulation, will be extremely difficult to change. By law, each time DoD needs to modify its content in any substantive way, it will be required to invoke the statutory union notification and collaborative process, obtain formal OPM approval, and notify Congress. Surely this is not the result you intended; it certainly is not what we envisioned when we fought for NSPS.

Apparently, the desire to limit bargaining is so strong that DoD and OPM would rather deal with the cumbersome, rigid, and inflexible system resulting from detailed regulations published in the Federal Register, now that Congress has removed the power of issuances to bar bargaining. In order to do this, DoD has also had to remove flexibilities previously given to its Components and managers in favor of centralized control. Kind of like cutting off your nose to spite your face.

We believe this will set up a situation in which DoD will have to waste precious time, resources and employee morale just policing its organizations to make sure that all the rules are uniformly applicable to all organizational or functional units included in NSPS so that what normally would be an agency rule can qualify as a government-wide rule.

In the Supplementary Information in the proposed regulations, on pages 29882-83, under “The Need for Change,” the regulations say:

The updated HR management system rules more specifically govern how retained classification, compensation, and performance management flexibilities will be implemented. The greater level of detail reflects a continued commitment to greater transparency regarding provisions of Pub. L. 110-181 and system improvements in light of operational experience with NSPS.

This is disingenuous, at best. DoD has issued a full set of implementing issuances, and recently updated them. Each of the Components: Army, Navy, Air Force, and the Fourth Estate has issued a complete set of supplements to those issuances. The issuances are Department directives, fully capable of providing transparency and better able than published regulations to be revised to reflect ongoing improvements brought about by experience under NSPS. But, issuances would have to be fully bargained under Chapter 71, while the major rule, if it is uniformly applicable to all organizational or functional units included in NSPS, will have more limited bargaining obligations. We do not believe that Congress intended for most of NSPS to be implemented under the major rule provision, but that this would be used sparingly and only when necessary.

We think DoD and OPM should be ashamed of themselves.

The proposed regulations fail to meet the requirements of § 9902(b) of the NDAA 2008. Among other things, the system they describe is not flexible or contemporary; is subject to abuse and discrimination; does not adequately ensure collective bargaining; does not contain a fair, credible, and transparent employee performance appraisal system; nor does it have effective safeguards to ensure fairness.

We also find it curious that DoD issued revised implementing issuances on April 3, 2008, a little over a month before publishing the proposed regulations. Was DoD so certain that it knew what the final regulations would look like, before seeing any of the public comments, that it could write the implementing issuances before publishing the enabling regulations?

In making these comments, AFGE in no way is waiving its right to deal with all aspects of NSPS through collective bargaining, negotiated grievance and arbitration processes, and all legal, political and other avenues available. The following specific comments are highlights of our concerns and are not a comprehensive list of every objection we have to NSPS and these proposed regulations.

SUBPART A – GENERAL

Page 29899 – § 9901.102 Eligibility and coverage.

The proposed regulations in § 9901.102(b) require DoD to notify OPM, but not affected labor organizations, before applying NSPS to employees. The regulations do, however, require notification of affected labor organizations when DoD rescinds that application (see § 9901.102(e)), so the absence of the requirement to notify unions prior to conversion is more conspicuous. Well before any action is taken to convert bargaining unit employees to NSPS, make changes to the system or rescind the application of any part of NSPS to bargaining unit employees, their union must be notified and all bargaining obligations must be fulfilled. § 9901.102(f) needs to be removed in its entirety as the NSPS statute does not allow DoD to apply NSPS to employees covered by anything other than the waivable or modifiable chapters of Title 5.

Pages 29899 – 29900 Definitions.

Objections we raised to these definitions in the past, either specifically as AFGE or as part of the United Defense Workers Coalition (UDWC), both in response to regulations and to issuances, continue to remain in force insofar as these proposed regulations have not adequately addressed those objections.

Page 29901 – § 9901.106 Relationship to other provisions.

§ 9901.106(2) purports to accord “great deference” to the interpretation of the regulations in this part by DoD and OPM. DoD and OPM deserve the deference other federal agencies deserve. Both agencies must abide by law and regulation, must carry out fully their collective bargaining obligations, must treat employees fairly and without unlawful discrimination, etc. This section appears to be an attempt to have future arbitrators, FLRA members, courts, etc. feel an artificial need to give DoD and OPM greater leeway to skirt their obligations. This is erroneous and offensive and this section should be removed.

Page 29901 – § 9901.107 Program evaluation.

“The Secretary will evaluate the regulations in this part and their implementation.” The old regulations required the Secretary to involve employee representatives in the evaluation. We expect to be fully involved in the evaluation, including involvement with the Comptroller General in accordance with Sec. 1106 (c) of the law.

SUBPART C – PAY AND PAY ADMINISTRATION

On page 29887 of the supplementary information, DoD summarizes the changes as follows:

Key changes include:

adding a provision to define what constitutes a “rate of pay” for the purposes of applying 5 U.S.C. 9902(e)(9);
adding regulations regarding pay limitations;
revising rules on NSPS general salary increases (including changes to comply with the NDAA);
revising standard local market supplements to be generally equivalent to GS locality pay (as required by the NDAA);
adding detailed rules regarding performance payouts from pay pools and other performance-related payments;
adding detailed pay administration rules;
establishing detailed rules regarding premium pay under NSPS (including identification of specific modifications to standard title 5 premium pay rules);
adding more detailed rules on conversions into the NSPS pay system; and
establishing new rules regarding conversions out of the NSPS pay system.

Every place the regulations say “detailed,” we believe DoD intends to limit bargaining by building the details into what it will argue is a government-wide rule.

Page 29888 – Supplementary Information – Rate of Pay

The Supplementary Information says:

§ 9901.305 – Rate of Pay. Deletes former § 9901.305 and adds a new section providing an explanation of what it means to establish and adjust a “rate of pay” in the context of 5 U.S.C. 9902(e)(9). Under that section of law, “any rate of pay established or adjusted in accordance with [5 U.S.C. 9902] shall be non-negotiable, but shall be subject to procedures and appropriate arrangements of [5 U.S.C. 7106(b)(2)-(3)].” It is appropriate that NSPS regulations issued under authority of 5 U.S.C. 9902(a) address section 9902(e)(9) since section 9902(b) requires that the system established under section 9902(a) meets certain conditions, including the condition in section 9902(b)(5). Section 9902(b)(5) states that collective bargaining is subject to any “limitation on negotiability established pursuant to law,” which would include the limitation in section 9902(e)(9).

The limitation in § 9902.(e)(9) clearly says, “Any rate of pay established or adjusted in accordance with the requirements of this section shall be non-negotiable, but shall be subject to procedures and appropriate arrangements of paragraphs (2) and (3) of section 7106(b)…”

The supplementary information in the proposed regulations goes on to say, “A rate amount only has meaning in the context of the required set of conditions that define what the rate is and when it applies.” The fact that a rate of pay, like most concepts, is interrelated to other concepts does not change the fact that Congress intended DoD to bargain over the procedures and appropriate arrangements related to rates of pay.

The actual regulatory language is:

Page 29905 – § 9901.305 Rate of pay.

(a) The term “rate of pay” in 5 U.S.C. 9902(e)(9) means—

(1) An individual employee’s base salary rate, local market supplement rate, and overtime and other premium pay rates (including compensatory time off);

(2) The rates comprising the structure of the pay system that govern the setting and adjusting of the individual employee rates identified in paragraph (a)(1) of this section, including the amount of each rate in the pay structure (expressed as a dollar amount or a percentage) and the conditions defining applicability of each rate…

By adding the phrase “and the conditions defining applicability of each rate” to the definition of “rate of pay,” DoD is trying to broaden the definition, and thus narrow the scope of bargaining. “Conditions defining applicability of each rate” could be interpreted to include the very procedures and arrangements Congress intended DoD to bargain. It is an act of cynicism and defiance on DoD’s part to think it can define itself out of its obligation. The phrase “conditions defining applicability of each rate” should be removed and DoD should carry out its legal requirement to bargain procedures and appropriate arrangements.

Page 29907 § 9901.314 National security compensation comparability.

This section updates the regulations to comply with the law in § 9902(e)(4) and (5), which now requires the aggregate compensation to be no less than would have been available had the employees not converted to NSPS through FY 2012 and for a formula to be developed for years after 2012. These new proposed regulations continue to fail to include any mention of § 9902(e)(3), which requires rates of compensation for civilian employees to be adjusted the same as are rates for members of the uniformed services. We objected to this omission in the original regulations and object again to the failure to include this important provision in the current proposed regulations.

Rate Ranges and General Salary Increases

Control Points

Page 29888 – Supplementary Information

§ 9901.321(c) – Control Points. Adds a new paragraph (c) to address control points, which were previously addressed solely in § 9901.342(d). This makes clear that control points (i.e., limitations on pay setting and pay progression within a pay band that apply to specified groups of similar positions) are part of the structure of the pay system. The new paragraph includes a listing of the factors that may be considered in establishing control points: mission requirements, budget, labor market factors, and benchmarks based on duties, responsibilities, competencies, qualifications, and performance.

The actual regulatory language is:

Page 29907-08 – § 9901.321 Structure.

(c) The Secretary may establish and adjust control points within a pay band to manage compensation (e.g., limitations on pay setting and pay progression within a pay band that apply to specified positions). The Secretary may consider only the following factors in developing control points: Mission requirements, labor market conditions, and benchmarks against duties, responsibilities, competencies, qualifications, and performance.

There is no mention of implementing issuances concerning control points in the proposed regulations. Under these regulations, control points encompass much more than performance payout decisions; they will set barriers to advancement within a band for all kinds of pay-setting decisions, such as starting pay, development pay, reassignment pay, promotion pay, etc.

Under the proposed regulations, the Secretary will determine control points. In the old regulations and issuances, the determination of control points was delegated to Components, which re-delegated them down further. This is an attempt to limit our ability to bargain, and in the process take away a great deal of flexibility previously given by DoD to its own managers.

We have been against control points from the beginning. They would allow one employee to have a kind of “glass ceiling” that prevents advancement to the top of the band no matter how good his or her performance is while another employee in the same band moves to the top. They provide opportunities for inequities and lack of transparency. The irony of it is that they create grade-like limits within the band. Why even pretend that employees are in broad bands with opportunities for advancement based on performance? Why not just superimpose a GS-like system on top of the bands?

Adjustment of Rate Ranges

Page 29889 – Supplementary Information

The Supplementary Information states:

§ 9901.322(e) – Adjustment of maximum rates in conjunction with general salary increase. Adds requirement that the maximum rate of all pay bands must be adjusted by no less than the percentage amount of the NSPS general salary increase under § 9901.323 (a)(1) effective on the date of that increase. This rule ensures that any eligible employee will receive the full amount of the NSPS general salary increase under § 9901.323(a)(1).

We understand that this change is necessary because the NDAA 2008 requires that no less than 60% of the GPI go to all employees rated above unacceptable. If a Level 2 or above employee were at the top of the band, or very close to the top, he or she might not be able to get the full increase unless the maximum rate was raised.

The Supplementary Information goes on to address § 9901.323:

§ 9901.323(a) – General salary increase. Revises § 9901.323 to provide that general salary increases are no longer linked to increases in the minimum rate of an employee’s rate range. Instead general salary increases for employees in various bands will be determined separately, subject to the rules in this section.

We understand that this section is included also because the law requires that all employees, except those with an unacceptable performance rating, get an increase that is not less than 60 percent of the GS general pay increase. DoD apparently wants to retain flexibility to adjust the minimum rates of bands by different amounts and if the annual increase to all employees above unacceptable were tied to that adjustment, as was true in the past, then all band minimum rates would have to go up by at least 60% of the GPI.

The Supplementary Information on page 29889 regarding § 9901.323(a) goes on to say:

As required by section 9902(e)(7), the portion of the GS general pay increase amount that is not provided as an NSPS general salary increase must be allocated to NSPS pay pool funding for the purpose of increasing base salary rates on the basis of employee performance.

The law requires that the rest of the GPI amount, over and above the 60% or more that goes for annual increases to all employees above unacceptable, go into the pay pools to be paid out as performance pay increases. In other words, DoD has to increase payroll funding each year by the amount of the GPI – it can’t give any part of it out as cash bonuses or use this money for other than employee compensation purposes. These changes appear to be necessary to carry out the NDAA 2008.

The proposed regulations add a new section § 9901.323(a)(2) described in the Supplementary Information on page 29889 as follows:

Proposed new § 9901.323(a)(2) makes clear that the Secretary may provide additional NSPS general salary increases for all eligible employees (except retained rate employees) in a designated occupational series in a pay band at other times to address labor market conditions, staffing difficulties, or mission priorities. This authority is subject to coordination with OPM under § 9901.105.

For a supposed pay-for-performance system, DoD seems to be intent on giving itself numerous ways to adjust pay for reasons other than performance. This appears to be a mechanism that would allow DoD to give all employees above unacceptable an increase of no less than 60% as required by law and then give employees in a particular occupation an additional increase at any time in the year, not based on individual performance. It would appear that this would have to be done for all employees above unacceptable in the same occupation and band Department-wide, although the regulations do not make that clear.

According to § 9901.321(b), “For each pay band within a career group, the Secretary will establish a common rate range that applies in all locations.” Under the same general heading, “Rate Ranges and General Salary Increases,” § 9901.323(a)(2) says:

In addition to the general salary increase under paragraph (a)(1) of this section, and subject to § 9901.105, a general salary increase may be provided to all eligible employees…in a designated occupational series in a pay band at times other than the effective date of the General Schedule annual adjustment under 5 U.S.C. 5303 if the Secretary determines that such an increase is necessary considering only labor market conditions, staffing difficulties, and mission priorities. Different general salary increases may be provided under this paragraph (a)(2) to employees in different occupational series or pay bands.

If this section is not referring to Department-wide increases, targeted local market supplements, would not make sense. Because of the NDAA 2008, all employees above unacceptable will get an annual increase of at least 60% at the same time that other federal employees get their increase under 5 U.S.C. 5303. At any time, the Secretary can decide to give a particular occupation an additional increase, and can give different occupations different increases, not based on performance or locality. At best, the system will be confusing, opaque, and subject to abuse.

Local Market Supplements

Page 29890 - § 9901.332 – Supplemental Information

The law now requires DoD to abide by government-wide locality pay. DoD has added “Targeted Local Market Supplements.” The supplemental information says:

§ 9901.332(c) Targeted local market supplements. Replaces existing paragraph (c) with a new paragraph regarding targeted local supplements. Targeted local market supplement are similar to GS special rate supplements. They are used to address staffing problems associated with a specific category of employees. They are payable when higher than any otherwise applicable standard local market supplement.

These targeted local market supplements, which are similar to GS special rate supplements, differ in one very important way – The Secretary will set them, not OPM, although they are subject to “coordination” with OPM. The proposed regulations do not defer to “implementing issuances.” The regulatory language regarding them is on page 29909:

§ 9901.333(b) Subject to § 9901.105 [coordination with OPM], the Secretary may set and adjust targeted local market supplements. In determining the amounts of the supplements, the Secretary will consider mission requirements, labor market conditions, availability of funds, pay adjustments received by employees of other Federal agencies, allowances and differentials under 5 U.S.C. Chapter 59, and any other relevant factors. The Secretary may determine the effective date of newly set or adjusted targeted local market supplements. Established supplements will be reviewed for possible adjustment at least annually in conjunction with rate range adjustments under § 9901.322.

We are concerned that these targeted local market supplements, as with some of the other pay flexibilities the Department has given itself, will be subject to abuse and discrimination and will not be transparent or credible to employees.

Performance-Based Pay

Page 29910 ff. – § 9901.342 Performance payouts.

§ 9901.342(b)(1) Performance pay pools. This section defers details and rules regarding the establishment and management of pay pools to implementing issuances, published by the Secretary, which should be fully negotiable as agency regulations.

In § 9901.342(b)(2), the regulations spell out that pay pool composition will be based on organization structure, classification structure, function of work, location, and/or organization mission. This section goes on to say:

The decision on pay pool composition will be reviewed and approved by an official who is at a higher level than the official who made the initial decision, as determined by a DoD Component, unless there is no official at a higher level in the organization.

This implies that Components will be delegated authority, although the proposed regulations do not say that directly. They say that the details will be established in accordance with implementing issuances published by the Secretary. These proposed regulations are quite fuzzy about which authorities are definitively delegated to the Components and below and which are retained by the Secretary.

§ 9901.342(b)(3) says:

Where determined appropriate, management may establish one or more subsets of a pay pool population (i.e., sub pay pools) for the purpose of reconciling ratings of record, share assignments, and payout determinations. Sub pay pools share in the common fund of the overall pay pool and operate within the requirements and guidelines established for the pay pool to which they belong.

Which management is referred to in this section – the Secretary? The Component? Lower levels?

We have objected to sub pay pools from the beginning. We do not understand why DoD entities should be allowed to establish pay pools so big and cumbersome that they can only be administered by developing a bureaucratic structure of pay pools and sub pay pools. In dealing with their supplements to DoD issuances, we asked each of the Components a version of the following question, and each of them answered that our understanding was correct:

It appears that the intention is for a supervisor or other rating official to recommend a rating of record, number of shares and share distribution between cash and a base pay increase for each subordinate employee. A reviewing official will approve the recommendation, presumably with the authority to make changes before approval. The approved recommendation, perhaps adjusted by the reviewing official, will go to the pay pool panel, or perhaps a sub-pay pool panel, without being shared with the employee. The sub-pay pool panel will consider the recommendations (some or all of which may have been adjusted by the rating official and thus are not the actual recommendations of the supervisor who interacted with the employee during the rating period). The panel will engage in a process that may result in some ratings being changed, some share numbers being changed, and some changes in determinations of how much of a performance payout for a particular employee will be cash and how much will be a base pay increase. The pay pool manager will make decisions where there is no consensus by the panel and certify the decisions of the pay pool. But, this is not the final product for a sub-pay pool. As we understand it, the decisions of all of the sub-pay pool managers will constitute recommendations that go before the actual pay pool panel. This panel will process, and may change, the recommendations of its sub-pay pool managers, which are based on the sub-pay pool panels’ recommendations, which are based on the reviewing officials’ recommendations, which are based on the rating official/supervisors’ recommendations. Is this a correct understanding of the process? If not, what is the correct understanding?

This is hardly transparent or fair. It puts the final decision on performance ratings and payouts far from the employee and supervisor who worked together during the year. When we asked in briefings what was the reason for having huge pay pools that require sub pay pools in order to be able to function, we were told it was for uniformity, to have shared business rules, share values, etc. But when we asked if there would be required uniformity in other important matters such as the same job objectives for all employees of the same occupation within the pay pool and sub pay pools, or the same rules on the weighting of job objectives, or decisions about which contributing factors would be used for each job objective, we were told, “No.”

We continue to believe that allowing huge pay pools that require sub pay pools sets up a bureaucratic structure that separates the employee from the performance payout, obscures the connection between pay and performance, and increases the chances for erroneous and discriminatory pay decisions.

§ 9901.342(b)(4) says that the Secretary may determine a percentage of pay to be included in pay pools and paid out in accordance with accompanying implementing issuances as—

· A performance-based pay increase;

· A performance-based bonus; or

· A combination of a performance-based pay increase and a performance-based bonus.

In § 9901.342(b)(5), the decision to apply a funding floor or ceiling to a pay pool, including the amount of such floor or ceiling, appears to be delegated to the Components, although there is no definitive delegation. It says:

The decision to apply a funding floor or ceiling to a pay pool, including the amount of such floor or ceiling, will be reviewed and approved by an official who is at a higher level than the official who made the initial decision, as determined by a DoD Component, unless there is no official at a higher level in the organization.

The responsibilities of the Pay Pool Panel, Pay Pool Manager, and Performance Review Authority (PRA) are described in §§ 9901.342(c) through (e). In the next sections of 9901.342, the regulations spell out the share range for each rating, the only factors that can be used to determine share assignments, the formula for calculating a share value, the method for calculating a performance payout, etc.

It seems to us to be exceedingly silly to put these things that previously were in issuances, into the regulations. Does it really make sense to have to go through the regulatory process any time circumstances would warrant DoD revising these rules? Is trying to avoid bargaining that important?

§ 9901.342(g)(3) says:

A performance payout may be an increase in base salary, a bonus, or a combination of the two. An increase in base salary may not cause the employee’s rate of base salary to exceed the maximum rate or applicable control point of the employee’s band rate range. The decision to pay a bonus, including the amount of such bonus, will be reviewed and approved by an official who is at a higher level than the official who made the initial decision, as determined by a DoD Component, unless there is no official at a higher level in the organization.

We assume this means that the decision to pay a bonus and the amount of the bonus has been delegated to the Components. Once again, that delegation is not definitively made, but must be inferred. Who makes the decision to give a performance payout as an increase in base salary or a combination of salary increase and bonus? Does that decision have to be reviewed by a higher level?

Throughout § 9901.342 regarding Performance payouts, there is a lack of clarity about whether rules are set by public regulation by the Secretary, are to be developed in issuances published by the Secretary, or are to be delegated to anyone else.

Page 29912 - § 9901.343 Pay reduction based on unacceptable performance and/or conduct.

This section requires such a pay reduction to be at least 5% but no more than 10%. Previously, the reduction could be 1% to 10%. We object to DoD removing the ability of managers to choose lesser penalties when warranted.

§ 9901.344 Other performance payments.

The decision to grant other performance payouts and the amount of the payouts appears to be delegated down to the components, with a requirement that an official higher than the one that made the decision review it. The regulations go on to say that authorized officials may make other performance payments to:

(1) Reward extraordinary individual performance;

(2) Recognize organizational or team achievement;

(3) Provide for other special circumstances.

Where does the money for these payments come from? Can the funding for these additional payments be used to lower the amount of money that goes into the pay pools for performance payouts to other employees? Why are these additional payments necessary? Is DoD not planning to invest enough in the performance pay pools to make meaningful performance payments, but needs to have additional ways to award favorites? “Implementing issuances” are mentioned, but it is not clear whether these will be at the Department or Component level.

Page 29891 – § 9901.345 Accelerated Compensation for Developmental Positions (ACDP) – Supplementary Information.

Accelerated Compensation for Developmental Positions. Modifies section by establishing uniform eligibility criteria for Accelerated Compensation for Developmental Positions (ACDP), limiting the form of an ACDP payment to that of a base salary increase, and adding general limits on the amount of ACDP that may be provided.

Developmental positions are in Band 1 and are similar to career ladder progression to the full performance level. ACDP payments are ways of moving some employees more rapidly towards the full performance level than others. ACDPs can be as much as 20%. § 9901.345(c) says:

Components choosing to provide ACDP increases must establish and document standards by which such employees will be identified and growth and development criteria by which additional pay increases will be determined.

This appears to delegate to Components the authority to choose to do ACDP payments or not. The Developmental Bands, in general, can create problems if there are no procedures governing the advancement of employees. Without a requirement of a decision to be made at the end of a year, an employee could stagnate in a developmental position. We plan to address these and other matters through bargaining.

Pay Administration

Page 29913 – § 9901.353 Setting pay upon reassignment.

This section puts into regulation many things formerly in the issuances. An employee can be moved voluntarily or involuntarily within the same band or to a comparable band and get an increase or decrease in salary.

NSPS allows for employees to be given more money, without any notice of the opportunity given to other employees or any competitive processes. It appears that these decisions will be at lower levels of the organization and must have approval from a higher level official.

The proposed regulations include specific rules and factors to be used in determining an increase or decrease under a reassignment action. An employee can get up to a 5% increase for an employee-initiated, or voluntary, reassignment. This can only be a total of 5% in a 12-month period. On the other hand, management can initiate a reassignment and give an employee a 5% increase and do so as often as it wants. The supplementary information says on page 29892 regarding § 9901.353(d):

There are no limits to the number of times an employee may be reassigned by management, and the employee is eligible for an increase of up to 5 percent with each reassignment. Any increase associated with a management-directed reassignment does not count toward the 12-month limitation.

Reassignments, details, etc. are going to be much more important than promotions in NSPS. We object to the ability of management to give an employee more money, perhaps unlimited numbers of 5% increases, without subjecting this to competitive procedures or even requiring that other employees be notified of the opportunity.

§ 9901.356 Pay retention

Under NSPS, an employee eligible for pay retention can continue to receive the retained rate for up to 104 weeks. The problem in NSPS is that after the 104 weeks, an employee can suffer an actual loss of pay, which we strongly oppose. The offensive section is § 9901.356(g), which says, "An employee whose pay retention terminates at the end of the 104-week period will have his or her pay set at the maximum rate of the pay band in which he/she is currently assigned." This has to mean that the employee's pay will be lowered. According to §§ 9901.356(f)(2) and (3), the employee's pay retention terminates when his or her band rate range encompasses the retained rate. The only person who would still be on pay retention at 104 weeks, other than one who is grandfathered in under § 9901.356(m), would be someone whose band range never caught up with the retained rate and thus his or her pay would have to be lowered to get to the maximum rate of the band.

Pay retention came into being in the past because Congress intended that employees not suffer a pay loss as a result of certain types of actions. We do not believe that Congress intends for someone on pay retention to suffer an actual pay reduction just because he or she is under NSPS. The person should remain on pay retention until the band rate range grows to encompass the retained rate.

In addition, we object to § 9901.356(j), which says, "Employees entitled to a retained rate will receive any performance payouts in the form of bonuses, rather than base salary adjustments..." Under current rules, a non-NSPS employee on retained pay would have retained grade and pay for two years, during which time he or she would get the full GPI. After two years, the person would be on retained pay and would get one-half the GPI until such time as his or her grade has moved up enough to encompass the retained pay rate. Under NSPS, the employee on pay retention would not get the full GPI for the two years, but would only get no less than 60% of it, and even that only because Congress forced DoD to give it. The remaining 40% of the GPI would be taken away from the person on pay retention, thus disadvantaging him or her over a non-NSPS employee.

§ 9901.356(m) is what DoD calls a "grandfather" provision to keep people on indefinite pay retention if they were already on pay retention when they converted to NSPS. This seems to be a good provision and we do not oppose it.

SUBPART D – PERFORMANCE MANAGEMENT

§ 9901.406 Setting and communicating performance expectations.

§ 9901.406(b) says:

Performance expectations will be communicated to the employee—

(1) In writing, including those that may affect an employee’s retention in the job,

This would seem to mean that there are expectations that affect an employee’s job retention and expectations that do not affect an employee’s job retention. Yet, the definition of “Unacceptable performance,” in § 9901.103 and included by reference in § 9901.404 is:

Unacceptable performance means performance of an employee which fails to meet one or more performance expectations, as amplified through work assignments or other instructions, for which the employee is held individually accountable.

Although § 9901.406(b) says that performance expectations will be communicated to employees in writing, § 9901.406(f) says:

Performance expectations may be amplified through particular work assignments or other instructions (which may specify the quality, quantity, accuracy, timeliness, or other expected characteristics of the completed assignment, or some combination of such characteristics). Such assignments and instructions need not be in writing.

In other words, performance expectations will be communicated to the employee in writing, except when they are not. Failure to meet a single expectation, whether written or not, necessarily must result in a rating of “Unacceptable,” as long as the employee is held individually accountable for the expectation. Isn’t that what “expectation” means in the context of a performance management system?

We have objected strenuously in the past and continue to object to this system, which allows an employee to be fired or face some other adverse action for failing to meet an ill-defined expectation that may or may not be in writing, may or may not have been adequately communicated to the employee and that may or may not truly warrant being the determinant of job retention.

This is made more confusing by the fact that in the past employees in NSPS were given performance plans that included job objectives and contributing factors. We were told in various briefings that the job objectives were the “what” of employees’ performance plans, that is, what they were expected to do. Contributing factors, similar to core competencies, were the “how,” namely how they were supposed to accomplish their job objectives. Neither of these is called an “expectation,” and we have objected, and continue to object to employees being subject to adverse actions based on performance, for things that are not clearly communicated and included in writing in their performance plans.

Has DoD abandoned the notion of performance plans with 3 to 5 job objectives and several contributing factors in favor of performance plans that include an unlimited number of written or unwritten expectations? § 9901.406(e) says that expectations include:

(1) Goals or objectives that set general or specific performance targets at the individual, team, and/or organizational level;

(2) Organizational, occupational, or other work requirements, such as standard operating procedures, operating instructions, manuals, internal rules and directives, and/or other instructions that are generally applicable and available to the employee; and

(3) Competencies an employee is expected to demonstrate on the job, and/or the contributions an employee is expected to make.

The confusion continues with § 9901.406(i), which says:

Performance expectations that comprise a performance plan are considered to be approved when the supervisor has communicated the performance plan to the employee in writing.

Are employees held accountable for their performance rating and job retention to expectations included, in writing, in their performance plan? Will they be clearly identified as “expectations” in their performance plan, or will they be subsumed in things called “job objectives” and “contributing factors”? Will they be clearly identified as expectations that affect job retention and expectations that do not affect job retention? Or, can employees have their rating and job retention determined by expectations that were never put in writing and that may never have been adequately communicated to them? That is unacceptable.

§ 9901.413 Reconsideration of ratings.

§ 9901.413(b)(1) says that negotiated grievance procedures are the exclusive administrative procedures for bargaining unit employees to challenge a rating of record or job objective rating as provided for in 5 U.S.C. 7121. 5 U.S.C. 7121 says that negotiated agreements should include a negotiated grievance procedure. The NDAA 2008 did not authorize DoD to unilaterally determine what avenues for appeal are available for bargaining unit employees or what subjects will be included in the negotiated grievance procedure. While we certainly believe that NSPS bargaining unit employees are greatly benefited by having a negotiated grievance and arbitration process, that is a matter to be bargained by the parties not decided unilaterally in regulations.

§ 9901.413(c) says:

Recalculation based on adjusted rating of record. In the event a reconsideration or negotiated grievance decision results in an adjusted rating of record, the revised rating will be referred to the Pay Pool Manager for recalculation of the employee’s general salary increase, adjustment to local market supplement, and the payout amount and distribution.

In the NDAA 2008, Congress restored Chapter 71 collective bargaining rights to DoD civilian employees. It did not give DoD the unilateral right to determine by regulation the scope of an arbitrator’s authority in the negotiated grievance and arbitration process. Allowing an arbitrator to change a rating, but not the performance payout that flows from that rating, is a hollow authority. We do not hold out a great deal of hope that most pay pool managers, whose original decisions have been repudiated by the arbitrator, will, on their own, treat the employee fairly in determining the payout.

In closing, AFGE wants to also reiterate that it still firmly believes that the regulations are inconsistent with the pay system requirements expressly set out in the NDAA of 2008 and, as such, the regulations are illegal.

New NSPS Guidelines Pose Problems for DoD Employees