Personnel Demonstration Project; Pay Banding and Performance-Based Pay Adjustments in the National Nuclear Security Administration, 72776-72802 [07-6144]

Agencies

• Office of Personnel Management
• Personnel Management Office

[Federal Register Volume 72, Number 245 (Friday, December 21, 2007)]
[Notices]
[Pages 72776-72802]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-6144]


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OFFICE OF PERSONNEL MANAGEMENT


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

AGENCY: U.S. Office of Personnel Management.

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

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SUMMARY: Chapter 47 of title 5, United States Code, authorizes the U.S. 
Office of Personnel Management (OPM), directly or in agreement with one 
or more agencies, to conduct demonstration projects that experiment 
with new and different human resources management concepts to determine 
whether changes in human resources policy or procedures would result in 
improved Federal human resources management. The National Nuclear 
Security Administration (NNSA) and OPM will test a pay banding system 
in which within-band pay progression is based on performance. The final 
project plan has been approved by NNSA, the Department of Energy, and 
OPM.

DATES: This demonstration project will be implemented on March 16, 
2008.

FOR FURTHER INFORMATION CONTACT: National Nuclear Security 
Administration: Rosa Benavidez, Demonstration Project Leader, (202-586-
1622), Office of Human Capital Management Programs, 1000 Independence 
Ave., SW., Washington, DC 20585. U.S.
    Office of Personnel Management: Patsy Stevens, Systems Innovation 
Group Manager, U.S. Office of Personnel Management, (202) 606-1574, 
1900 E Street, NW., Room 7456, Washington, DC 20415.

SUPPLEMENTARY INFORMATION: 

1. Background

    In May 2006, NNSA responded to OPM's solicitation of interest in 
undertaking a demonstration project to experiment with and test the 
concept of performance-based pay increases. NNSA already had 
substantial experience with such a mechanism. NNSA's enabling statute 
(National Defense Authorization Act for Fiscal Year 2000, Pub. L. 106-
65, as amended) provided the NNSA Administrator with the authority to 
establish not more than 300 scientific, engineering, and technical 
positions as necessary to carry out the Administrator's 
responsibilities, and to appoint individuals to these positions and fix 
their compensation without regard to title 5, United States Code 
(U.S.C.) [hereafter in this notice referred to as the ``NNSA excepted 
service system'']. In developing an employment system to support this 
authority, NNSA opted for pay banding and designed a performance-based 
pay system. NNSA has made full use of its excepted service system 
authority and considers pay-for-performance a highly effective tool to 
attract, reward, and retain high performers. OPM's solicitation was 
opportune. NNSA now desires to test the feasibility of expanding pay-
for-performance among the ranks of its larger General Schedule (GS) 
workforce. At the same time, NNSA sees the demonstration project as an 
opportunity to streamline the traditional position classification 
system that governs GS positions by banding together one or more GS 
grades. NNSA had done similar banding when it established its excepted 
service system some years before. When NNSA submitted its official 
proposal to OPM in August 2006, pay banding was a vital part of the 
plan.

2. Overview

    The NNSA Demonstration Project proposal was approved by OPM and 
publicized in the Federal Register on February 28, 2007. With OPM's 
preliminary approval given, and knowing that NNSA would receive 
critical comments from the public and have about 6 months to refine its 
plan, NNSA's Administrator asked the agency's top program managers to 
re-examine projected career paths and proposed pay bands to ensure they 
effectively met the varying mission requirements and management needs 
found in NNSA's primary nuclear weapons, nuclear nonproliferation, and 
naval reactors propulsion programs. NNSA's Office of Human Capital 
Management Programs facilitated this re-examination. The agency's top 
managers were briefed on the various management and mission 
implications of the project, and discussions with managerial 
stakeholder groups were held to elicit insights and perspectives on how 
to ensure the project makes credible and meaningful contributions to 
enhancing the overall excellence of NNSA's twenty-first century 
workforce.
    Meanwhile, there was a 30-day public comment period immediately 
following publication of the proposed demonstration project plan in the 
Federal Register, culminating in a public hearing on April 4, 2007, 
held at the Department of Energy (DOE) headquarters in Washington, DC. 
A total of 55 individuals, mostly NNSA employees, one NNSA sub-
organization, and one labor organization, submitted written comments 
and questions. Two additional individuals provided comments and asked 
questions at the public hearing. Many of these commenters offered 
multiple comments and questions. A total of 170 different comments and 
questions were received, with some of them duplicative. Comments 
covered a number of different management and human resources topical 
areas, and in some cases, pertained to more than one topic. Two broad 
topics relating to pay bands and pay-related issues received the 
largest number of comments and questions by a considerable margin. 
There were 45 comments on pay-related issues and 39 on issues relating 
to pay bands. Other topical issues earning numerous comments/questions 
included staffing (17), position classification (14), management 
accountability (14), excepted service (10), employee relations (7), 
employee equity (6), performance management (5), and reduction in force 
(4). An additional 25 comments and questions did not fall into one of 
the above topical areas. Every comment and question received was 
extremely important, as each helped to focus NNSA's top leadership 
during the Administrator's re-examination of the project plan and 
helped the leadership to better understand the long-term management and 
employee implications of the project. Public comments and questions 
often served as a catalyst to raising additional questions on the part 
of top management. As a result of public comments received, NNSA has 
made a number of substantive refinements to its plan and a few 
clarifying editorial and textual changes as well.

3. Summary of Comments and Responses

    Comments are arranged into 11 broad topical areas that correspond 
to the topics identified in the previous section and are presented not 
in an order dictated by the number of comments received, but in an 
order that reflects the logic of the project's design scheme and 
contents; i.e., in a topical order beginning with pay banding and 
devolving through pay, position classification, staffing, performance

[[Page 72777]]

management, employee matters, and management matters. NNSA's responses 
are generic summaries relative to the major issues raised by comments/
questions, rather than point-by-point responses.

(a) Career Paths and Pay Bands

    There were several comments about proposed career paths, several 
comments about the constituent job series in each career path, several 
comments about proposed pay band pay rates, many comments about the 
lack of pay band symmetry across career paths, and many comments about 
the structure of proposed pay bands relative to the pay band structure 
in NNSA's excepted service system.
(1) Career Paths
    Comments: Several commenters wondered why NNSA didn't establish a 
supervisory career path to recognize and reward supervision or have 
more targeted and occupationally narrower career paths, as the Defense 
Department's National Security Personnel System does.
    Response: In designing proposed career paths, NNSA wanted to take 
the broadest approach that made sense, given the nature of the work 
performed and the nature of the occupations requiring this work. The 
broader the design approach, the more employees are treated alike and 
the simpler it is to administer pay banding. Employee equity and 
systemic simplification are central goals of this project. In deciding 
on the original career path proposal, NNSA opted to essentially build 
its career paths around OPM's white-collar ``PATCO'' categories with 
one exception. The PATCO scheme encompasses extremely broad groupings 
of white-collar occupational categories, largely based on differences 
in the nature of work and the essential job knowledge required to 
successfully perform the work (for instance, whether work 
accomplishment requires certain educational attainments, or analytical 
ability, or subject-matter competencies, and so on). OPM defines each 
distinct occupational job series according to whether work is 
professional (``P''), administrative (``A''), technical (``T''), 
clerical (``C''), or falls into a miscellaneous others (``O'') 
category. NNSA's original proposal simply lumped into two broad primary 
career paths all ``professional'' occupations and all 
``administrative'' occupations, respectively, while combining all 
``clerical'' and ``technician'' occupations into a third composite 
career path, irrespective of whether positions in these career paths 
possessed classifiable supervisory duties. There is no distinct PATCO 
category for supervision. The notable exception to this extremely broad 
general approach was an extremely narrow fourth career path, which 
covered only the GS-084 Nuclear Material Courier occupation. 
Notwithstanding the inclusion of only one job series, this career path 
covers a sizable block of employees. There are about 300 couriers 
scattered throughout the United States.
    In light of the comments received regarding career paths, NNSA's 
top managers have reconsidered and refined certain elements of the 
original proposal, including career paths. NNSA has reconstituted its 
two primary career paths into an Engineering and Scientific Career Path 
and a Professional, Technical, and Administrative Career Path and is 
establishing a fifth career path for interns enrolled in NNSA's Future 
Leaders Program.
    The most populous jobs in NNSA are engineering, followed by 
scientific. As of August 2007, there were 205 GS-801 employees, 64 GS-
840 employees, and another 24 employees in positions classified in 
other GS-0800 occupations. There were also 64 GS-1301 employees and 7 
in other GS-1300 occupations. All together, there were 364 General 
Schedule employees in engineering and scientific occupations, in 
complement to the additional 425 engineering and scientific employees 
appointed under NNSA's excepted service system authority and through 
two other DOE excepted service authorities. Because engineering and 
scientific employees perform work vital to NNSA's primary nuclear 
weapons, nuclear nonproliferation, and naval reactors missions, and 
because this cadre--engineers and scientists serving under either the 
General Schedule or the excepted service system--predominates in NNSA 
in comparison to other professional occupations (e.g., foreign affairs 
specialists, industrial hygienists, attorneys, and the like), the 
agency's top managers have decided to reconstitute the Engineering and 
Scientific Career Path to exclude other ``professional'' occupations. 
These other professional occupations are now incorporated into the 
reconstituted Professional, Technical, and Administrative Career Path.
    Future Leaders are recruited with academic achievement and 
diversity in mind and traditionally have been appointed under several 
competitive and excepted service authorities, with varying conditions 
of employment and advancement opportunities unique to each respective 
appointing authority. Establishing a Future Leaders Career Path, into 
which all interns will be appointed and advanced, and making all 
participants subject to pay banding will be of great benefit to NNSA 
and the interns. Not only will the human capital management practices 
attendant to these employees be standardized, but so will development 
and advancement opportunities--one set of rules and expectations for 
all Future Leader interns.
    In lieu of a supervisory career path, or a supervisory pay 
differential, NNSA will seek to recognize and reward supervisory 
performance by providing supervisory bonuses as described in the 
project plan.
(2) Occupational Series in Career Paths
    Comments: Several commenters wanted to know how NNSA decided which 
job series to assign to which career paths. In particular, there were 
questions relating to why certain ``administrative'' occupations were 
treated separately from ``professional'' occupations, since in the 
opinion of some commenters, the work accomplished in NNSA, regardless 
of whether performed, for example, by an engineer or program analyst, 
or an accountant or budget analyst, was pretty much the same.
    Response: As explained in the response immediately above, NNSA's 
original career path proposal conformed generally to OPM's PATCO 
categories. OPM assigns each authorized job series to one of these 
categories for definitional and pay purposes. In constructing its three 
broad career paths in the original proposal, NNSA simply used the same 
PATCO series assignments as does OPM. In light of comments received 
regarding the proposed demonstration project plan, NNSA has 
reconsidered and refined certain elements of the original proposal, 
including the constituent job series that make up respective career 
paths. For instance, only professional positions whose occupational job 
series are found in OPM's ``GS-0800 Engineering and Architecture 
Group'' and ``GS-1300 Physical Sciences Group'' are to be included in 
NNSA's redesigned Engineering and Scientific Career Path. After further 
reflection, NNSA could not agree that such professional occupations as 
GS-510 accountants, GS-690 industrial hygienists, and GS-905 attorneys, 
employees who primarily ``support'' the main missions of NNSA, belonged 
in the same career path as engineers and scientists, those who do the 
pre-eminent mission work of NNSA. Further, it was not felt that GS-130 
foreign affairs specialists, with their significantly

[[Page 72778]]

``non-technical'' knowledge base, albeit professional employees who 
perform primary mission work, should be grouped in the same career path 
as engineers and scientists. Similarly, such professional occupations 
as GS-1102 contract specialist and GS-1515 operations research analyst 
are to be included in NNSA's redesigned and expanded Professional, 
Technical, and Administrative Career Path.
(3) Pay Rates
    Comments: Some commenters pointed out that the pay rates associated 
with NNSA's proposed pay bands were lesser in value than corresponding 
pay rates found in the demonstration projects and alternative personnel 
systems of other Federal agencies, or even in comparison with the pay 
rates in NNSA's own excepted service system. Several commenters felt 
this rendered NNSA uncompetitive in the labor market versus these other 
systems, and several considered lower pay rates unfair and not 
consistent with the principle of ``equal pay for equal work.''
    Response: NNSA looked at two basic occupational questions in 
considering these comments:
    1. Historically, has NNSA been able to attract and retain critical 
skills to carry out important work within the traditional GS grade and 
pay structure?
    2. Is NNSA losing employees to pay-banded agencies with enhanced 
pay rates?
    In looking at the first question, what NNSA found was that there is 
no directly correlative data relating to ability ``to attract and 
retain critical skills,'' but there is plenty of anecdotal information. 
NNSA experiences instances of recruitment difficulty in two basic 
circumstances, (1) when a local private employer successfully competes 
for a top prospect by offering a higher starting salary than NNSA can, 
and (2) at locations that are considered geographically isolated and 
remote, and where top candidates are scarce. But despite these 
instances, NNSA has not experienced a general pattern of recruitment 
difficulty because NNSA's important national security work has an 
intrinsic attraction to prospective candidates, and because NNSA makes 
selective good use of Government-wide recruitment incentives. The 
second question was answered through a straightforward analysis of the 
data: NNSA is not losing current employees to any significant degree to 
agencies with enhanced pay rates, such as to the National Security 
Personnel System (NSPS) in the Department of Defense. In fact, during 
the past two years, NNSA has gained 13 employees (not including senior 
executives) from NSPS, while losing only 9 to NSPS.
    Based on these findings, NNSA's initial approach to establishing 
pay band pay rates is affirmed. NNSA remains committed to its 
demonstration project principle to construct pay band thresholds and 
boundaries, and associated pay rates, consistent with OPM's official 
classification criteria and the Government's prevailing pay structure.
    While the notion of pay rates in excess of the current rates 
permissible under the traditional GS pay system is attractive to many 
managers and employees, implementing enhanced pay rates on a broad 
scale is not compelling now on the evidence in hand. Nor is NNSA 
prepared at this time to undertake systematic occupational market 
studies to validate the need for enhanced pay rates or to develop NNSA-
only position classification criteria and standards, which are 
prerequisites to obtaining OPM's approval to institute enhanced pay 
rates. However, we note that the demonstration project includes an 
authority to establish special staffing supplements, in lieu of 
locality payments, in order to increase pay when necessary to address 
serious recruitment and retention difficulties associated with a 
particular category of jobs.
(4) Pay Band Structures
    Comments: Perhaps no other topic generated so many comments and 
often conflicting opinions. Many commenters felt that NNSA's proposal 
failed to live up to the project's goal to achieve greater parity with 
NNSA's own excepted service pay-banded system, not only due to 
differences in pay band pay rates but also due to differences in how GS 
grades were to be bundled. Others took strong exception to the 
differences in proposed pay-band structures for ``professional'' and 
``administrative'' positions, feeling that because, in their opinions, 
such work was of equivalent value to NNSA, it was unfair not to have 
identical pay bands, while others took a contrary view, feeling that 
engineers and scientists should not be in the same career path as other 
professional and administrative occupations. Still others offered that 
when NNSA proposed only single-grade pay bands (such as a GS-13 pay 
band, a GS-14 pay band, and a GS-15 pay band in the proposed 
``administrative'' career path), this defeated the purpose of pay 
banding, that in fact it was not ``pay banding'' at all but just more 
of the same bureaucratic classification practice. Some commenters 
proposed their own pay band structures. Several commenters suggested 
that NNSA establish supervisory pay bands with higher pay rates to 
recognize the value of supervision and to incentivize the voluntary 
movements of technical employees into leadership positions.
    Response: NNSA found much to agree with in the many comments 
received on this topic. These comments led NNSA to reconsider the 
proposed pay-band structures, while recognizing that no matter what 
NNSA did in response to comments, there was no practical way to 
reconcile all viewpoints or satisfy everyone's concerns. Consequently, 
NNSA revised some, though not all, of its earlier pay-band structures, 
where the work and employee promotional patterns supported doing so. 
NNSA agreed that the exercise of supervision compounds the complexities 
and value of a position's work and should be recognized in some way. 
NNSA is therefore adopting a supervisory bonus mechanism as part of its 
performance policies.
    In reconsidering NNSA's fundamental approach to pay bands, NNSA 
weighed the various and often competing arguments, only to affirm in 
the end the original approach. Upon closer study, NNSA found that lying 
just beneath the surface of a seemingly attractive ``equity'' argument 
on behalf of identical pay bands was the more powerful reality that all 
work is not equivalent in grade value across occupations and 
organizations, that in fact there can be meaningful differences in the 
inherent level of work performed by professional and administrative 
employees, and that fulfilling the principle of ``equal pay for 
substantially equal work'' actually results in pay band structures that 
reflect these meaningful differences. Positions attributable to a given 
career path will have traditional grading patterns, and employee 
recruitment and promotion patterns, in common with other positions in 
the career path, but not in common with positions in other career 
paths.
    Consequently, NNSA not only revised its career paths but is 
revising the attendant pay band structures, as follows:
    I. Engineering and Scientific Career Path: Encompasses all 
professional positions classified in the GS-0800 and GS-1300 job 
series, subdivided into the following pay bands:
     Pay Band I (GS-5 through GS-8)
     Pay Band II (GS-9 through GS-11)
     Pay Band III (GS-12/GS-13)
     Pay Band IV (GS-14/GS-15)
    II. Professional, Technical, and Administrative Career Path: 
Encompasses all OPM-recognized professional occupations, except GS-

[[Page 72779]]

0800 engineers and GS-1300 scientists, requiring positive education 
requirements, and all other subject-matter, business, and 
administrative occupations characterized by a traditional two-grade 
interval pattern of grade progression. All positions encompassed within 
this career path are subdivided into the following pay bands:
     Pay Band I (GS-5 through GS-8)
     Pay Band II (GS-9 through GS-12)
     Pay Band III (GS-13/GS-14)
     Pay Band IV (GS-15)
    III. Technician and Administrative Support Career Path: 
Encompassing technician, secretarial, assistant, and clerical 
occupations, and similar positions characterized by a traditional one-
grade interval pattern of grade progression. All positions encompassed 
within this career path are subdivided into the following pay bands:
     Pay Band I (GS-1 through GS-4)
     Pay Band II (GS-5 through GS-8)
     Pay Band III (GS-9)
    IV. Nuclear Materials Couriers Career Path: Encompassing all 
positions classified into the GS-084 job series, subdivided into the 
following pay bands:
     Pay Band I (GS-8 through GS-10)
     Pay Band II (GS-11)
     Pay Band III (GS-12)
     Pay Band IV (GS-13)
    V. Future Leaders Career Path: Encompassing the positions of all 
interns enrolled in NNSA's 2-year Future Leaders Program, in various 
engineering, scientific, professional, technical, and administrative 
occupations. All positions encompassed within this career path are 
subdivided into the following pay bands:
     Pay Band I (GS-5 through GS-8)
     Pay Band II (GS-9 through GS-11)
     Pay Band III (GS-12/GS-13) \1\
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    \1\ Although all Future Leaders will have career ladders to pay 
band III in either the Engineering and Scientific Career Path, or 
the Professional, Technical, and Administrative Career Path, a 
control point equating to the salary of GS-12 step 10 will be 
established for those Future Leaders with a Masters Degree in 
business-related and administrative fields to enable these 
individuals to be converted from band III of the Future Leaders 
Career Path to band II of the Professional, Technical, and 
Administrative Career Path upon successful completion of the 2-year 
program.
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    The arguments in favor of readjusting NNSA's original pay-band 
proposals were several. (The only pay bands not altered from the 
original are those associated with career path III.) The readjustment 
in the Engineering and Scientific Career Path not only better reflects 
the pre-eminent work done in NNSA by engineers and scientists, but is 
more consistent with the actual promotional patterns found in the 
demographics of the workforce. Most General Schedule engineers and 
scientists in NNSA are either at GS-14, or GS-15, with development 
patterns that often see GS-14 positions advance to GS-15 levels of 
work. Such advancement occurs traditionally under both competitive and 
noncompetitive promotional procedures, when such traditional job 
factors as Guidelines, Complexity, Scope and Effect, and others, have 
evolved under the weight of natural employee growth and maturation to 
the highest levels creditable (e.g., levels 2-5, 3-5, 4-6, and so on) 
under respective engineering and scientific standards and guides. In an 
agency with highly technical national security missions and one-of-a-
kind nuclear weapons, nonproliferation, and naval reactor propulsion 
programs, it is not surprising to find engineering and scientific 
positions expanding in scope and responsibility due to recognizable 
increases in technical job expertise and project authority, which so 
often accrue to such positions over time. Out of 364 GS engineers and 
scientists, there are 147 GS-14 and 148 GS-15 positions that are graded 
in almost every case, including many classified supervisors, on their 
paramount non-supervisory work assignments.
    Similarly, agency program managers, agreeing with many of the 
comments received on this subject, questioned the validity and 
effectiveness of the separate single-grade ``bands'' at the GS-13, -14, 
and -15 levels previously proposed for the now reconstituted 
Professional, Technical, and Administrative Career Path. As NNSA looked 
at the actual distributions of professional, subject-matter, and 
administrative positions that would be covered within this broad career 
path, as well as relevant employee promotional patterns, NNSA realized 
that this path's pay-band structure also required adjusting. The new 
pay-band patterns in this career path are more consistent with the 
demographics of the actual workforce today; the majority of positions 
found in this career path are graded at GS-13 and GS-14, about 640 
encumbered positions at this writing. Combining GS-13 and -14 into band 
III therefore makes better sense to NNSA than the original proposal 
did, given the relationship between these two grades among the many 
occupations covered by the career path. Generally, the main difference 
in NNSA between GS-13 and GS-14 in actual classification practice is 
that the Supervisory Controls and Guidelines factors are credited one 
level higher at GS-14, the two factors most readily influenced by the 
greater freedom from supervision and guidelines that invariably comes 
to a position through seasoning, through greater maturity of judgment, 
and through a derivatively more confident and authoritative incumbent 
performance. Combining these two grades into a single pay band, 
covering the majority of employees serving in positions in this 
important career path, shifts the focus of employee pay advancement 
from position classification and merit promotion criteria to 
performance-based criteria, one of the chief goals of this 
demonstration project. This shift in pre-eminence from classification 
and promotion criteria to performance also occurs, of course, in the 
examples of other pay bands in other occupational career paths, and 
serves in the aggregate to underscore how pay-banding intrinsically 
enhances the potential effectiveness of a performance-based pay system.
    A review of actual promotional patterns supports combining GS-13 
and -14 into one pay band. Of the 328 GS-14 employees serving in 
occupations that will be covered by the Professional, Technical, and 
Administrative Career Path, 80 were promoted from NNSA GS-13 positions 
in the same occupational series and line of work.
    With respect to the Nuclear Materials Couriers Career Path, NNSA's 
Office of Human Capital Management Programs worked diligently with the 
top managers from the Office Secure Transportation, the NNSA 
organization in which the couriers are assigned, to arrive at a pay-
band pattern that better met both management's mission needs and 
employee advancement expectations. In developing pay bands for the new 
Future Leaders Career Path, the Future Leaders Program Manager was 
heavily consulted.
(5) Comparisons With NNSA Excepted Service System Pay Bands
    Comments: Many commenters questioned why NNSA proposed pay bands 
for General Schedule engineering and scientific positions that did not 
correspond to the pay band structure in NNSA's own excepted service 
system, pointing out, in their opinions, that the work was identical.
    Response: To understand the different pay band structures between 
General Schedule and NNSA's excepted service system engineering and 
scientific positions, the fundamental distinction between these two 
systems must be understood. While it is true that many current excepted 
service system engineers and scientists are former General Schedule 
engineers and scientists, and that both General

[[Page 72780]]

Schedule and excepted service system employees can currently be found 
working in the same facilities and offices, what needs to be kept in 
mind when comparing the two systems is the very nature of the 
authorities through which respective employees are appointed and paid. 
The NNSA Act (P.L. 106-65, as amended) gives the Administrator the 
authority to appoint employees to scientific and engineering positions 
and to pay them without regard to title 5, United States Code, when the 
Administrator deems it necessary to accomplish his statutory 
responsibilities. By design, these positions are established in unusual 
occupational circumstances (either extreme difficulty of work, or 
extreme difficulty in recruitment), and do not represent the 
engineering and scientific work common to many occupational settings in 
NNSA. Furthermore, excepted service system employees in concept have 
been held to a higher performance threshold (as befitting a 
performance-based pay system) than their General Schedule counterparts, 
which NNSA believes has resulted in an overall improvement in 
excellence and mission accomplishment--the reason NNSA now seeks to 
expand the applicability of pay-for-performance. At the same time, 
these excepted service system employees do not possess traditional 
civil service entitlements, such as ``career status,'' or certain 
protections having to do with reduction in force and other employment 
matters--a key design difference between the two systems. Although it 
is true that NNSA could request that OPM approve pay rates exceeding 
those traditionally associated with GS grades under the authority of 
the demonstration project, as discussed in subsection C above, NNSA is 
not now prepared to undertake systematic occupational market studies to 
validate the need for enhanced pay rates or to develop NNSA-only 
position classification criteria and standards.

(b) Excepted Service

    Comments: There were other comments comparing the demonstration 
project to NNSA's existing excepted service system, aside from concerns 
relating to proposed pay bands and pay rates. A number of commenters 
expressed the view that NNSA's current General Schedule employees be 
permitted the opportunity to volunteer for the demonstration project, 
just as General Schedule engineers and scientists had the opportunity 
to volunteer to enter the NNSA excepted service system at the time of 
its inception a few years ago. Similarly, others suggested that NNSA 
provide an opportunity for current excepted service employees to 
volunteer for the demonstration project, and in essence, volunteer out 
of the excepted service system. There were various reasons given for 
this latter suggestion. The absence of ``career status'' (and the 
resulting inability to apply for many of NNSA's promotional 
opportunities), and the absence of ``second-round'' RIF protections, 
were mentioned. Also, some excepted service employees feel topped out 
in terms of pay potential.
    Response: Providing an opportunity to volunteer in or out of the 
demonstration project, or the excepted service system for that matter, 
is not tenable today. Because NNSA is experimenting with a pay-banding 
and pay-for-performance system that, were it to be successful, would 
replace entire segments of the General Schedule workforce, allowing 
employees to volunteer to participate in the demonstration project 
would be unwieldy to manage, impractical to administer, and, more 
compelling, not in the best interest of efficient Government. 
Furthermore, NNSA intends to continue to make full use of its unique 
excepted service employment authority in those circumstances and for 
those purposes that the NNSA Act envisions. From a practical 
standpoint, excepted service employees who have not previously competed 
for competitive appointment and who do not already have career status 
will have to apply for demonstration project positions through an 
appropriate appointing authority.

(c) Pay and Pay Pools

    Comments: This was the other topical issue receiving many comments. 
The most frequent pay comment, by far, had to do with the issue of 
annual comparability pay increases, locality pay, and the effects of 
performance on these annual pay events. NNSA had proposed one pay pool 
from which general pay adjustments and performance-based pay increases 
were to have been funded and paid out all at one time, and many 
commenters felt the plan was unclear in describing the 
interrelationships among these pay events. Other comments concerned (1) 
the effects of budgetary constraints on the amounts and timing of 
payouts; (2) the apparent lack of pay-setting guidelines with respect 
to hiring new employees and promoting existing employees; (3) the 
apparent lack of a financial incentive for an NNSA employee to be 
reassigned to another NNSA job or location to fill a critical need; (4) 
the pay implications of supervisory incompetence, caprice, or 
favoritism in appraising employee performance; and (5) the effect of 
pay banding on premium pay for overtime work for the courier workforce, 
the payment of night differential for work performed beyond the first-
40-hour tour of duty, and other pay matters relating to the unique 
irregular work schedules of the couriers.
    Response: NNSA agrees that the original proposal was not as clearly 
presented as it should have been, and furthermore, has reconsidered 
certain mechanical features of its pay provisions, making several 
changes to the plan accordingly. NNSA will establish two pay pools, one 
from which to fund annual general pay adjustments and the second from 
which to fund performance-based payouts. Each pay pool will have its 
own payout schedule, though in close proximity to the end of the 
calendar year and to each other. In conjunction with establishment of 
two pay pools, NNSA is increasing the maximum number of shares for 
performance payouts, from 3 shares to 4. NNSA is also changing the 
share distribution pattern (number of shares linked to performance 
level) from 3-2-1-0 to 4-3-2-1-0. An employee with a Significantly 
Exceeds Expectation (level ``5'' performance under NNSA's performance 
management program) may receive 3 or 4 shares, an employee with a Fully 
Meets Expectations (level ``3'' performance under NNSA's performance 
management program) rating and no critical element rate at the Needs 
Improvement level may receive 1 or 2 shares, and all other employees 
receive 0 shares. As under the original proposal, any increased 
locality pay or staffing supplement percentages will be applied on top 
of eligible employees' adjusted base rates outside of the pay pool 
process.
    Furthermore, NNSA will provide a limited flexibility to increase an 
employee's pay upon accepting an intra-pay band reassignment. These 
changes, along with NNSA's pay-setting guidelines, will be described in 
detail in NNSA's Demonstration Project Policies and Procedures Manual, 
which shall be published in accompaniment to this project plan. The 
pay-setting guidelines will ensure that the use of demonstration 
project pay flexibilities will be judicious and appropriate. NNSA's 
administration of the demonstration project will be under OPM's 
continuous oversight, with rigorous evaluations of pay-setting and 
other project provisions and applications. Supervisors will be afforded 
extensive training to ensure they have the competence to make fair

[[Page 72781]]

and valid employee appraisals, and they will be held accountable for 
doing so during their own performance appraisals. As for the courier 
workforce, pay banding will have no effect whatsoever on their tours of 
duty, their administrative work schedules, or on their eligibility 
under current law and regulation to receive premium pay, night 
differentials, and other pay benefits and incentives.

(d) Position Classification

    Comments: Several commenters wondered how upholding the use of 
OPM's traditional position classification criteria and standards will 
lend itself to streamlining the ``cumbersome, labor-intensive, and 
difficult to comprehend'' system, as the project plan calls it. They 
imply that part of the problem with the present system is just these 
criteria and standards, and they don't see how NNSA will be able to 
reduce documentation requirements, eliminate use of the Factor 
Evaluation System format (which typically increases the length of 
position descriptions threefold), or reduce traditional procedural 
steps. Others wondered how NNSA's pay-banding system would safeguard 
equal pay for equal work when a selecting official will be free to set 
pay for a new appointee anywhere in a band. Some noted that current 
employees might be penalized in comparison to a new hire's potential 
for a pay increase, as pay increases for internal promotees are limited 
to 8 percent, and this limitation may actually offer an employee less 
money than customarily received when moving from one GS grade to the 
next during a conventional promotion. Others were concerned about the 
effect on an employee's existing promotion potential in a traditional 
career-ladder position when converting to a pay-banded position, when 
that potential falls outside the band of the position to which the 
employee converts. One person asked what impact there would be on the 
conversion to pay banding of a position currently graded outside the 
proposed maximum band range of a given career path. Others were 
concerned about the right of employees to appeal their placement into a 
career path and pay band.
    Response: The comments in this topical area, while more process 
oriented than comments in other topical areas, underscore the need to 
clarify just how position classification works in a pay-banding 
environment. The comments, especially those about career ladders and 
equal pay for equal work, warrant more discussion.
    In general, OPM's position classification standards and guides 
remain the single most concise and valuable analytical tools with 
respect to defining occupations and evaluating assignments of white-
collar work, not only in the Federal sector, but in general. They 
remain models for other levels of Government, and even private 
industry, to emulate in developing their own local job-evaluation 
schemes. OPM's standards and guides do not in themselves contribute to 
the classification system's breakdown and inefficiency. Rather, it is 
the towering emphasis today on compensation as a tool for attracting 
and retaining the best talent in a hypercompetitive labor market that 
has hammered the rigid grade-bound classification system into a 
contorted and broken program. All the hammering has brought resistance, 
inertia, and resignation among managers and classifiers alike. Pay 
banding, in bundling several grades and pay rates together into one 
band when appropriate, will go a long way to lift the deadly onus off 
the classification program. But this is only the start of the 
classification program's streamlining. There will be a number of 
genuine and potentially significant opportunities under the 
demonstration project to simplify the administration of the 
classification program. Not delegating classification authority to 
managers, as most other demonstration projects and alternative 
personnel systems have done, is a significant simplification. Job 
analysis is no less sophisticated than are most other technical 
disciplines in the modern workplace. Efficient classification practice 
requires substantial training and years of seasoning. NNSA believes 
that it makes far better sense not to expend countless resources and 
endless hours trying to train and encourage supervisors to become 
seasoned classifiers, but rather, to hone their skills as leaders of 
the men and women they supervise and to retain classification authority 
and skills in the personnel office. Furthermore, there is nothing in 
OPM's existing doctrines and requirements that will not permit the 
simplification of position description formats or the synopsizing of 
traditional evaluation documents. Add pay banding to the flexibility 
that already exists, and there is a significant opportunity to 
streamline. Pay banding can group two or more levels of traditional 
work and associated pay rates into one pay band when appropriate, 
thereby compressing expanses of work and pay rates into fewer 
classification units and easing attendant classification practices and 
protocols, with less documentation, particularly when future automation 
comes on line.
    It is true that successful streamlining doesn't happen by itself 
and won't happen overnight. NNSA has considerable design and 
development work to do in building an effective pay-banding 
classification system, but not having to develop its own classification 
standards and guides will contract NNSA's design and development 
challenges immeasurably. This system will be built around demonstration 
project career paths and will feature two unique concepts, the ``core 
pay band descriptor'' and the ``core position description.'' A 
descriptor is a generic benchmark description used to illustrate the 
ranges of complementary work levels within a pay band. The assignment 
of a specific position to a particular pay band will be made on the 
basis of a core pay band descriptor. Core pay band descriptors will be 
based on the OPM job family standard and functional classification 
guide that most directly corresponds to the work encompassed within an 
occupational series. A core position description is simply an 
abbreviated benchmark description of a common set of core duties and 
responsibilities typical of large numbers of positions within each 
career path and pay band across NNSA's various organizational and 
functional settings. NNSA will publish its pay-banding classification 
policies in its companion document to this project plan, NNSA's 
Demonstration Project Policies and Procedures Manual, and will 
supplement these policies with handbook guidance as needed. This 
guidance will more fully describe NNSA's streamlined pay-banding 
classification system and will better describe the simplified position 
description concept with samples. Briefings tailored to managers, 
employees, and the personnel staff, respectively, will also be 
developed to accompany the development of the system and application of 
NNSA's classification policies.
    The compressed occupational construct of a pay band renders 
concerns about undermining the civil service system's classification 
principles unfounded, as several gradations of work are possible within 
a given pay band. In essence, pay banding assumes that different 
employees in the same career path, job series, and pay band of a 
properly classified position can operate at differing levels--within 
reason--due to variations in incumbent maturity (seasoning), and 
performance. In this circumstance, equal pay for substantially equal 
work is not compromised, even though one

[[Page 72782]]

employee may be earning higher pay than another employee in the same 
pay band. In a fundamental respect, this is really no different than 
the disparities in pay that occur between employees in the same 
properly classified GS-13 position where one employee is earning a GS-
13, step 2, rate and another is earning a GS-13, step 9, rate.
    The 8 percent limitation on a pay increase as a result of internal 
promotion is a standardized policy that will apply in most situations. 
Most other pay-banding systems set similar controls on pay increases. 
NNSA considered a higher percentage, and even considered a range of 
percentages, from lower to higher, but decided on the fixed 8 percent 
minimum increase to mitigate the opportunity for disparate employee 
treatment at such an important career event. While NNSA expects most 
internal promotion actions to adhere to this standard, like most rules, 
there will be the flexibility to allow an exception, with proper 
justification, and higher-management approval. This flexibility will be 
described in detail in the staffing and pay policies that will be 
published in accompaniment to this project plan.
    There will continue to be ``career ladders'' under NNSA's pay-
banding system, though instead of grade intervals, there will be band 
intervals. A ``laddered'' position is simply a position advertised 
during recruitment at a certain level of full performance that is 
filled through selection and appointment at a lower pay band. NNSA is 
developing staffing policies that will ``grandfather'' employees who at 
the time of conversion to the appropriate pay band have not reached 
their promotion potential. These employees will be eligible for an in-
band pay increase similar to a promotion increase under the General 
Schedule system until they reach their full promotion potential. ``Full 
promotion potential'' is a traditional position classification and 
personnel staffing concept that will continue to have validity under 
NNSA's demonstration project, and it means the highest grade, or pay 
band, of a career-ladder position for which an incumbent previously 
competed under the Government's merit system principles and an agency's 
merit promotion plan. Once an NNSA employee who converted to pay 
banding under this demonstration project receives an in-band pay 
increase or a promotion that takes him or her to a pay level equivalent 
to the highest GS grade in the formerly applicable career ladder, the 
employee will be considered to have reached the full performance level, 
and the grandfather provision will cease to apply. Future in-band pay 
increases for such an employee would then be based solely on 
performance, consistent with all other demonstration project employees. 
Of course, just as a GS employee is not guaranteed a career-ladder 
promotion without the supervisor's certification, the promotions and 
special grandfathered in-band increases for demonstration project 
employees will not be guaranteed, and they will be issued new 
performance plans with each pay increase. Only current NNSA employees 
who convert at the inception of pay banding will be afforded the 
benefit of having their career ladders grandfathered. The specific 
terms and conditions of this benefit will be published in the policies 
and procedures manual that will implement this project plan.
    As NNSA prepares to implement the demonstration project, NNSA is 
reviewing current position classification outcomes, and potential 
discrepancies and inconsistencies, with the intent to correct any that 
are found prior to implementation to assure a smooth conversion 
process.
    Under the demonstration project, employees retain their traditional 
position classification appeal rights. A classification appeal is a 
formal request by an employee in writing for a review of the official 
job series, pay band, or pay system, of the employee's current position 
to correct what the employee believes is an erroneous classification. 
Any employee in a position covered by chapter 51 of 5 U.S.C., and by 
NNSA's Demonstration Project, can file a classification appeal.

(e) Staffing

    Comments: Most of the 17 staffing comments crossed over into other 
topical areas already treated, such as the structure of relative pay 
bands across career paths, and the impact of employee conversion to pay 
banding on pre-existing promotion potential as a result of having 
successfully competed for a career-ladder position. Other comments 
concerned such issues as pay-setting and band and grade assignment upon 
converting to a pay-banding position from a GS position, and vice 
versa, upon converting back to GS from pay banding. Many commenters 
pointed out that the language in the February 28 Federal Register 
notice pertaining to such practical staffing and pay matters was vague. 
One person expressed concern at the quality of applicants under pay 
banding, should candidates only need to meet the minimum qualification 
requirements associated with the lowest grade level in a multi-graded 
band, and believed that the candidate screening process would suffer as 
a result.
    Response: It is understandable that many commenters found NNSA's 
proposed project plan vague and unclear in parts. NNSA's demonstration 
project plan, in both its proposed and final incarnations, is designed 
to mainly answer the ``what'' of a matter, not the ``how.'' This is why 
there have been many references in these responses, as well as 
throughout the text of the project plan, to a policies and procedures 
manual. But this response is not to dodge the issues. Most of the 
comments received during the public comment period have been invaluable 
in guiding NNSA's development of its companion policies and procedures. 
By design, a demonstration project is an experiment. Frankly, there is 
more than one way to execute and effect almost any feature of this 
experiment, and though modeling previous successful experiments and 
viable alternative personnel systems can be extremely useful, there are 
still mechanical subtleties and finer points of interpretation in 
matters of pay banding, staffing, and pay that NNSA must come to terms 
with. Having said this, it can be said after the past 6 months of 
rigorous development and refinement, that NNSA has gained competence 
and sureness about how to effectively execute the innumerable features 
and applications of this project. With respect to questions about 
conversion, NNSA GS employees will be converted to the career path and 
pay band that is equivalent to their current job series and grade, 
irrespective of pre-existing promotion potential, as discussed in the 
preceding subsection. In no case will an employee lose pay upon 
conversion; in fact, at conversion, most employees will receive an 
increase in pay reflecting the prorated value of their next scheduled 
within-grade increase (WIGI) based on the amount of time they have 
served in their respective waiting period.
    The project plan gives NNSA authority to establish the rules 
governing pay-setting for employees who convert out of the 
demonstration project and move to a GS position. Those technical 
conversion-out rules will be provided in NNSA's manual of implementing 
policies and procedures and will be forwarded to other Federal agencies 
should an NNSA pay-banded employee move to a GS position in another 
agency. In general, demonstration project employees moving to a GS 
position will be converted to a GS-equivalent grade and rate before 
they leave the demonstration

[[Page 72783]]

project and thus will be treated as GS employees under GS pay-setting 
rules.
    NNSA is also developing staffing guidelines to aid managers, 
selecting officials, and personnel office staff on processes to use in 
evaluating candidate qualifications, and to identify the more qualified 
candidates from among applicants. We expect that this will take time as 
we train staff, develop operating procedures, and evaluate their 
effectiveness. This will be true of most other operational features and 
applications of the project. It will be some time following project 
implementation and employee conversion before NNSA is proficient in 
most demonstration project matters, though NNSA is taking great pains 
and care to ensure that start-up and transition are implemented as 
smoothly as possible.

(f) Performance Management

    Comments: Most of the several comments received on performance 
management concerned the adaptability of NNSA's existing performance 
management program to the demonstration project. There were concerns 
expressed about the timing of implementation--too soon--about the 
readiness of NNSA's supervisors to fulfill their responsibilities to 
appraise their subordinates fairly--not ready--about the subjectivity 
of NNSA's four-level rating scheme--can't make distinctions--and so on. 
A labor union suggested ways to improve NNSA's appraisal program.
    Response: The project is scheduled to be implemented on March 16, 
2008. Once implementation occurs, there will be complete instructions 
on what to expect, and how to proceed, midway through the rating year 
as it will be. As NNSA prepares to implement the demonstration project, 
agency management holds many of the same reservations as did 
commenters. When NNSA was established seven years ago as a separately 
organized agency within DOE, NNSA inherited a variety of then existing 
performance management programs, between headquarters and a multitude 
of field offices. Four appraisal cycles ago, NNSA consolidated and 
standardized all GS and equivalent appraisal programs into one. At the 
onset of each new rating year since then, NNSA has made changes in its 
program based on the lessons learned from the previous rating cycle. As 
NNSA's program has evolved from year to year, it has been necessary to 
conduct focus groups and supervisory training. This upcoming year, 
during the transition to the demonstration project, will be no 
exception. And NNSA thinks this is a good thing. It is doubtful there 
would ever be an ideal time to embark on such a project. NNSA believes 
waiting for such a time will be a precious opportunity lost. By design, 
the demonstration project is an experiment. Many things are supposed 
and anticipated, but few things are known for sure in advance. They 
need to be tried and tested. This NNSA intends to do, realizing that it 
is likely that there will continue to be a need for improvements in 
design and execution for the next several years to come, not only 
concerning the existing performance management program, but to the 
demonstration project as a whole.

(g) Reduction in Force

    Comments: There were several questions concerning the mechanics of 
reduction in force (RIF) under the demonstration project, and the 
impact on employee RIF entitlements. One person asked whether 
demonstration project employees and excepted service employees would 
compete together in a RIF. Another asked whether employee protections 
would be lessened under the demonstration project. A third person asked 
specifically whether there would be ``bumping'' rights.
    Responses: Not only will there be bumping rights for demonstration 
project employees, but all other traditional employee protections are 
retained under the demonstration project. There is only one substantive 
change from traditional rules, having to do with a further subdivision 
of an NNSA competitive area by career path. Currently in NNSA, the 
decision to undertake RIF is made by the Administrator, respective Site 
Office Managers, the Service Center Director, and the heads of the 
Naval Reactors Offices in Pittsburgh, PA, and Schenectady, NY. 
Consequently, each of these management officials is considered to be 
the head of a competitive area for RIF purposes. (The Administrator has 
actually delegated the authority to take and direct personnel actions 
to these officials, while retaining this authority for all headquarters 
components, except Naval Reactors, which has a unique dual reporting 
arrangement with the Secretaries of Energy and Navy.) What this means 
from a practical management standpoint is that Site Offices, the 
Service Center, and the Pittsburgh and Schenectady Naval Reactors 
Offices are considered to be under separate administration for RIF 
purposes, while the Administrator remains the head of the headquarters 
competitive area. The existing competitive area standard in NNSA under 
current Federal regulation, and DOE policy, is ``a subdivision of the 
agency under separate administration within the local commuting area 
[5CFR351.402].'' The concept of ``local commuting area'' further 
defines the competitive area standard. Regulations permit agencies to 
subdivide competitive areas according to commuting area, the geographic 
proximity within which normal patterns of applicant recruitment and 
worker commutation can be expected to occur, even when the management 
official with the authority to take and direct personnel actions is 
located elsewhere. This is what NNSA does currently, and this part 
won't change under the demonstration project. Therefore, employees in 
one NNSA competitive area would not now compete with employees in 
another competitive area, nor would employees in different commuting 
areas within the same competitive area compete with each other. Under 
the demonstration project, NNSA will institute one additional 
competitive area subdivision, by career path, so that the employees in 
one career path would not compete with employees in another career path 
in a given RIF. NNSA's non-demonstration project employees, such as 
bargaining unit employees at headquarters, or all excepted service 
employees, are not affected by this competitive area change. They 
continue to be subject to traditional RIF rules, and applicable 
collective bargaining agreements, and would not compete with 
demonstration project employees in a given RIF.

(h) Employee Relations

    Comments: The several comments in this topical area concerned 
whether employees have the right of appeal, or to grieve, their 
performance ratings, and whether employees whose ratings are less than 
Fully Meets Expectations will have an opportunity to improve.
    Response: The demonstration project has no direct bearing on NNSA's 
performance management program, though the program continues to be 
refined based on lessons learned from previous rating cycles. Under 
NNSA's performance management policies, employees whose ratings are 
less than Fully Meets Expectations are provided structured 
opportunities to improve their performance. An employee who is 
dissatisfied with an official rating can request a reconsideration, 
under NNSA's policies and procedures.

(i) Employee Equity

    Comments: Commenters generally felt that the demonstration project 
will actually produce contrary results. Instead of encouraging workers 
to

[[Page 72784]]

higher levels of excellence, it will actually discourage workers who 
benefit now from the employment stability that the traditional civil 
service system provides. They suggested that the net effect of basing 
pay increases on performance will allow for faster pay progression in 
the short-term, with the ultimate effect of increasing salary costs to 
such a degree that there won't be sufficient funds to properly reward 
employees in the future. Two persons agreed with basing pay increases 
on performance, but had concerns about the equity of the process, and 
disagreed that performance pay increases should be combined with the 
annual comparability pay adjustment.
    Response: NNSA shares some of these same concerns, and views these 
concerns as challenges. Perhaps the biggest challenge the agency faces 
is earning and keeping the trust of its employees during this time of 
profound change, while ensuring that the demonstration project is not 
perceived as a disincentive. Perhaps the next biggest challenge is 
ensuring that supervisors are properly trained in their key 
responsibilities under the demonstration project, and that they are 
held accountable when they don't uphold these responsibilities. And two 
other significant challenges are ensuring that there are adequate cost 
controls in place, and that ample funds are appropriated to support 
meaningful levels of performance-based pay increases. NNSA does not 
minimize the significance of these challenges, but does not shrink from 
them either.
    As already discussed, NNSA is establishing two pay pools, and will 
administer annual pay adjustments and performance-based pay increases 
separately.

(j) Management Accountability

    Comments: A uniform thread runs through the many comments submitted 
on management accountability. Commenters expressed disbelief that 
managers will be held accountable for not rendering objective and fair 
performance ratings, and some said they have yet to see measures put in 
place, or actions taken, to assure accountability. One person wanted to 
know how OPM will oversee accountability and conduct ongoing 
evaluations.
    Response: Chapter 47 of title 5 requires an evaluation of the 
results of each demonstration project and its impact on improving 
public management. This project plan has been revised to include 
additional details about the project evaluation. In addition, NNSA will 
be held to scrutiny under DOE's human capital management accountability 
regimen. Aside from these layers of oversight, NNSA is dedicated to 
changing the management culture. One of the Administrator's highest 
goals is to make NNSA an Employer of Choice. NNSA will encourage 
openness between managers and employees, will provide extensive 
training to supervisors, will institute a regimen of employee 
communications, and will hold supervisors accountable through the 
performance management process. Supervisors, like everyone else in 
NNSA, will be held to higher standards.

(k) Other

    Comments: The comments in this category did not fall neatly under 
any other topic, and mainly reflected employee anxiety, or asked 
extremely process-oriented questions that will be responded to via 
other media. A general concern in various comments was the desire for 
more specificity. In some cases, NNSA has made changes that provide 
more specific information. (See section 4, ``Changes to Demonstration 
Project Plan.'')
    Two specific comments warrant NNSA's response: a letter from a 
labor organization, and a thoughtful comment about the merit system 
principles.
    Response: The labor organization offered an extensive critique of 
recent pay-for-performance initiatives in Government, and then offered 
suggestions concerning NNSA's proposal. NNSA shares the union's deep 
concern for the welfare of affected employees, and for advancing the 
public's interest in protecting nuclear security. NNSA will consider 
all suggestions for improving the demonstration project, and for making 
it a success. Should NNSA decide to apply the demonstration project to 
its bargaining unit employees in the future, it will honor its 
collective bargaining obligations.
    One person expressed concern that NNSA and OPM were not giving due 
adherence to the statutory merit system principles [5 U.S.C. 2301]. We 
disagree. As explained earlier, NNSA is relying on OPM's position 
classification criteria and standards and is adhering to the 
classification principle in 5 U.S.C. 5101(1) of ``equal pay for 
substantially equal work,'' which is akin to the merit principle in 5 
U.S.C. 2301(b)(3) of ``equal pay should be provided for work of equal 
value.'' NNSA has a profound regard for the merit system principles and 
has taken great pains in the design of this project to safeguard these 
principles. We note that the merit principle in 5 U.S.C. 2301(b)(3) 
also states that ``appropriate incentives and recognition should be 
provided for excellence in performance.'' Thus, the performance-based 
pay features of this demonstration project support this merit 
principle.

4. Changes to Demonstration Project Plan

    What follows is a list enumerating the substantive changes to 
NNSA's demonstration project, and major textual changes to the plan. 
The page numbers referenced are those found in the February 28, 2007, 
Federal Register Notice. Some of the changes have been