Proposed Personnel Demonstration Project; Alternative Personnel Management System for the U.S. Department of Agriculture, Food Safety and Inspection Service, 26436-26451 [E8-10440]

Agencies

• Office of Personnel Management

[Federal Register Volume 73, Number 91 (Friday, May 9, 2008)]
[Notices]
[Pages 26436-26451]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-10440]


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OFFICE OF PERSONNEL MANAGEMENT


Proposed Personnel Demonstration Project; Alternative Personnel 
Management System for the U.S. Department of Agriculture, Food Safety 
and Inspection Service

AGENCY: U.S. Office of Personnel Management.

ACTION: Notice of a proposed demonstration project 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 result in 
improved Federal human resources management. The Food Safety and 
Inspection Service (FSIS), the United States Department of Agriculture 
(USDA), and OPM propose to test a results-based, competency-linked pay-
for-performance system that is combined with a simplified, pay banding 
classification and compensation system. Section 4703 of

[[Page 26437]]

title 5 requires OPM to publish the proposed project plan in the 
Federal Register. This notice fulfills that requirement.

DATES: To be considered, written comments must be submitted on or 
before June 9, 2008. A public hearing will be held on the proposed 
project plan on Thursday, June 26, 2008, and will begin at 10 a.m., 
Eastern Standard Time. The location of the hearing is: U.S. Department 
of Agriculture, South Building, 1400 Independence Avenue, SW., 
Washington, DC 20250. You must use the 7th wing entrance which is 
accessible from Independence Avenue.
    Public parking is limited, but the building is conveniently 
accessible to the ``Smithsonian'' Metro stations. The South Building is 
a secure facility. Members of the public must show a government-issued 
photo ID (e.g. State driver's license). Attendees will undergo 
electronic screening, and their personal belongings will be subject to 
a physical search. Personal items prohibited in the South Building 
include devices that can transmit and record, weapons (guns, knives, 
explosives, etc.), and alcohol. A member of the public possessing such 
items will be barred from entering, and such items are subject to 
confiscation. There will be a sign-in table set up in the lobby of the 
Jefferson Auditorium. A greeter and signs will direct attendees to the 
auditorium location.
    There will be a telephone call-in number for members of the public 
and agency who cannot attend in person. That number will be 888-790-
4330 (Passcode: Demonstration Project), and the line will be active 
from 10 a.m. Eastern Standard Time until the conclusion of the hearing.
    At the time of the hearing, interested persons or organizations may 
present their written or oral comments on the proposed demonstration 
project. The hearing will be informal. However, anyone wishing to 
testify should contact the person listed under FOR FURTHER INFORMATION 
CONTACT, so that FSIS, USDA, and OPM can plan the hearing and provide 
sufficient lead time for all interested persons and organizations to be 
heard. Priority will be given to those on the schedule, with others 
speaking in any remaining available time. Each speaker's presentation 
will be limited to five minutes. Written comments may be submitted to 
supplement oral testimony during the public comment period.

ADDRESSES: Comments may be mailed to Demonstration Projects, U.S. 
Office of Personnel Management, 1900 E Street, NW., Room 7677, 
Washington, DC 20415 or submitted by e-mail to Demoprojects@opm.gov.

FOR FURTHER INFORMATION CONTACT: (1) FSIS, Laurie Lindsay, Director, HR 
Demonstration Project Staff, (202) 720-7983, 1400 Independence Avenue, 
SW., Room 2134 South Building, Washington D.C, 20250; (2) Office of 
Personnel Management, Patsy Stevens, Systems Innovation Group Manager, 
(202) 606-1574, U.S. Office of Personnel Management, 1900 E Street, 
NW., Room 7456, Washington, DC 20415.

SUPPLEMENTARY INFORMATION: The goals of this demonstration project are 
to improve workforce performance and promote mission accomplishment by 
making employees' pay increases more performance-sensitive, so that 
only Fully Successful and higher performers will receive any pay 
adjustments and the best performers will receive the largest pay 
adjustments. This will produce such measurable outcomes as improving 
the quality of new hires, increasing the proportion of agency positions 
that remain filled, improving supervisors' and employees' commitment to 
a highly effective performance culture, retaining good performers, 
making line managers more responsible and accountable for human 
resources management, improving the effectiveness and efficiency of 
human resources systems, and closing human capital gaps for supervisory 
and mission-critical occupations (e.g., the gap between the number of 
employees required at each competency proficiency level to perform 
current and future missions and the number of existing employees at 
those levels).

Linda M. Springer,
Director.

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems with the Present System
    C. Changes Required/Expected Benefits
    D. Participating Organizations
    E. Participating Employees
    F. Labor Participation
    G. Project Design
III. Personnel System Changes
    A. Pay Banding Classification and Pay System
    1. Establishment of Career Paths and Pay Bands
    2. Position Classification
    3. Delegation of Classification Authority
    4. Classification Appeals
    5. Elimination of Fixed Steps
    6. Rate Range
    7. Locality Pay
    8. Rate of Basic Pay Upon Initial Appointment
    9. Rate of Basic Pay Upon Promotion
    10. Rate of Basic Pay in Noncompetitive Lateral Actions
    11. Other Pay Administration Provisions
    12. Staffing Supplements
    13. Status as GS Employees
    B. Performance Appraisal System
    1. Program Requirements
    2. Supervisory Accountability
    3. Reconsideration of Ratings
    C. Performance-based Pay Increases and Awards
    1. Performance Shares
    2. Performance Pay Pools
    3. Performance-based Pay Increases
    4. Employees Who Cannot Receive a Performance Pay Increase
    5. Performance Awards
    D. Developmental Pay Increases
    E. Staffing
    1. Minimum Qualification Requirements
    2. Flexible Pay Setting for New Hires
    3. Promotions
    F. Reduction-in-Force
IV. Training
V. Conversion
    A. Conversion to the Demonstration Project
    B. Conversion to the General Schedule
VI. Project Modification
VII. Project Duration
VIII. Project Evaluation
IX. Costs
    A. Buy-in Costs
    B. Recurring Costs
X. Waiver of Laws and Regulations Required

I. Executive Summary

    This project was designed by the United States Department of 
Agriculture (USDA), including the Food Safety and Inspection Service 
(FSIS), with participation of and review by the U.S. Office of 
Personnel Management (OPM). The demonstration project will pursue 
several key objectives: to simplify the current classification system 
for greater flexibility in classifying work and paying employees; to 
reaffirm the performance management and rewards system for improving 
individual and organizational performance; to assure that the 
allocation of annual pay increases reflects distinctions in levels of 
performance in a meaningful way; and to test the effectiveness of 
multi-grade pay bands in recruiting, advancing and retaining employees. 
The duration of the project will be 5 years, except that the project 
may be extended by OPM if further testing and evaluation are warranted.
    The proposed project will test whether a results-based, competency-
linked pay-for-performance system can be successful in USDA. Previous 
alternative pay systems that used competency models (e.g., the 
Government Accountability Office (GAO) compensation system and the 
Department of Defense (DOD) Acquisition Workforce Demonstration 
Project) did not focus on missions or occupations related to public 
health or food defense. Moreover, the workforce covered by the proposed 
demonstration project is predominantly supervisory (about 40%), and it 
is important to

[[Page 26438]]

establish effective pay-for-performance policies and procedures for 
supervisory positions before extending such systems to large numbers of 
line worker positions throughout the Federal Government. Finally, a 
substantial number of the covered employees (approximately 30 percent) 
have working conditions that are dramatically different from other 
white-collar workers (e.g., shift-oriented work in slaughter or meat 
processing facilities), including the requirement for substantial 
amounts of regularly-scheduled and intermittent overtime.

II. Introduction

A. Purpose

    The purpose of the proposed project is to strengthen the 
contribution of human resources management in helping to achieve the 
missions of the specific program areas of FSIS. The proposed project 
will test whether a results-based, competency-linked, pay-for-
performance system and related innovations will produce successful 
results in a public health regulatory environment with distinct working 
conditions and an ever-present concern for food defense and security.

B. Problems with the Present System

    The USDA Strategic Human Capital Plan and the President's 
Management Agenda require FSIS to manage human capital in the 21st 
century very aggressively. FSIS must achieve comprehensive human 
capital goals for strategic workforce planning, learning and workforce 
development, recruitment and retention, and evolution of a highly 
effective performance culture.
    The FSIS Strategic Plan calls for continued transformation of the 
existing workforce, which was recruited and trained during a time when 
food safety was considered a conventional inspection program governed 
by legislation such as the Federal Meat Inspection Act of 1906, the 
Poultry Products Inspection Act of 1957, the Wholesome Meat Act of 
1967, the Wholesome Poultry Products Inspection Act of 1968, and the 
Egg Products Inspection Act of 1970. This legislation was enacted when 
food industry practices were characterized by carcass-by-carcass 
organoleptic inspection. To carry out its public health regulatory 
missions today, FSIS must assure science-based development and 
execution of policy and must also emphasize risk-oriented assessment, 
planning, analysis, inspection, and management activities. Also, FSIS 
must recruit, develop, retain, and accomplish life-cycle management for 
a workforce that is educated and skilled in public health, food 
defense, food safety, public education, and emergency-response systems, 
programs, practices, and technologies. In addition to inspecting 
poultry and meat animals, poultry and meat products, and egg products, 
FSIS must accomplish a growing list of advanced public health functions 
to include conducting risk assessments to identify and evaluate the 
potential human health outcomes from the consumption of meat, poultry, 
and egg products.
    At best, the personnel system that currently covers USDA and FSIS 
employees is based on 20th century assumptions about the nature of 
public service. Although the current Federal personnel management 
system is based on important core principles, those principles operate 
in an inflexible, one-size-fits-all system of defining work, hiring 
staff, managing people, assessing and rewarding performance, and 
advancing personnel. These inherent weaknesses make support of the FSIS 
mission complex, costly, and, ultimately, risky from the standpoint of 
public health. Currently, pay and the movement of personnel are pegged 
to outdated, narrowly-defined work definitions, hiring processes are 
cumbersome, and high performers and low performers are generally paid 
alike. These systemic inefficiencies detract from the potential 
effectiveness of the public health workforce.
    The challenges facing USDA and FSIS today to assure and improve the 
public health from farm to table require a workforce transformation. 
FSIS employees are being asked to assume new and different 
responsibilities, take more initiative, and be more innovative, agile, 
and accountable than ever before. It is critical that USDA and FSIS 
support the entire public health workforce with modern systems, 
particularly a human resources management system that supports and 
protects their critical role in public health, food safety, and food 
security.

C. Changes Required/Expected Benefits

    The innovations of the project and their objectives are summarized 
below.
1. Pay Banding and Classification
    Occupational groups will be placed in appropriate career paths, pay 
bands will replace grades, and agency pay band standards will replace 
OPM position classification standards. The classification system will 
be automated as much as possible through intranet-based classification 
tools, and authority will be delegated to line managers (at least one 
level below the Deputy Assistant Administrator level).
    These changes are intended to simplify and speed up the 
classification process, make the process more serviceable and 
understandable, improve the effectiveness of classification decision-
making and accountability, and facilitate pay for performance.
    Pay bands, which generally correspond to multiple grade levels, 
provide larger classification targets that can be defined by shorter, 
simpler, and more understandable classification standards. This simpler 
system will be easier to automate, will require fewer resources to 
operate, and will facilitate delegation to line managers.
    By providing broader and more flexible pay ranges for setting entry 
pay, pay banding will provide hiring officials with an important tool 
for attracting high-quality candidates and thus contribute to the 
objective of increasing the quality of new hires.
    By providing more flexible pay progression based on performance, 
pay banding will give managers the ability to increase the pay of good 
performers to higher and more competitive levels, thus improving the 
retention of good performers. At the same time, the potential for 
higher pay increases for good performance, supported by the broader pay 
ranges of a pay banding system, will contribute to the objective of 
improving organizational and individual performance.
2. Staffing
    Additional staffing tools will include such elements as flexible 
entry salaries, staffing supplements for employees in the applicable 
special rate categories, developmental pay increases, and more flexible 
pay increases associated with promotion.
    These changes are intended to attract high-quality candidates and 
increase the retention of good performers. Flexible pay-setting for new 
hires is a recruiting tool that gives hiring officials greater 
flexibility to offer more competitive salaries to high-quality 
candidates, addressing the objective of improving the quality of new 
hires. This will be used in conjunction with existing recruitment and 
retention incentives under title 5.
3. Pay
    The most important change in pay administration is the introduction 
of a pay-for-performance system. The pay-for-performance system will 
support several objectives. It will strengthen the organization's 
performance culture. It will promote fairness through the

[[Page 26439]]

results-based, competency-linked, performance rating process. It will 
provide a motivational tool as well as a retention tool. As a 
motivational tool, the promise of higher pay increases for good 
performance encourages high achievement. As a retention tool, a pay-
for-performance system allows the organization to quickly move the 
salaries of good performers to levels that are more competitive in the 
labor market. The promise of higher pay increases for good performance 
will encourage achievement and promote the objective of improved 
individual and organizational performance.
    Under the proposed pay-for-performance system, employee performance 
ratings will govern individual pay progression within pay bands. Any 
general increase in GS rates of basic pay approved by Congress and the 
President will be applied only to the FSIS band ranges (i.e., band 
minimums and maximums). Demonstration project employees will receive 
pay increases based on their rating of record. Funds currently applied 
to within-grade increases, quality step increases, and the annual GS 
pay adjustment will be used to grant these performance-based pay 
increases. Employees rated below Fully Successful will not receive any 
basic pay increase, nor will they receive pay increases when locality 
pay percentages are increased. (See section III.C.)
    In addition, employees in developmental positions may receive 
additional pay increases. Funds used for career ladder promotions from 
one grade to a higher grade will initially be used to fund these 
developmental pay increases. These pay increases may be granted to an 
employee to recognize the faster progression that can occur in a 
developmental position. This pay flexibility addresses the objective of 
improving retention by raising the pay of high-performing employees 
while also supporting the objective of preserving merit system 
principles (e.g., equal pay for work of equal value). (See section 
III.D.)
4. Performance Appraisal
    The demonstration project will continue to use the current FSIS 
appraisal program including the current five-level rating process, 
which incorporates competencies into the performance standards. (The 
five-level rating system has the following levels: 1--Unacceptable, 2--
Marginal, 3--Fully Successful, 4--Superior, and 5--Outstanding.) The 
performance appraisal process is intended to (1) promote good 
performance; (2) encourage a continuing dialogue between supervisors 
and employees on organizational objectives, supervisory expectations, 
employee performance, employee needs for assistance and guidance, and 
employee development; and (3) provide a basis for performance-related 
decisions in employee development, pay, rewards, assignment, promotion, 
and retention. The program will more effectively communicate to 
employees how they are performing, the rewards of good performance, and 
the consequences of poor performance.
5. Pay for Performance
    The most important feature of the demonstration project is that it 
links the employee's rating of record to shares of a performance pay 
pool. Performance-based pay increases give an operating unit the 
ability to raise the pay of good performers more rapidly, thus 
improving retention of good performers. Performance pay is distributed 
to employees either in the form of increases in base pay or, when the 
employee reaches a band maximum (or is on retained pay), in the form of 
a performance bonus. The number and type of performance pay pools will 
be described in implementing guidance, but performance ratings will be 
linked to performance pay shares so that employees who earn a level 
five rating (the highest) will earn the greatest number of performance 
pay shares, employees who earn a level four rating will earn a smaller 
number of shares, and employees who earn a level three rating will earn 
the fewest number of performance shares. Employees rated below level 
three will not be eligible for performance pay increases.
6. Performance Awards
    Existing programs for both non-monetary and monetary recognition 
will remain under the plan in accordance with chapter 45 of title 5, 
United States Code.
    Awards address two objectives. First, rewarding achievement will 
make high achievers more likely to remain, thus improving retention of 
the best performers. Second, the potential for awards for achievement 
will encourage improved individual performance. Although FSIS is not 
testing any new procedures under the demonstration project authority in 
chapter 47 of title 5, awards are a key part of a performance pay 
system and therefore noted here to clarify their use and provide a full 
picture of the project plan.
7. Line Management Authority
    The program areas will delegate greater authority and 
accountability to line managers. This delegation is intended to improve 
the effectiveness of human resources management by strengthening the 
role of line managers as the human resources managers of their units. 
The project will be managed by the FSIS Demonstration Project 
Management Board (DPMB), composed of representatives from each 
operating unit (program area) and chaired by the Assistant 
Administrator for the Office of Management.

D. Participating Organizations

    The Department proposes that FSIS be the only agency participating 
in this project. The Department and FSIS have determined that employees 
in all program areas in the agency, including headquarters and field 
employees, will participate, except that all bargaining-unit members 
will be excluded. Including all bargaining unit members would cause the 
project to exceed the 5,000 limit on the number of participating 
employees. Included in the project are all non bargaining-unit 
employees located in meat and poultry plants throughout the United 
States (excluding intermittent food inspection personnel (GS-1863) 
appointed under Schedule A 213.3113(1)(3) and Schedule C employees), 15 
District Offices, 3 Field Laboratories, a Technical Service Center in 
Omaha NE, a Financial Processing Center in Des Moines IA, a Human 
Resources Field Office in Minneapolis MN, as well as all Headquarters 
program offices. Each of these units is committed to operating a 
credible, robust performance appraisal program aligned to the 
organization's strategic goals and objectives. These organizations have 
demonstrated this commitment the past two years, as FSIS implemented a 
comprehensive performance management training program within the 
agency.

E. Participating Employees

    The demonstration project covers all General Schedule employees 
(with pay plan codes GS and GM) in non-bargaining unit positions. The 
excluded bargaining unit positions are nonsupervisory positions in the 
food technology (GS-1382), food inspection (GS-1863), and consumer 
safety inspection (GS-1862) series and non-bargaining food inspection 
(GS-1863) employees appointed under Schedule A 213.3113(1)(3).
    Also excluded from coverage of this project are all Senior 
Executive Service (SES), Senior Level (SL), and Federal Wage System 
(WG) employees, and all Schedule C employees.
    Table 1 shows the number of employees subject to coverage under 
this project by occupational series and

[[Page 26440]]

grade. The OPM occupational series will be retained for all covered 
positions.

                                                                Table 1.--Covered Employees, by Series and Grade (as of 01/08/08)
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                             Series                                  1       2       3       4       5       6       7       8       9      10      11      12      13      14      15     Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0018............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       4       1  ......  ......       5
0080............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1  ......       1
0099............................................................  ......  ......  ......       1  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1
0101............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       1
0110............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       4  ......       5
0199............................................................  ......  ......  ......       1  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1
0201............................................................  ......  ......  ......  ......  ......  ......  ......  ......      10  ......       4      26      41      21       4     106
0203............................................................  ......  ......  ......  ......       6       5      17  ......  ......  ......  ......  ......  ......  ......  ......      28
0260............................................................  ......  ......  ......  ......  ......  ......  ......  ......       3  ......       1       1       8       4       1      18
0299............................................................  ......  ......  ......  ......  ......  ......       1  ......       2  ......  ......  ......  ......  ......  ......       3
0301............................................................  ......  ......  ......  ......  ......  ......       1  ......      46       1       1      23      20      19      11     122
0303............................................................       3  ......       3      14       9       4      12  ......       1  ......  ......  ......  ......  ......  ......      46
0305............................................................  ......  ......       1       5       1  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       7
0318............................................................  ......  ......  ......  ......       4      16      37       8       4  ......  ......  ......  ......  ......  ......      69
0326............................................................  ......       1  ......      14  ......       9  ......  ......  ......  ......  ......  ......  ......  ......  ......      24
0335............................................................  ......  ......  ......       1  ......       5       1  ......  ......  ......  ......  ......  ......  ......  ......       7
0340............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......      35      28      63
0341............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1  ......       1  ......  ......       2
0342............................................................  ......  ......  ......  ......  ......  ......  ......  ......       1  ......  ......  ......       1       1  ......       3
0343............................................................  ......  ......  ......  ......  ......  ......       1  ......      16  ......      15      34      52      32      14     164
0344............................................................  ......  ......  ......  ......       1       4      35  ......  ......  ......  ......  ......  ......  ......  ......      40
0361............................................................  ......  ......  ......  ......  ......  ......       1  ......  ......       1  ......  ......  ......  ......  ......       2
0391............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       1  ......  ......       2
0399............................................................  ......  ......  ......       1  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1
0401............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       4       1       2       7
0403............................................................  ......  ......  ......  ......  ......  ......  ......  ......       6  ......       2      30      35      16       2      91
0404............................................................  ......  ......       5       2       1       1       8  ......      11  ......       2  ......  ......  ......  ......      30
0414............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1  ......  ......  ......       1
0415............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       2       1  ......       3
0499............................................................  ......       1       1       1       1  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       4
0501............................................................  ......  ......  ......  ......  ......  ......       2  ......       5  ......       4       2       6       6       3      28
0503............................................................  ......  ......  ......       2      22       6       5       3  ......  ......  ......  ......  ......  ......  ......      38
0510............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       8      10       3  ......      21
0544............................................................  ......  ......  ......  ......  ......  ......       3  ......  ......  ......  ......  ......  ......  ......  ......       3
0560............................................................  ......  ......  ......  ......  ......  ......  ......  ......       1  ......  ......       5       3       3       1      13
0561............................................................  ......  ......  ......  ......  ......  ......       1  ......  ......  ......  ......  ......  ......  ......  ......       1
0599............................................................  ......  ......  ......       1  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1
0601............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       6       6       1      13
0602............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1  ......       1
0690............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       1  ......  ......       2
0696............................................................  ......  ......  ......  ......  ......  ......       2  ......       3  ......      14     161      83       2  ......     265
0699............................................................  ......  ......  ......       2  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       2
0701............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......      74     678     184      25       6     967
0799............................................................  ......  ......  ......  ......  ......  ......      19  ......  ......  ......       1  ......  ......  ......  ......      20
0896............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       1  ......       2
1035............................................................  ......  ......  ......  ......  ......  ......       1  ......       1  ......       3       5       7       1  ......      18
1071............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       2  ......  ......  ......  ......       2
1084............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1  ......  ......  ......  ......       1
1101............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       3       1       1       5
1102............................................................  ......  ......  ......  ......  ......  ......  ......  ......       1  ......  ......       3       3       2  ......       9
1301............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       2       2  ......       4
1311............................................................  ......  ......  ......       1       1       1  ......  ......       6  ......       2  ......  ......  ......  ......      11
1320............................................................  ......  ......  ......  ......  ......  ......  ......  ......       2  ......       5      33      20       6  ......      66
1382............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       8       3  ......      11
1412............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       7       1       1  ......      10
1501............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       3       2  ......       5
1515............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       1  ......  ......       2
1529............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       2       1  ......       3
1654............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       1       1  ......  ......       3
1701............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1  ......  ......       1
1702............................................................  ......  ......  ......  ......  ......       1  ......       1  ......  ......  ......  ......  ......  ......  ......       2
1801............................................................  ......  ......  ......  ......  ......  ......       1  ......       1  ......      41      71      30      16       2     162
1810............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       6       2       1  ......       9
1862............................................................  ......  ......  ......  ......  ......  ......  ......      15     115  ......  ......  ......  ......  ......  ......     130
1863............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       1       4  ......  ......       5
1899............................................................  ......  ......  ......       1       1  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       2
2001............................................................  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......       3  ......       2  ......  ......       5
2005............................................................  ......  ......  ......  ......  ......       1  ......  ......  ......  ......  ......  ......  ......  ......  ......       1
2210............................................................  ......  ......  ......  ......  ......  ......  ......  ......       2  ......       2      34      30      18       3      89
2299............................................................  ......  ......  ......  ......  ......  ......  ......  ......       1  ......  ......  ......  ......  ......  ......       1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total.......................................................       3       2      10      47      56      44     148      27     238       2     180   1,137     581     236      80   2,791
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[[Page 26441]]

F. Labor Participation

    No bargaining-unit employees are covered in this project.

G. Project Design

    The project methodology is to introduce into all FSIS program areas 
(for covered positions) certain innovations in human resources 
management, and to evaluate over time the effects of those innovations 
on the ability of the program areas to manage their human resources. 
The methodology includes the following steps:
    1. Selection of Innovations: The Department and FSIS have 
determined that particular pay banding and performance-based pay 
progression innovations that are linked to a framework of core 
competencies should be included in the proposed project. These 
innovations, and the procedures associated with them, are described 
below under Pay Banding Classification and Pay System, Performance 
Appraisal System, Performance-based Pay Increases and Awards, 
Developmental Pay Increases, Staffing and Reduction-in-Force (See 
Section III, A through F).
    2. Selection of Program Areas: The Department and FSIS have 
selected all program areas of the agency for inclusion in the project 
since the total number of non-bargaining unit employees is 
approximately 2,900 (part-time, full-time, and intermittent) and falls 
within the maximum of 5,000 allowed for a demonstration project.
    3. Goals and Objectives: The specific project objectives are listed 
under SUPPLEMENTARY INFORMATION and Executive Summary and are directly 
related to the issues identified under Section II.B, Problems with the 
Present System.
    4. Partnership: The Department and FSIS have limited the covered 
workforce to non-bargaining unit positions. Therefore, input from labor 
representatives is not required. However, consistent with the policy of 
the agency Administrator, FSIS will seek input from two employee 
associations whose membership overlaps with the covered workforce.
    5. Baseline Evaluation: To provide a basis of comparison between 
employee opinions of the current system and their future opinions of 
the project system, each employee in the covered program areas will be 
asked to complete an opinion questionnaire comparable to the Federal 
Human Capital Survey prior to implementation of the project. To 
establish a baseline for cost analysis, each operating unit will be 
required to analyze its personnel costs during fiscal years 2005, 2006, 
and 2007.
    6. Training: The agency and the program areas will provide training 
to managers, employees, and human resources staff prior to 
implementation of the project and will provide additional training to 
managers on the pay-for-performance system prior to the end of the 
first performance cycle. (See Section IV, Training.)
    7. Implementation: To ensure a smooth implementation, the agency 
will emphasize top management support; the development of detailed 
operating procedures and implementing directives prior to 
implementation; thorough training of managers, employees and human 
resources staff; step-by-step implementation planning; adequate backup 
systems, particularly in automated personnel and payroll systems; and 
sufficient operating resources.
    8. Program Evaluation: The Department and FSIS will arrange for 
periodic evaluation of the project under an OPM-approved evaluation 
plan. (See Section VIII, Project Evaluation.) The evaluation will be 
designed to determine whether the innovations are achieving project 
goals and objectives and are operating within acceptable cost limits. 
(See Section IX, Costs.)

III. Personnel System Changes

A. Pay Banding Classification and Pay System

1. Establishment of Career Paths and Pay Bands
    In coordination with OPM, FSIS may establish, and adjust over time, 
career paths that group one or more occupational categories together 
and provide a common pay banding structure ( i.e., a set of work levels 
and rate ranges) for occupations within a given career path. Initially, 
FSIS intends to establish four career paths as follows:
    (a) Professional, Scientific, and Administrative [AP]: Policy, 
staff, line, supervisory, and managerial positions in science, 
veterinary medicine, consumer safety, food technology, mathematics, 
accounting, and other comparable occupations with a positive education 
requirement. Examples of occupational series are 0403-Microbiology, 
0510-Accounting, 0696-Consumer Safety, 0701-Veterinary Medical Science, 
and 1301-General Physical Science. In addition, this career path will 
include policy, staff, line, supervisory, and managerial positions in 
such fields as finance, procurement, human resources management, public 
information, management and program analysis, compliance investigation, 
and other two-grade interval occupations that do not maintain a 
positive education requirement. Examples of these occupational series 
are 0201-Human Resources Management, 0343-Management and Program 
Analysis, 1035-Public Affairs.
    (b) Supervisory Inspection [AI]: Supervisory positions that direct 
the work of inspectors at an import warehouse, a plant, or in a circuit 
of plants within a geographic area. These positions are 1862-
Supervisory Consumer Safety Inspectors.
    (c) Scientific and Technical Support [AS]: Line positions, 
predominantly in agency laboratories, which support professional and 
scientific operations. Examples include 0404-Biological Science 
Technician, 1311-Physical Science Technician and similar traditional 
one-grade interval technician support occupations in agency 
laboratories.
    (d) Management Support [AO]: Nonsupervisory and supervisory 
clerical and assistant positions that support positions not fitting the 
definition of any other career paths. Examples include 203-Human 
Resources Assistant, 318-Secretary, 326-Office Automation Assistant, 
344-Management Assistant and similar traditional one-grade interval 
technician and administrative support occupations.
    Each career path will be subdivided into pay bands. Each pay band 
will correspond to one or more GS grades. Pay bands provide larger 
classification targets that can be defined by shorter, simpler and more 
understandable classification standards. In coordination with OPM, FSIS 
may establish, and adjust over time, a career path's pay band 
structure. Initially, the pay bands within each career path and their 
relationship to GS grades will be as follows:

[[Page 26442]]



                                                         Table 2.--Sample Pay Bands Under PHHRS
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Career path                Pay band 1          Pay band 2          Pay band 3          Pay band 4          Pay band 5           Pay band 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Administrative, Professional,    GS-1/4 (Student     GS-5/7 Trainee....  GS-9/11             GS-12/13 * Full     GS-14 Expert......  GS-15 Senior Expert
 and Scientific (AP).             Trainee).                               Intermediate.       Performance.       Pay Band 5S.......  Pay Band 6S
                                                                                                                 GS-13/14            GS-15 Manager
                                                                                                                  Supervisor.
Supervisory Inspection (AI)....  ..................  ..................  GS-8/9 Supervisory  GS-10/11 Senior
                                                                          Inspectors.         Supervisors.
Scientific & Technical (AS)....  GS-1/4 (Aide).....  GS-5/6/7 Entry....  GS-8/9 Independent  GS-10/11 Expert &
                                                                                              Supervisory.
Management Support (AO)........  GS-1/4 Clerical     GS-5/6/7 Assistant  GS-8/9/10 Senior
                                  (Entry).            or Clerical         or Lead
                                                      Supervisor.         Assistant, and
                                                                          Supervisor .
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Also includes supervisory positions where the band-controlling work is actually personally performed non-supervisory work.

    The final pay banding architecture will be described in 
implementing guidance. FSIS will coordinate changes in career paths or 
pay banding structures with OPM. After coordination with OPM, FSIS will 
give affected employees advance notice and an opportunity to comment 
before effecting a change with respect to career paths or pay banding 
structure.
2. Position Classification
    Occupational groups will be placed in career paths, pay bands will 
replace grades, and FSIS pay band standards will replace OPM position 
classification standards. The General Schedule occupational series will 
be retained.
    Each classification standard will describe the threshold of work 
encompassed by each pay band based on general duties and 
responsibilities, knowledge, skills, and abilities. FSIS will establish 
classification standards in consultation with OPM. Positions must meet 
or exceed the threshold to be classified into a pay band. These bases 
complement each other at each pay band in a career path and may not be 
separated in classifying a position. OPM classification standards will 
not be used directly, but may be used indirectly to establish 
competency criteria that distinguish pay bands or pay levels within a 
key career path.
3. Delegation of Classification Authority
    The agency has delegated classification authority to SES and GS-15 
executives and managers since July 2004. The delegated classification 
authority (DCA) provisions of this project continue this initiative and 
increase the number of managers who receive classification authority. 
Managers must successfully complete DCA training before classification 
authority may be exercised. The delegation of classification authority 
will be facilitated by the expansion of an intranet-based Position 
Description Library, which will include standard descriptions of all 
key positions in all career paths and pay bands. Line managers will 
utilize this intranet-based Position Description Library to select or 
classify most positions. These changes are intended to simplify and 
speed up the classification process, make the process more serviceable 
and understandable, improve the effectiveness of classification 
decision-making and accountability, and facilitate pay for performance. 
Implementing guidance will describe the modified DCA policies and 
procedures.
4. Classification Appeals
    An employee covered by the FSIS Demonstration Project may appeal 
the occupational series, official title, or pay band of his or her 
position at any time to the agency, Department or directly to the 
Office of Personnel Management consistent with procedures currently 
prescribed under 5 CFR part 511, subpart F. Implementing guidance will 
describe the classification appeals process.
5. Elimination of Fixed Steps
    Employees will be converted from existing 15-grade GS position 
classification and pay system established under 5 U.S.C. chapter 51 and 
chapter 53, subchapter III, to the new pay banding system. The 10 fixed 
steps of each GS grade will not apply to employees participating in the 
demonstration project. The fixed-step system operates primarily to 
reward longevity. A pay banding pay system is an important element of 
any effort to make pay more performance-sensitive. No employee's pay 
will be reduced as a result of becoming covered by the demonstration 
project. (See section V.A.) However, demonstration project employees 
will no longer receive longevity-based, within-grade pay increases at 
prescribed intervals. Instead, they will be granted annual performance 
increases and bonuses as described in section III.C below.
6. Rate Range
    The normal minimum and maximum rates of the rate range for each pay 
band will equal the applicable step 1 rate and step 10 rate, 
respectively, for the lowest and highest grades, respectively, in the 
GS that are included in the pay band. The normal minimum and maximum 
rates of each band will be increased at the time of a general pay 
increase under 5 U.S.C. 5303 so they equal the new minimum and maximum 
rates of the grades corresponding to the band.
    The minimum rate of the pay band is extended 5 percent below the 
normal minimum for employees with a rating of record below Fully 
Successful. Such an employee's rate may fall below the normal pay band 
minimum when that minimum increases as a result of a pay band 
adjustment, but the employee cannot receive a pay increase because the 
employee's rating of record is below Fully Successful, as described in 
section III.C.4.
    The maximum rate of each pay band is extended 5 percent above the 
normal maximum for all employees with a rating of record at the highest 
level (currently called ``Outstanding'' in FSIS). This feature will 
help to ensure that the range of available pay rates will be adequate 
to recognize truly outstanding performance. The upper range extension 
is reserved for employees with an Outstanding rating. If an employee in 
the upper range extension is rated below the

[[Page 26443]]

Outstanding level, special provisions apply, as described in section 
III.A.11.
7. Locality Pay
    Locality-based comparability payments under 5 U.S.C. 5304 will be 
paid on top of the rate of basic pay in the same manner as those 
payments apply to GS employees (except as otherwise provided in this 
plan). Staffing supplements may apply as described in section III.A.12. 
When a locality-based comparability payment established under 5 U.S.C. 
5304 is increased, a demonstration project employee whose most recent 
rating of record is Fully Successful or higher is entitled to the 
increased locality payment.
    A demonstration project employee whose most recent rating of record 
is below Fully Successful is entitled to the increased locality 
payment, but his or her underlying rate of basic pay will be reduced in 
a manner that ensures the employee's total rate of pay does not 
increase. This reduction is necessary to ensure, in an administratively 
feasible way, that an employee rated less than Fully Successful will 
not receive a pay increase. It does not constitute a reduction in pay 
for purposes of applying the adverse action procedures in chapter 75 of 
title 5, United States Code. (Exception: An employee's rate of basic 
pay may not be reduced under this paragraph to the extent that the 
reduction would cause an employee's rate to fall more than 5 percent 
below the normal range minimum.)
    A locality rate cap 5 percent higher than the normal EX-IV cap is 
established to accommodate those Outstanding performers in the 5 
percent upper rate range extension. This higher cap will apply only to 
employees receiving a rate within the upper range extension. If the 
locality rate for an employee at the normal band maximum is affected by 
the EX-IV cap, resulting in an ``effective locality pay percentage'' 
that is less than the regular locality pay percentage, the locality 
rate for an employee in the upper rate range extension of the same band 
will be computed using that same effective locality pay percentage. 
(For example, if the regular locality pay percentage is 30 percent, but 
the EX-IV cap causes the amount of locality pay actually received by an 
employee at the normal band maximum to be 20 percent, that effective 
locality pay percentage of 20 percent would be used to compute locality 
pay for an employee in the upper range extension of the same band.)
8. Rate of Basic Pay Upon Initial Appointment
    Upon appointment to a demonstration project position under 
Delegated Examining, Direct-Hire Authorization or other authority 
primarily designed for initial entry into the Federal service (e.g., 
Veterans Employment Opportunity Act, 30% Disabled Veteran Appointment), 
an appointee's rate of basic pay may be set at any rate within the 
normal pay band range. In exercising this flexibility, FSIS will 
consider the appointee's qualifications, competing job offers, FSIS's 
need for the appointee's talents, the appointee's potential 
contributions to FSIS mission accomplishment, and the rates received by 
on-board employees. This flexibility will allow FSIS to compete more 
effectively with private industry for the best talent available. 
Implementing guidance will provide managers with assistance in setting 
pay to assure fair and equitable treatment of a diverse workforce.
9. Rate of Basic Pay Upon Promotion
    Upon promotion to a higher pay band within a career path or to a 
pay band in another career path with a higher maximum rate, an 
employee's rate of basic pay will be set at a rate within the higher 
pay band that provides a pay increase of 8 percent, unless a greater 
increase is necessary to set pay at the normal range minimum. (See 
section III.E.3 for definition of ``promotion.'') In consultation with 
OPM, FSIS may establish exceptions to this policy to deal with 
employees receiving a retained rate, employees who are re-promoted 
shortly after demotion, employees with exceptional performance 
warranting a larger increase with higher-management approval, etc. FSIS 
may adopt, in consultation with OPM, policies providing a promotion-
equivalent increase in appropriate circumstances to a Federal employee 
outside the demonstration project who accepts a position covered by the 
demonstration project.
10. Rate of Basic Pay in Noncompetitive Lateral Actions
    Upon non-competitive lateral movement (e.g., via transfer or 
reassignment, not conversion of position) to a demonstration project 
position from another Federal position, an employee's pay rate 
(including any locality payment or staffing supplement) will be set at 
an amount that is equal (after any geographic pay conversion) to the 
employee's existing pay rate (including any locality payment or 
equivalent basic pay supplement), subject to the applicable normal 
range maximum. For such an employee moving from a position outside the 
demonstration project, FSIS may provide an increase in the rate of 
basic pay immediately after movement to reflect the prorated value of 
the employee's next scheduled within-grade increase under the former 
pay system, consistent with the requirements in section V.A.
11. Other Pay Administration Provisions
    Annual performance-based pay increases described in section III.C.3 
will be made to the rate of basic pay. These increases are scheduled to 
be made on the same date that the annual rate range adjustments 
normally take effect--i.e., the first day of the first pay period 
beginning on or after January 1. To be eligible for an annual 
performance pay increase an employee must have a rating of record of 
Fully Successful or higher.
    Annual performance awards described in section III.C.5. provide for 
lump-sum cash payments recognizing performance and will be made at the 
same time as the annual performance pay increase. To be eligible for a 
performance award, an employee must have a rating of record of Fully 
Successful or higher.
    Developmental pay increases described in Section III.D may be paid 
no more than once during any 52-week period, following the mid-year 
progress review.
    The grade retention provisions in 5 U.S.C. 5362 and 5 CFR part 536 
are not applicable (i.e., no pay band retention). The pay retention 
rules in 5 U.S.C. 5363 and 5 CFR part 536 apply to demonstration 
project employees, subject to the following exceptions:
    (1) An employee with a rating of record below Fully Successful may 
not receive an increase in his or her retained rate under the 50-
percent adjustment rule in 5 U.S.C. 5363(b)(2)(B);
    (2) The cap on retained rates is equal to the rate for level IV of 
the Executive Schedule plus 5 percent (instead of the EX-IV cap 
established in 5 CFR 536.306) in order to accommodate the upper range 
extension;
    (3) An employee in the upper range extension who is rated below 
Outstanding will be converted to a retained rate before processing any 
other pay action; and
    (4) The range maximum rate used in computing retained rate 
adjustments under the 50-percent adjustment rule will be the maximum 
rate of the highest applicable rate range (including any applicable 
locality payment or staffing

[[Page 26444]]

supplement) taking into consideration an employee's rating of record. 
For retained rate employees rated Outstanding, the increase is 50 
percent of the dollar change in the applicable adjusted rate for the 
upper range extension maximum. (Note that an employee rated Outstanding 
must have a retained rate in excess of the upper range extension 
maximum adjusted rate, since he or she would otherwise be converted to 
a rate within that range extension.) For retained rate employees rated 
below Outstanding, the increase is 50 percent of the dollar change in 
the applicable adjusted rate for the normal band maximum.
    If an employee is receiving a retained rate that is less than the 
applicable adjusted maximum rate (including any applicable locality 
payment or staffing supplement) for the upper range extension for the 
employee's band, and if that employee receives a rating of record of 
Outstanding, the employee's retained rate will be terminated and 
converted to an equal adjusted rate (base rate in upper range extension 
plus applicable locality payment or staffing supplement). This 
conversion must be processed before any other pay adjustment.
    For a retained rate employee with a rating of record of 
Outstanding, if a retained rate increase provided at the time of a 
range adjustment results in the retained rate falling below the 
applicable adjusted rate for the upper range extension maximum, the 
employee's retained rate will be terminated, and the employee's pay 
will be set at the maximum rate of the upper range extension.
    For a retained rate employee with a rating of record of Fully 
Successful or Superior, if a retained rate adjustment provided at the 
time of a range adjustment results in the retained rate falling below 
the applicable adjusted rate for the normal band maximum, the 
employee's retained rate will be terminated, and the employee's pay 
will be set at the normal band maximum rate.
    For a retained rate employee with a rating of record below Fully 
Successful, the retained rate is frozen and not subject to adjustment. 
When such an employee's retained rate falls below the applicable 
adjusted rate for the normal band maximum, the employee's retained rate 
will be terminated, and the employee's pay will be set at an adjusted 
rate equal to the retained rate (i.e., the rate is not set at the range 
maximum).
    As required by 5 CFR 536.304(a)(2) and 536.305(a)(2), any general 
pay adjustment, including a retained rate adjustment as described in 
the preceding paragraphs, must be processed before any other 
simultaneous pay action (such as a geographic pay conversion).
    When applicable, the saved pay rules in 5 U.S.C. 3594 and 5 CFR 
359.705 for former SES members continue to apply to demonstration 
project employees, except that (1) an employee with a rating of record 
below Fully Successful may not receive an increase in his or her saved 
rate under 5 U.S.C. 3594(c)(2); and (2) the 50-percent adjustment rule 
must be applied in the same manner as it is applied for a retained rate 
under 5 U.S.C. 5363, subject to the modifications described in the 
preceding paragraphs. The rules regarding termination of a saved rate 
when it falls below the applicable adjusted maximum rate must be 
parallel to those governing termination of a retained rate under 5 
U.S.C. 5363, subject to the modifications described in the preceding 
paragraphs.
    FSIS may adopt supplemental pay administration policies governing 
matters not specifically addressed in this plan, subject to any OPM 
guidance. In addressing geographic conversions and simultaneous pay 
actions, such rules must be consistent with 5 CFR 531.205 and 5 CFR 
531.206, respectively.
12. Staffing Supplements
    An employee who is assigned to an occupational series and 
geographic area covered by an OPM-established special rates schedule, 
and who meets any other applicable coverage requirements, will be 
entitled to a staffing supplement if the maximum adjusted rate for a 
covered position in the GS grades corresponding to the employee's band 
is a special rate that exceeds the applicable maximum GS locality rate. 
The staffing supplement is added on top of the rate of basic pay in the 
same manner as locality pay. An employee will receive the higher of the 
applicable locality payment or staffing supplement.
    For employees being converted into the demonstration project, the 
employee's total pay immediately after conversion will be the same as 
immediately before, but a portion of the total will be in the form of a 
staffing supplement. Adverse action and pay retention provisions will 
not apply to the conversion process as there will be no change in the 
total salary rate. The staffing supplement is calculated as described 
below.
    Upon conversion, the demonstration base rate will be established by 
dividing the employee's former GS adjusted rate (the higher of special 
rate or locality rate) by the staffing factor. The staffing factor will 
be determined by dividing the maximum special rate for the banded 
grades by the GS base rate corresponding to that special rate (step 10 
GS base rate for the same grade as the special rate). The employee's 
demonstration staffing supplement is derived by multiplying the 
demonstration base rate by the staffing factor minus one. Therefore, 
the employee's final demonstration special staffing rate equals the 
demonstration base rate plus the special staffing supplement; this 
amount will equal the employee's former GS adjusted rate.
    Simplified, the formula is this:

Staffing factor=(Maximum special rate for banded grades)/(GS base rate 
corresponding to that special rate)
Demonstration base rate=(Former GS adjusted rate [special or locality 
rate])/ (Staffing factor)
Staffing supplement=demonstration base rate x (staffing factor-1)
Salary upon conversion=demonstration base rate + staffing supplement 
[sum will equal existing rate]

    If a special rate employee is converted to a band where the maximum 
GS adjusted rate for the banded grades is a locality rate, when the 
employee is converted into the demonstration project, the demonstration 
base rate is derived by dividing the employee's former special rate by 
the applicable locality pay factor (for example, in the Washington-
Baltimore area, the locality pay factor is 1.2089 in 2008). The 
employee's demonstration locality-adjusted rate will equal the 
employee's former GS adjusted rate.
    Any GS or special rate schedule adjustment will require 
recomputation of the staffing supple