Science and Technology Reinvention Laboratory Personnel Management Demonstration Project, Department of Navy (DON), Office of Naval Research (ONR), 30198-30241 [2010-12690]

Agencies

• Office of the Secretary
• DEPARTMENT OF DEFENSE

[Federal Register Volume 75, Number 103 (Friday, May 28, 2010)]
[Notices]
[Pages 30198-30241]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-12690]



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Part IV





Department of Defense





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Science and Technology Reinvention Laboratory Personnel Management 
Demonstration Project, Department of Navy (DON), Office of Naval 
Research (ONR); Notice

Federal Register / Vol. 75 , No. 103 / Friday, May 28, 2010 / 
Notices

[[Page 30198]]


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DEPARTMENT OF DEFENSE

Office of the Secretary


Science and Technology Reinvention Laboratory Personnel 
Management Demonstration Project, Department of Navy (DON), Office of 
Naval Research (ONR)

AGENCY: Office of the Deputy Under Secretary of Defense (Civilian 
Personnel Policy) (DUSD (CPP)), (DoD)

ACTION: Notice of proposal to adopt a demonstration project plan and 
additional flexibilities.

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SUMMARY: The Office of Naval Research (ONR) proposes to adopt the Naval 
Research Laboratory (NRL) Personnel Management Demonstration Project 
with modifications and one flexibility from the U.S. Army Aviation and 
Missile Research, Development and Engineering Center (AMRDEC). The 
majority of flexibilities and administrative procedures are expected to 
be adopted without changes. However, modifications are made when 
necessary to address ONR's specific organizational, workforce, and 
approval needs; technical modifications to conform to changes in the 
law and governing Office of Personnel Management (OPM) regulations, 
which are not being waived, that were effected after the publication of 
the NRL personnel demonstration project plan; and changes in response 
to comments received during the 30-day comment period.

DATES: ONR's adoption proposal may not be implemented until a 30-day 
comment period is provided, comments addressed, and a final Federal 
Register notice published. To be considered, written comments must be 
submitted on or before June 28, 2010.

ADDRESSES: Send comments on or before the comment due date by mail to 
Ms. Betty A. Duffield, CPMS-PSSC, Suite B-200, 1400 Key Boulevard, 
Arlington, VA 22209-5144; by fax to (703) 696-5462; or by e-mail to 
Betty.Duffield@cpms.osd.mil.

FOR FURTHER INFORMATION CONTACT: Office of Naval Research: Ms. Margaret 
J. Mitchell, Director, Human Resources Office, Office of Naval 
Research, 875 North Randolph Street, Code 01HR, Arlington, VA 22203; 
Margaret.J.Mitchell@navy.mil.
    DoD: Ms. Betty A. Duffield, CPMS-PSSC, Suite B-200, 1400 Key 
Boulevard, Arlington, VA 22209-5144.

SUPPLEMENTARY INFORMATION: Section 342(b) of the National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 1995, Public Law 103-337, 
as amended (10 U.S.C. 2358 note) by section 1109 of NDAA FY 2000, 
Public Law 106-65, and section 1114 of NDAA FY 2001, Public Law 106-
398, authorizes the Secretary of Defense (SECDEF) to conduct personnel 
management demonstration projects at DoD laboratories designated as 
Science and Technology Reinvention Laboratories (STRLs). Section 1107 
of NDAA FY 2008, Public Law 110-181, as amended by section 1109 of NDAA 
FY 2009, Public Law 110-417, requires the SECDEF to execute a process 
and plan to employ the personnel management demonstration project 
authorities granted to the Office of Personnel Management under title 5 
United States Code (U.S.C.) section 4703 at the STRLs previously 
enumerated in 5 U.S.C. 9902(c)(2), and now redesignated in section 1105 
of NDAA FY 2010, Public Law 111-84, 123 Stat. 2486, and 73 FR 73248, to 
enhance the performance of the missions of the laboratories. Section 
1107 of Public Law 110-181 further authorizes in subsection 1107(c) 
that any flexibility available to any demonstration laboratory shall be 
available for use at any other laboratory as previously enumerated in 
title 5 U.S.C. 9902(c)(2). The Office of Naval Research (ONR) is listed 
as one of the previously designated 5 U.S.C. 9902(c)(2) STRLs.

1. Background

    Since 1966, many studies of Department of Defense (DoD) 
laboratories have been conducted on laboratory quality and personnel. 
Almost all of these studies have recommended improvements in the 
civilian personnel policy, organization, and management. Pursuant to 
the authority provided in section 342(b) of Public Law 103-337, as 
amended, a number of DoD STRL personnel demonstration projects were 
approved. These projects are ``generally similar in nature'' to the 
Department of Navy's ``China Lake'' Personnel Demonstration Project. 
The terminology, ``generally similar in nature,'' does not imply an 
emulation of various features, but rather implies a similar opportunity 
and authority to develop personnel flexibilities that significantly 
increase the decision authority of laboratory department heads and/or 
directors.
    This demonstration project involves: (1) Streamlined delegated 
examining; (2) noncitizen hiring; (3) expanded detail authority; (4) 
extended probationary period for newly hired employees; (5) expanded 
temporary promotion; (6) voluntary emeritus program; (7) paybanding; 
(8) contribution-based compensation system; (9) performance-based 
reduction-in-pay or removal actions; and (10) reduction-in-force (RIF) 
procedures.

2. Overview

    DoD published notice in 73 FR 73248, December 2, 2008, that 
pursuant to subsection 1107(c) of Public Law 110-181, the three STRLs 
listed in 73 FR 73248 not having personnel demonstration projects at 
that time may adopt the flexibilities of the other laboratories 
previously listed in subsection 9902(c)(2) and now redesignated in 
section 1105 of Public Law 111-84. ONR is one of the three STRLs 
specified in this provision.
    Accordingly, ONR intends to build its demonstration project using 
flexibilities adopted from existing STRL demonstration projects 
(specifically NRL and AMRDEC). Final plans for the NRL and AMRDEC 
personnel management demonstration projects were published in the 
Federal Register as follows:
     Department of the Navy: NRL--64 FR 33970, June 24, 1999. 
No amendments have been published; and
     Department of the Army: AMRDEC--62 FR 34876 and 62 FR 
34906, June 27, 1997; and amendments and/or corrections to final plans 
published--64 FR 11074, March 8, 1999; 64 FR 12216, March 11, 1999; 65 
FR 53142, August 31, 2000; and 67 FR 5716, February 6, 2002.

3. Access to Flexibilities of Other STRLs

    Flexibilities published in this Federal Register notice shall be 
available for use by the STRLs previously enumerated in 5 U.S.C. 
9902(c)(2), now redesignated in section 1105 of Public Law 111-84, if 
they wish to adopt them in accordance with DoD Instruction 1400.37; 73 
FR 73248 to 73252; and after the fulfilling of any collective 
bargaining obligations.

    Dated: May 21, 2010.
Mitchell S. Bryman,
Alternate OSD Federal Register Liaison Officer, Department of Defense.

Table of Contents

I. Executive Summary
II. Introduction
    A. Purpose
    B. Problems with the Current System
    C. Waivers Required
    D. Expected Benefits
    E. Participating Organizations and Employees
    F. Project Design
III. Accessions and Internal Placements
    A. Hiring Authority
    1. Background
    2. Delegated Examining
    B. Legal Authority

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    C. Determining Employee and Applicant Qualifications
    D. Noncitizen Hiring
    E. Expanded Detail Authority
    F. Extended Probationary Period
    G. Definitions
    1. Basic Pay
    2. Maintained Pay
    3. Promotion
    4. Reassignment
    5. Change to Lower Pay Band
    6. Pay Adjustment
    7. Detail
    8. Highest Previous Rate
    9. Approving Manager
    H. Pay Setting Determinations Outside the CCS
    1. External New Hires
    2. Internal Actions
    a. Promotion.
    b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to 
Lower Pay Band (except RIF).
    c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to 
Lower Pay Band Due to Adverse or Performance-based Action.
    d. Involuntary Change to Lower Pay Band or Reassignment to a 
Career Track with a Lower Salary Range, Other than Adverse or 
Performance-based.
    e. RIF Action (including employees who are offered and accept a 
vacancy at a lower pay band or in a different career track).
    f. Upward Mobility or Other Formal Training Program Selection.
    g. Return to Limited or Light Duty from a Disability as a Result 
of Occupational Injury to a Position in a Lower Pay Band or to a 
Career Track with Lower Basic Pay Potential than Held Prior to the 
Injury.
    h. Restoration to Duty.
    i. Reassignment.
    j. Student Educational Employment Program.
    k. Hazard Pay or Pay for Duty Involving Physical Hardship.
    I. Priority Placement Program (PPP)
    J. Expanded Temporary Promotion
    K. Voluntary Emeritus Program
IV. Sustainment
    A. Position Classification
    1. Career Tracks and Pay Bands
    a. Target Pay Band.
    b. Occupational Series and Position Titling.
    c. Classification Standards.
    d. Fair Labor Standards Act (FLSA).
    (1) Guidelines for FLSA Determinations.
    (2) Nonsupervisory and Leader Positions.
    (3) Supervisory Positions.
    2. Requirements Document (RD)
    3. Delegation of Classification Authority
    a. Delegated Authority.
    b. Position Classification Accountability.
    B. Integrated Pay Schedule
    1. Annual Pay Action
    2. Overtime Pay
    3. Classification Appeals
    4. Above GS-15 Positions
    5. Distinguished Contributions Allowance (DCA)
    a. Eligibility.
    b. Nomination.
    c. Reduction or Termination of a DCA.
    d. Lump-Sum DCA Payments.
    e. DCA Budget Allocation.
    f. Concurrent Monetary Payments.
    C. Contribution-Based Compensation System (CCS)
    1. General
    2. CCS Process
    3. Pay Pool Annual Planning
    a. Element Weights and Applicability.
    b. Supplemental Criteria.
    4. Annual CCS Appraisal Process (See Figure 7.)
    5. Exceptions
    6. Normal Pay Range (NPR)--Basic Pay Versus Contribution
    7. Compensation
    a. General Increases.
    b. Merit Increases.
    c. Locality Increases.
    d. Contribution Awards.
    8. Career Movement Based on CCS
    a. Advancements in Level Which May be Approved by the Pay Pool 
Manager.
    b. Advancements in Level Which Must be Approved by the Chief of 
Naval Research (CNR).
    c. Advancement to Level V of the Science and Engineering (S&E) 
Professional Career Track.
    9. CCS Grievance Procedures
V. Separations
    A. Performance-based Reduction-in-Pay or Removal Actions
    B. Reduction-in-Force (RIF) Procedures
    1. RIF Authority
    2. RIF Definitions
    a. Competition in RIF.
    b. Competitive Area.
    c. Competitive Level.
    d. Service Computation Date (SCD).
    (1). Federal SCD.
    (2) CCS Process Results.
    (3). Credit from Other Rating Systems.
    (4) RIF Cutoff Date.
    3. Displacement Rights
    a. Displacement Process
    b. Retention Standing
    c. Vacant Positions
    d. Ineligible for Displacement Rights
    e. Change to Lower Level due to an Adverse or Performance-based 
Action
    4. Notice Period
    5. RIF Appeals
    6. Separation Incentives
    7. Severance Pay
    8. Outplacement Assistance
VI. Demonstration Project Transition
    A.Initial Conversion or Movement to the Demonstration Project
    1. Placement into Career Tracks and Pay Bands
    2.Conversion of retained grade and pay employees
    3. WGI Buy-In
    4. Career Promotion Eligibility
    5. Conversion of Special Salary Rate Employees
    6. Conversion of Employees on Temporary Promotions
    7. Non-competitive Movement into the Demonstration Project
    B. CCS Start-Up
    C. Training
    1. Types of Training
    a. Employees.
    b. Supervisors and Managers.
    c. Support Personnel.
    D. New Hires into the Demonstration Project
    E. Conversion or Movement from Demonstration Project
    1. Grade Determination.
    2. Pay Setting
    3. Employees in Positions Classified Above GS-15
    4. Determining Date of Last Equivalent Increase
    C. Personnel Administration
    D. Automation
    E. Experimentation and Revision
VII. Demonstration Project Duration
VIII. Demonstration Project Evaluation Plan
    A. Overview
    B. Evaluation Model
IX. Demonstration Project Costs
    A. Cost Discipline
    B. Implementation Costs
X. Automation Support
    A. General
    B. Defense Civilian Personnel Data System (DCPDS)
    C. Core Document (COREDOC)
    D. RIF Support System (RIFSS)
    E. Contribution-based Compensation System Data System
Appendix A. Summary of Demonstration Project Features Adopted by ONR
Appendix B: Required Waivers to Laws and Regulations
Appendix C: Definitions of Career Tracks and Pay Bands
Appendix D: Table of Occupational Series Within Career Tracks
Appendix E: Classification and CCS Elements
Appendix F: Computation of the IPS and the NPR
Appendix G: Intervention Model

I. Executive Summary

    This project adopts with some modifications the STRL personnel 
management demonstration project designed by NRL and an additional 
flexibility from the AMRDEC personnel management demonstration project. 
The modified design of the demonstration project described herein was 
developed by ONR with the participation of and review by the DON, the 
DoD, and incorporation of the knowledge and design of other STRL 
demonstration projects.
    The ONR coordinates, executes, and promotes the science and 
technology programs of the United States Navy and Marine Corps. ONR's 
directorates balance a robust science and technology portfolio, 
allocating funds to meet the warfighter's requirements, focusing 
efforts on all three major phases of development funding: basic 
research, applied research, and advanced technology development. ONR's 
six science and technology departments coordinate and execute research 
in the areas of:
    1. Expeditionary Maneuver Warfare and Combating Terrorism

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    2. Command, Control, Communications, Intelligence, Surveillance, 
and Reconnaissance
    3. Ocean Battlespace Sensing
    4. Sea Warfare and Weapons
    5. Warfighter Performance
    6. Naval Air Warfare and Weapons
    In order to sustain these unique capabilities, ONR must be able to 
hire, retain, and continually motivate enthusiastic, innovative, and 
highly-educated scientists and engineers, supported by accomplished 
business management and administrative professionals as well as a 
skilled administrative and technical support staff.
    The goal of the project is to enhance the quality and 
professionalism of the ONR workforce through improvements in the 
efficiency and effectiveness of the human resource system. The project 
flexibilities will strive to achieve the best workforce for the ONR 
mission, adjust the workforce for change, and improve organizational 
efficiency. The results of the project will be evaluated within five 
years of implementation

II. Introduction

A. Purpose

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

B. Problems With the Current System

    The current Civil Service GS system has existed in essentially the 
same form since the 1920's. Work is classified into one of fifteen 
overlapping pay ranges that correspond with the fifteen grades. Base 
pay is set at one of those fifteen grades and the ten interim steps 
within each grade. The Classification Act of 1949 rigidly defines types 
of work by occupational series and grade, with very precise 
qualifications for each job. This system does not quickly or easily 
respond to new ways of designing work or to changes in the work itself.
    The performance management model that has existed since the passage 
of the Civil Service Reform Act has come under extreme criticism. 
Employees frequently report there is inadequate communication of 
performance expectations and feedback on performance. There are 
perceived inaccuracies in performance ratings with general agreement 
that the ratings are inflated and often unevenly distributed by grade, 
occupation, and geographic location.
    The need to change the current hiring system is essential as ONR 
must be able to recruit and retain scientific, engineering, acquisition 
support and other professionals, and skilled technicians. ONR must be 
able to compete with the private sector for the best talent and be able 
to make job offers in a timely manner with the attendant bonuses and 
incentives to attract high quality employees.
    Finally, current limitations on training, retraining, and otherwise 
developing employees make it difficult to correct skill imbalances and 
to prepare current employees for new lines of work to meet changing 
missions and emerging technologies.

C. Waivers Required

    ONR proposes changes in the following broad areas to address its 
problems in human resources management: Accessions and internal 
placements, sustainment, and separations. Appendix B lists the laws, 
rules, and regulations requiring waivers to enable ONR to implement the 
proposed systems. All personnel laws, rules, and regulations not waived 
by this plan will remain in effect. Basic employee rights will be 
safeguarded and Merit System Principles will be maintained.

D. Expected Benefits

    The primary benefit expected from this demonstration project is 
greater organizational effectiveness through increased employee 
satisfaction. The long-standing Department of the Navy ``China Lake'' 
and the National Institute of Standards and Technology (NIST) 
demonstration projects have produced impressive statistics on increased 
job satisfaction and quality of employees versus that for the Federal 
workforce in general. This project will demonstrate that a human 
resource system tailored to the mission and needs of the ONR workforce 
will facilitate:
    (1) Sustainment of ONR's quality scientific and business management 
workforces in today's competitive environment;
    (2) Improved employee satisfaction with pay setting and adjustment, 
recognition, and career advancement opportunities;
    (3) Human Resources (HR) flexibilities needed to staff and shape a 
quality workforce of the next 10-20 years;
    (4) Increased retention of high-level contributors; and
    (5) Simpler and more cost effective HR management processes.
    An evaluation model was developed for the Director, Defense, 
Research and Engineering (DDR&E) in conjunction with STRL service 
representatives and the OPM. The model will measure the effectiveness 
of this demonstration project, as modified in this plan, and will be 
used to measure the results of specific personnel system changes.

E. Participating Organizations and Employees

    ONR is comprised of the ONR Headquarters in Arlington, Virginia, 
and ONR employees geographically dispersed at the locations shown in 
Figure 1. It should be noted that some sites currently have fewer than 
ten people and that the sites may change should ONR reorganize or 
realign. Successor organizations will continue coverage in the 
demonstration project.
    The demonstration project will cover approximately 450 ONR civilian 
employees under title 5, U.S.C. in the occupations listed in Appendix 
D. The project plan does not cover members of the Senior Executive 
Service (SES), Senior Level (SL), Scientific and Professional (ST), 
expert and consultant employees (EH), or Administratively Determined 
(AD) pay plans. However, SES, SL, and ST employees, after leaving 
Federal government service, may participate in the Voluntary Emeritus 
Program. There are no labor unions representing ONR employees.

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[GRAPHIC] [TIFF OMITTED] TN28MY10.003

F. Project Design

    In response to the initial authority granted by Congress to develop 
a demonstration project, ONR chartered a design team to develop the 
project plan. The team was led by a senior ONR manager from outside the 
Human Resources Office (HRO) and was responsible for developing project 
proposals. The team was composed of 20 employees of different grade 
levels and in different occupations. There was a mix of managers, 
supervisors, and non-supervisors from offices throughout ONR. The team 
had the assistance of HR personnel from ONR and from NRL. It also 
received information and advice from OPM, the Office of the DUSD (CPP), 
and a number of organizations with on-going demonstration projects. 
Information and suggestions were solicited from ONR employees and 
managers through interviews, briefings, small-group meetings, and a 
suggestion program established specifically for the design effort. This 
plan was submitted to DUSD (CPP) in 2001. Work on this plan was 
postponed pending the outcome of several Departmental HR initiatives 
addressing new personnel systems.
    Following enactment of Public Law 110-181, ONR undertook an effort 
to review and resubmit the demonstration project plan. Upon extensive 
review and discussion with internal and external stakeholders, ONR 
leadership decided to adopt existing flexibilities according to 
subsection 1107(c) of Public Law 110-181, 73 FR 73248, and DoDI 
1400.37. Specifically, ONR proposes to adopt the NRL demonstration 
project plus an additional flexibility from the AMRDEC demonstration 
project. Appendix A summarizes the modifications proposed for each of 
the adopted project flexibilities and administrative procedures. 
Modifications to existing flexibilities are made when necessary to 
address ONR's specific organizational, workforce, and approval needs 
and technical modifications to conform to changes in the law and 
governing OPM regulations, which are not being waived, that were 
effected after the publication of the NRL personnel demonstration 
project plan. Further changes to the project plan may be made in 
response to comments received during the 30-day comment period 
following publication of this notice.

III. Accessions and Internal Placements

A. Hiring Authority

1. Background
    Private industry and academia are the principal recruiting sources 
for scientists and engineers at ONR. It is extremely difficult to make 
timely offers of employment to hard-to-find scientists and engineers. 
Even when a candidate is identified, he or she often finds another job 
opportunity before the lengthy recruitment process can be completed.
2. Delegated Examining
    a. Competitive service positions within the ONR Demonstration 
Project will be filled through Merit Staffing or under Delegated 
Examining.
    b. The ``Rule of Three'' will be eliminated. When there are no more 
than 15 qualified applicants and no preference eligibles, all eligible 
applicants are immediately referred to the selecting official without 
rating and ranking. Rating and ranking will be required only when the 
number of qualified candidates exceeds 15 or there is a mix of 
preference and nonpreference applicants. Statutes and regulations 
covering veterans' preference will be observed in the selection process 
and when rating and ranking are required. If the candidates are rated 
and ranked, a random number selection method using the application 
control number will be used to determine which applicants will be 
referred when scores are tied after the rating process. Veterans will 
be referred ahead of non-veterans with the same score.

B. Legal Authority

    For actions taken under the auspices of the ONR Demonstration 
Project, the legal authority, Public Law 103-337, will be used. For all 
other actions, ONR will continue to use the nature of action codes and 
legal authority codes prescribed by OPM, DoD, or DON.

C. Determining Employee and Applicant Qualifications

    Figure 2 displays the minimum General Schedule (GS) qualifications 
requirements for each career path and pay band level. Special DON or 
DoD requirements not covered by the OPM Qualification Standards 
Operating Manual for GS Positions, such as

[[Page 30202]]

Defense Acquisition Workforce Improvement Act (DAWIA) qualification 
requirements for acquisition positions, physical performance 
requirements for sea duty, work on board aircraft, etc., must be met.
[GRAPHIC] [TIFF OMITTED] TN28MY10.004

D. Noncitizen Hiring

    Where Executive Orders or other regulations limit hiring 
noncitizens, ONR will have the authority to approve the hiring of 
noncitizens into competitive service positions when qualified U.S. 
citizens are not available. Under the demonstration project, as with 
the current system, a noncitizen may be appointed only if it has been 
determined there are no qualified U.S. citizens. In order to make this 
determination, the position will be advertised extensively throughout 
the nation using paid advertisements in major newspapers or scientific 
journals, etc., as well as the ``normal'' recruiting methods. If a 
noncitizen is the only qualified candidate for the position, the 
candidate may be appointed. The selection is subject to approval by the 
Department Head or Director of the hiring organization. The 
demonstration project constitutes a delegated examining agreement from 
OPM for the purposes of 5 CFR 213.3102(bb).

E. Expanded Detail Authority

    Under the demonstration project, ONR's approving manager would have 
the authority:
    (1) To effect details up to one year to demonstration project 
positions without the current 120-day renewal requirement; and
    (2) To effect details to a higher level position in the 
demonstration project up to one year within a 24-month period without 
competition.
    Details beyond the one-year require the approval of the Chief of 
Naval Research or designee and are not subject to the 120-day renewal 
requirement.

F. Extended Probationary Period

    All current laws and regulations for the current probationary 
period are retained except that nonstatus candidates hired under the 
demonstration project in occupations where the nature of the work 
requires the manager to have more than one year to assess the 
employee's job performance will serve a three-year probationary period. 
Employees with veterans' preference will maintain their rights under 
current law and regulation.

G. Definitions

1. Basic Pay
    The total amount of pay received at the rate fixed through CCS 
adjustment for the position held by an employee including any merit 
increase but before any deductions and exclusive of additional pay of 
any other kind.
2. Maintained Pay
    An employee may be entitled to maintain his or her rate of basic 
pay if that rate exceeds the maximum rate of basic pay for his or her 
pay band as a result of certain personnel actions (as described in this 
plan). An employee's initial maintained pay rate is equal to the lesser 
of (1) the basic pay held by the employee at the time an action is 
taken which entitles the employee to maintain his or her pay or (2) 150 
percent of the maximum rate of basic pay of the pay band to which 
assigned. The employee is entitled to maintained pay for 2 years or 
until the employee's basic pay is equal to or more than the employee's 
maintained pay, whichever occurs first. Exceptions to the 2-year limit 
include employees on grade and pay retention ``grandfathered'' in upon 
initial conversion into the demonstration project, former special rate 
employees receiving maintained pay as a result of conversion into the 
project, and employees placed through

[[Page 30203]]

the priority placement programs. Employees will receive half of the 
across-the-board GS percentage increase in basic pay and the full 
locality pay increase while on maintained pay. Upon termination of 
maintained pay, the employee's basic pay will be adjusted according to 
the CCS appraisal process. If the employee's basic pay exceeds the 
maximum basic pay of his or her pay band upon expiration of the 2-year 
period, the employee's pay will not be reduced; the employee will be in 
the overcompensated range of basic pay category for CCS pay increase 
purposes, see Figure 9.
    Maintained pay shall cease to apply to an employee who: (1) Has a 
break in service of 1 workday or more; or (2) is demoted for personal 
cause or at the employee's request. The employee's maintained rate of 
pay is basic pay for purposes of locality pay (locality pay is basic 
pay for purposes of retirement, life insurance, premium pay, severance 
pay, advances in pay, workers' compensation, and lump-sum payments for 
annual leave but not for computing promotion increases). Employees 
promoted while on maintained pay may have their basic pay (excluding 
locality pay) set up to 20 percent greater than the maximum basic pay 
for their current pay band or retain their ``maintained pay,'' 
whichever is greater.
3. Promotion
    The movement of an employee to a higher pay band within the same 
career track or to a different career track and pay band in which the 
new pay band has a higher maximum basic salary rate than the pay band 
from which the employee is leaving.
4. Reassignment
    The movement of an employee from one position to another position 
within the same pay band in the same career track or to a position in 
another career track and pay band in which the new pay band has the 
same maximum basic salary rate as the pay band from which the employee 
is leaving.
5. Change to Lower Pay Band
    The movement of an employee to a lower pay band within the same 
career track or to a different career track and pay band in which the 
new pay band has a lower maximum basic salary range than the pay band 
from which the employee is leaving.
6. Pay Adjustment
    Any increase or decrease in an employee's rate of basic pay where 
there is no change in the employee's position. Termination of 
maintained pay is also a pay adjustment.
7. Detail
    The temporary assignment of an employee to a different 
demonstration project position for a specified period when the employee 
is expected to return to his or her regular duties at the end of the 
assignment. (An employee who is on detail is considered for pay and 
strength purposes to be permanently occupying his or her regular 
position.)
8. Highest Previous Rate
    ONR will establish maximum payable rate rules that parallel the 
rules in 5 CFR 531.202 and 531.203(c) and (d).
9. Approving Manager
    Managers at the directorate, division head, division 
superintendent, or directorate-level staff offices who have budget 
allocation/execution; position management; position classification; 
recruitment; and staffing authorities for their organization.

H. Pay Setting Determinations Outside the CCS

1. External New Hires
    a. This includes reinstatements. Initial basic pay for new 
appointees into the demonstration project may be set at any point 
within the basic pay range for the career track, occupation, and pay 
band to which appointed that is consistent with the special 
qualifications of the individual and the unique requirements of the 
position. These special qualifications may be consideration of 
education, training, experience, scarcity of qualified applicants, 
labor market considerations, programmatic urgency, or any combination 
thereof which is pertinent to the position to which appointed. Highest 
previous rate may be used to set the pay of new appointees into the 
demonstration project. (The approving manager authorizes the basic 
pay.)
    b. Transfers from within DoD and other Federal agencies will have 
their pay set using pay setting policy for internal actions based on 
the type of pay action.
    c. A recruitment or relocation bonus may be paid using the same 
provisions available for GS employees under 5 U.S.C. 5753. Employees 
placed through the DoD Priority Placement Program (PPP), the DON 
Reemployment Priority List (RPL), or the Federal Interagency Career 
Transition Assistance Plan are entitled to the last earned rate if they 
have been separated.
2. Internal Actions
    These actions cover employees within the demonstration project, 
including demonstration project employees who apply and are selected 
for a position within the project.
    a. Promotion.
    When an employee is promoted, the basic pay after promotion may be 
up to 20 percent greater than the employee's current basic pay. 
However, if the minimum rate of the new pay band is more than 20 
percent greater than the employee's current basic pay, then the minimum 
rate of the new pay band is the new basic pay. The employee's basic pay 
may not exceed the basic pay range of the new pay band. Highest 
previous rate may be applied, if appropriate. (The approving manager 
authorizes the basic pay.) Note: Most target pay band promotions will 
be accomplished through the CCS appraisal and pay adjustment process 
(see section IV.C.8).
    b. Pay Adjustment (Voluntary Change to Lower Pay) or Change to 
Lower Pay Band (except RIF).
    When an employee accepts a voluntary change to lower pay or lower 
pay band, basic pay may be set at any point within the pay band to 
which appointed, except that the new basic pay will not exceed the 
employee's current basic pay or the maximum basic pay of the pay band 
to which assigned, whichever is lower. Highest previous rate may be 
applied, if appropriate. (The approving manager authorizes the basic 
pay.)
    (1) Examples of Voluntary Change to a Lower Pay Band. An employee 
in an Administrative Specialist and Professional Career Track, Pay Band 
III, position may decide he or she would prefer a Pay Band II position 
in the Administrative Support Career Track because it offers a 
different work schedule or duty station. An employee in Level IV of the 
Administrative Specialist and Professional Career Track who has a 
family member with a serious medical problem and wants to be relieved 
of supervisory responsibilities may request a change to Pay Band III.
    (2) Example of Pay Adjustment (Voluntary Change to Lower Pay) or 
change to a Lower Pay Band. An employee may accept a change to lower 
pay or to a lower pay band through a settlement agreement. A Research 
Physicist, who is in Level III and is being paid near the top of Level 
III, is rated unacceptable in the critical element Research and 
Development (R&D) Business Management. In settlement of a proposal to 
remove this employee for unacceptable performance, an agreement is 
reached which reduces

[[Page 30204]]

the employee's pay to a rate near the beginning of Level III.
    c. Pay Adjustment (Involuntary Change to Lower Pay) or Change to 
Lower Pay Band Due to Adverse or Performance-based Action.
    When an employee is changed to a lower pay band, or receives a 
change to lower pay due to an adverse or performance-based action, the 
employee's basic pay will be reduced by at least 6 percent, but will be 
set at a rate within the rate range for the pay band to which assigned. 
(The approving manager authorizes the basic pay.) Such employees will 
be afforded appeal rights as provided by 5 U.S.C. 4303 or 7512, as 
appropriate.
    d. Involuntary Change to Lower Pay Band or Reassignment to a Career 
Track with a Lower Salary Range, Other than Adverse or Performance-
based.
    If the change is not a result of an adverse or performance-based 
action, the basic pay will be preserved to the extent possible within 
the basic pay range of the new pay band. If the pay cannot be set 
within the rate range of the new pay band, it will be set at the 
maximum rate of the new pay band and the employee's pay will be 
reduced. If the change is a result of a position reclassification 
resulting in the employee being assigned to a lower pay band or 
reassigned to a different career track with a lower maximum basic 
salary range, the employee is entitled to maintained pay if the 
employee's current salary exceeds the maximum rate for the new band.
    e. RIF Action (including employees who are offered and accept a 
vacancy at a lower pay band or in a different career track).
    The employee is entitled to maintained pay, if the employee's 
current salary exceeds the maximum rate for the new band.
    f. Upward Mobility or Other Formal Training Program Selection.
    The employee is entitled to maintained pay, if the employee's 
current salary exceeds the maximum rate for the new band.
    g. Return to Limited or Light Duty from a Disability as a Result of 
Occupational Injury to a Position in a Lower Pay Band or to a Career 
Track with Lower Basic Pay Potential than Held Prior to the Injury.
    The employee is entitled indefinitely to the basic pay held prior 
to the injury and will receive full general and locality pay increases. 
If upon reemployment, an employee was not given the higher basic pay 
(basic pay received at the time of the injury), any retirement annuity 
or severance pay computation would be based on his or her lower basic 
pay (salary based on placement in a lower pay band). Even though the 
Department of Labor (DOL) would make up the difference between the 
lower basic pay and the higher basic pay earned at the time of injury, 
the DOL portion is not considered in the retirement or severance pay 
computation.
    h. Restoration to Duty.
    Employees returning from the uniformed services following an 
absence of more than 30 days must be restored as soon as possible after 
making application, but not later than 30 days after receipt of 
application. If the employee's uniformed service was for less than 91 
days the employee will be placed in the position that he or she would 
have attained if continuously employed. If not qualified for this 
position, employee will be placed in the position he or she left. For 
service of 91 days or more, the employee may also be placed in a 
position of like seniority, status, and pay. In the case of an employee 
with a disability incurred in or aggravated during uniformed service, 
and after reasonable efforts to accommodate the disability is entitled 
to be placed in another position for which qualified that will provide 
the employee with the same seniority, status, and pay, or the nearest 
approximation.
    i. Reassignment.
    The basic pay normally remains the same. Highest previous rate may 
be applied, if appropriate. (The approving manager authorizes the basic 
pay).
    j. Student Educational Employment Program.
    The Student Educational Employment Program consists of two 
components: The Student Temporary Employment Program and the Student 
Career Experience Program. Initial basic pay for students in either of 
these programs may be set at any point within the basic pay range for 
the career track, occupation, and pay band to which appointed. Basic 
pay may be increased upon return to duty (RTD) or conversion to 
temporary appointment, in consideration of the student's additional 
education and experience at the time of the action. Students who work 
under a parallel work study program may have their basic pay increased 
in consideration of additional education and/or experience. Basic pay 
for students may be increased based on their CCS appraisal. (The 
approving manager authorizes the basic pay).
    k. Hazard Pay or Pay for Duty Involving Physical Hardship.
    Employees under the demonstration project will be paid hazardous 
duty pay under the provisions of 5 CFR part 550, subpart I.

I. Priority Placement Program (PPP)

    Current PPP procedures apply to new hires and internal actions.

J. Expanded Temporary Promotion

    Current regulations require that temporary promotions for more than 
120 days to a higher level position than previously held must be made 
competitively. Under the demonstration project, ONR would be able to 
effect temporary promotions of not more than one year within a 24-month 
period without competition to positions within the demonstration 
project.

K. Voluntary Emeritus Program

    The ONR Voluntary Emeritus Program is similar to the Voluntary 
Emeritus Program presented in the AMRDEC demonstration project FRN, 
section III.D.5., page 34890. Under the ONR program, the CNR will have 
the authority to offer retired or separated individuals voluntary 
assignments at ONR. This authority will include individuals who have 
retired or separated from Federal service. Voluntary Emeritus Program 
assignments are not considered ``employment'' by the Federal government 
(except for purposes of injury compensation). Thus, such assignments do 
not affect an employee's entitlement to buyouts or severance payments 
based on an earlier separation from Federal service. The Voluntary 
Emeritus Program will ensure continued quality research while reducing 
the overall salary line by allowing higher paid individuals to accept 
retirement incentives with the opportunity to retain a presence in the 
scientific community. The program will be of most benefit during 
manpower reductions as senior employees could accept retirement and 
return to provide valuable on-the-job training or mentoring to less 
experienced employees. Voluntary service will not be used to replace 
any employee or interfere with career opportunities of employees.
    To be accepted into the emeritus program, a volunteer must be 
recommended by ONR managers to the CNR or designee. Everyone who 
applies is not entitled to a voluntary assignment. The approving 
official must clearly document the decision process for each applicant 
(whether accepted or rejected) and retain the documentation throughout 
the assignment. Documentation of rejections will be maintained for two 
years.
    To ensure success and encourage participation, the volunteer's 
Federal retirement pay (whether military or

[[Page 30205]]

civilian) will not be affected while serving in a voluntary capacity. 
Retired or separated Federal employees may accept an emeritus position 
without a break or mandatory waiting period.
    Volunteers will not be permitted to monitor contracts on behalf of 
the government or to participate on any contracts or solicitations 
where a conflict of interest exists. The same rules that currently 
apply to source selection members will apply to volunteers.
    An agreement will be established between the volunteer, the CNR or 
designee, and the HRO Director. The agreement will be reviewed by the 
local Legal Office for ethics determinations under the Joint Ethics 
Regulation. The agreement must be finalized before the assumption of 
duties and shall include:
    (1) A statement that the voluntary assignment does not constitute 
an appointment in the civil service, is without compensation, and any 
and all claims against the Government (because of the voluntary 
assignment) are waived by the volunteer;
    (2) a statement that the volunteer will be considered a Federal 
employee for the purpose of injury compensation;
    (3) volunteer's work schedule;
    (4) length of agreement (defined by length of project or time 
defined by weeks, months, or years);
    (5) support provided by the ONR (travel, administrative, office 
space, supplies);
    (6) a one-page Statement of Duties and Experience;
    (7) a provision that states no additional time will be added to a 
volunteer's service credit for such purposes as retirement, severance 
pay, and leave as a result of being a member of the Voluntary Emeritus 
Program;
    (8) a provision allowing either party to void the agreement with 10 
working days written notice; and
    (9) the level of security access required (any security clearance 
required by the assignment will be managed by the ONR while the 
volunteer is a member of the Voluntary Emeritus Program).

IV. Sustainment

A. Position Classification

    The position classification changes are intended to streamline and 
simplify the process of identifying and categorizing the work done at 
ONR. ONR will establish an Integrated Pay Schedule (IPS) for all 
demonstration project positions in covered occupations. The IPS will 
replace the current GS and extend the pay schedule equivalent to the 
basic pay range of the Government's Senior Level Pay System to 
accommodate positions classified above the GS-15 level under a proposed 
new STRL demonstration project initiative being developed by DoD.
1. Career Tracks and Pay Bands
    Within the IPS, occupations with similar characteristics will be 
grouped together into four career tracks. Each career track consists of 
a number of pay bands, representing the phases of career progression 
that are typical for the respective career track. The pay bands within 
each career track are shown in Figure 3, along with their GS 
equivalents. The equivalents are based on the levels of responsibility 
as defined in 5 U.S.C. 5104 and not on current basic pay schedules. 
Appendix C provides definitions for each of the career tracks and the 
pay bands within them. The career tracks and pay bands were developed 
based upon administrative, organizational, and position management 
considerations at ONR. They are designed to enhance pay equity and 
enable a more seamless career progression to the target pay band for an 
individual position or category of positions. This combination of 
career tracks and pay bands allows for competitive recruitment of 
quality candidates at differing rates of compensation within the 
appropriate career track, occupation, and pay band. It will also 
facilitate movement and placement based upon contribution, in 
conjunction with the CCS described in paragraph IV.C. Other benefits of 
this arrangement include a dual career track for S&E employees and 
greater competitiveness with academia and private industry for 
recruitment. Appendix D identifies the occupational series currently 
within each of the three career tracks.
[GRAPHIC] [TIFF OMITTED] TN28MY10.005

    a. Target Pay Band.
    Each position will have a designated target pay band under the 
demonstration project. This target pay band will be identified as the 
pay band to which an incumbent may be advanced without further 
competition within a career track. These target pay bands will be based 
upon present full performance levels. Target pay bands may vary based 
upon occupation or career track. Employees' basic pay will be capped at 
the target pay band until other appropriate conditions (e.g., 
competition, position management approval, increase in or acquisition 
of higher level duties, and approval of an accretion of duties 
promotion) have been met, and the employee has been promoted into the 
next higher level.
    b. Occupational Series and Position Titling.
    Presently, ONR positions are identified by occupational groups and 
series of classes in accordance with OPM position classification 
standards. Under the demonstration project, ONR will continue to use 
occupational series designators consistent with those currently 
authorized by OPM to identify positions. This will facilitate related 
personnel management requirements, such as movement into and out of the

[[Page 30206]]

demonstration project. Other occupational series may be added or 
deleted as needed to support the demonstration project. 
Interdisciplinary positions will be accommodated within the system 
based upon the qualifications of the individual hired.
    Titling practices consistent with those established by OPM 
classification standards will be used to determine the official title. 
Such practice will facilitate other personnel management requirements, 
such as the following: Movement into and out of the demonstration 
project, reduction in force, external reporting requirements, and 
recruitment. CCS pay band descriptors and Requirements Document (RD) 
(see paragraph IV.A.2) information will be used for specific career 
track, pay band, and titling determinations.
    c. Classification Standards.
    Under the proposed demonstration project, the number of 
classification standards would be reduced to three (see Figure 3). Each 
standard would align with one of the three career tracks and would 
cover all positions within that career track. Each career track has two 
or three elements that are considered in both classifying a position 
and in judging an individual's contributions for pay setting purposes. 
Each element has generic descriptors for every pay band. These 
descriptors explain the type of work, degree of responsibility, and 
scope of contributions that need to be ultimately accomplished to reach 
the highest basic pay potential within each pay band. (See Appendix E.) 
To classify a position, a manager would select the pay band which is 
most indicative overall of the type of duties to be performed and the 
contributions needed. For example: A supervisor needs a secretarial 
position for a branch. In reading the elements and descriptors for the 
Administrative Support Career Track, the supervisor determines that the 
Level II descriptors illustrate the type of work and contributions 
needed. Therefore, the position would be classified as a Secretary, 
Level II.
    d. Fair Labor Standards Act (FLSA).
    Demonstration project positions will be covered under the FLSA and 
5 CFR part 551. Determination of their status (exempt or nonexempt) 
will be made based on the criteria contained in 5 CFR part 551. The 
status of each new position under the demonstration project will be 
determined using computer assisted analysis as part of an automated 
process for preparing the RD. Those positions for which the computer is 
unable to make the final FLSA determination will be ``flagged'' for 
referral to a human resources specialist for determination.
    (1) Guidelines for FLSA Determinations.
    i. Supervisory Information: Provided through an automated system in 
a checklist format; results of this checklist have an impact on FLSA 
determination.
    ii. FLSA Information: Provided through an automated system in a 
checklist format; results of this checklist in conjunction with the 
supervisory information provide a basis for the FLSA determination.
    iii. If required, the section entitled ``Purpose of Position'' will 
be used to assist in FLSA determination.
    iv. RD's requiring additional review before being finalized will be 
forwarded to a human resources specialist to review the FLSA 
determination.
    (2) Nonsupervisory and Leader Positions.
    Figure 4 shows the exempt or nonexempt status applicable to 
nonsupervisory and leader positions in the indicated career track and 
pay band. In those cases where ``Review'' is indicated, the FLSA status 
must be determined based on the specific duties and responsibilities of 
the subject position.
[GRAPHIC] [TIFF OMITTED] TN28MY10.006

    (3) Supervisory Positions.
    FLSA determination for supervisory positions must be made based on 
the duties and responsibilities of the particular position involved. As 
a rule, if a position requires supervision of employees who are exempt 
under FLSA, the supervisory position is likely to be exempt also.
2. Requirements Document (RD)
    An RD will replace the Optional Form 8 and position description 
used under the current classification system. The RD will be prepared 
by managers using a menu-driven, automated system. The automated system 
will enable managers to classify and establish many positions without 
intervention by a human resources specialist. The abbreviated RD will 
combine the position information, staffing requirements, and 
contribution expectations into a 1- or 2-page document.
3. Delegation of Classification Authority
    Classification authority will be delegated to managers as a means 
of increasing managerial effectiveness and expediting the 
classification function. This will be accomplished as follows:
    a. Delegated Authority.
    i. The CNR will delegate classification authority to the Human 
Resources Office (HRO) Director. The HRO Director may further delegate 
authority to Department Heads and Directors of

[[Page 30207]]

the immediate organization of the position being classified.
    ii. The classification approval must be at least one level above 
the first-level supervisor of the position.
    iii. First-line supervisors at any level will provide 
classification recommendations.
    iv. HRO support will be available for guidance and recommendations 
concerning the classification process. (Any dispute over the proper 
classification between a manager and the HRO will be resolved by the 
CNR or designee.
    b. Position Classification Accountability.
    Those to whom authority is delegated are accountable to the CNR. 
The CNR is accountable to the DON. Those with delegated authority are 
expected to comply with demonstration project guidelines on 
classification and position management, observe the principle of equal 
pay for equal work, and ensure that RD's are current. First-line 
supervisors will develop positions using the automated system. All 
positions must be approved through the proper chain of command.

B. Integrated Pay Schedule

    Under the demonstration project, an IPS will be established which 
will cover all demonstration project positions at ONR. This IPS, which 
does not include locality pay, will initially extend from the basic pay 
for GS-1, step 1 to the basic pay for GS-15, step 10. The adjusted 
basic pay cap, which does include locality pay, is Executive Level IV, 
currently $155,500. The salary range for the S&E pay band V pay band is 
expected to be established under the new STRL demonstration project 
initiative being developed for positions classified above GS-15.
1. Annual Pay Action
    ONR will eliminate separate pay actions for within-grade increases, 
general and locality pay increases, performance awards, quality step 
increases, and most career promotions and replace them with a single 
annual pay action (including either permanent or bonus pay or both) 
linked to the CCS. This will eliminate the paperwork and processing 
associated with multiple pay actions which average three per employee 
per year.
2. Overtime Pay
    Overtime will be paid in accordance with 5 CFR part 550, subpart A. 
All nonexempt employees will be paid overtime based upon their ``hourly 
regular rate of pay,'' as defined in existing regulation (5 CFR part 
551).
3. Classification Appeals
    An employee may appeal the occupational series, title, career 
track, or pay band of his or her position at any time. An employee must 
formally raise the area of concern to supervisors in the immediate 
chain of command, either verbally or in writing. If an employee is not 
satisfied with the supervisory response, he or she may then appeal to 
the DoD appellate level. If an employee is not satisfied with the DoD 
response, he or she may then appeal to the OPM only after DoD has 
rendered a decision under the provisions of this demonstration project. 
Since OPM does not accept classification appeals on positions which 
exceed the equivalent of a GS-15 level, appeal decisions involving Pay 
Band V for science and engineering positions classified about the GS-15 
level will be rendered by DoD and will be final. Appellate decisions 
from OPM are final and binding on all administrative, certifying, 
payroll, disbursing, and accounting officials of the Government. Time 
periods for case processing under 5 CFR subpart F, sections 511.603, 
511.604, and 511.605 apply.
    An employee may not appeal the accuracy of the RD, the 
demonstration project classification criteria, or the pay-setting 
criteria; the propriety of a basic pay schedule; the assignment of 
occupational series to the occupational family; or matters grievable 
under an administrative or negotiated grievance procedure, or an 
alternative dispute resolution procedure.
    The evaluation of classification appeals under this demonstration 
project is based upon the demonstration project classification 
criteria. Case files will be forwarded for adjudication through the HRO 
and will include copies of appropriate demonstration project criteria.
4. Above GS-15 Positions
    The pay banding plan for the Scientific and Engineering 
occupational family includes a pay band V to provide the ability to 
accommodate positions with duties and responsibilities that exceed the 
General Schedule GS-15 classification criteria. This pay band is based 
on the Above GS-15 Position concept found in other STRL personnel 
management demonstration projects that was created to solve a critical 
classification problem. The STRLs have positions warranting 
classification above GS-15 because of their technical expertise 
requirements including inherent supervisory and managerial 
responsibilities. However, these positions are not considered to be 
appropriately classified as Scientific and Professional Positions (STs) 
because of the degree of supervision and level of managerial 
responsibilities. Neither are these positions appropriately classified 
as Senior Executive Service (SES) positions because of their 
requirement for advanced specialized scientific or engineering 
expertise and because the positions are not at the level of general 
managerial authority and impact required for an SES position.
    The original Above GS-15 Position concept was to be tested for a 
five-year period. The number of trial positions was set at 40 with 
periodic reviews to determine appropriate position requirements. The 
Above GS-15 Position concept is currently being evaluated by DoD 
management for its effectiveness; continued applicability to the 
current STRL scientific, engineering, and technology workforce needs; 
and appropriate allocation of billets based on mission requirements. 
The degree to which ONR plans to participate in this concept and 
develop classification, compensation, and performance management 
policy, guidance, and implementation processes will be based on the 
final outcome of the DoD evaluation.
5. Distinguished Contributions Allowance (DCA)
    The DCA is a temporary monetary allowance up to 25 percent of basic 
pay (which, when added to an employee's rate of basic pay, may not 
exceed the rate of basic pay for Executive Level IV) paid on either a 
bi-weekly basis (concurrent with normal pay days) or as a lump sum 
following completion of a designated contribution period(s), or 
combination of these, at the discretion of ONR. It is not basic pay for 
any purpose, i.e., retirement, life insurance, severance pay, 
promotion, or any other payment or benefit calculated as a percentage 
of basic pay. The DCA will be available to certain employees at the top 
of their target pay bands, whose present contributions are worthy of 
scores found at a higher pay band, whose level of contribution is 
expected to continue at the higher pay band for at least 1 year, and 
current market conditions require additional compensation.
    Assignment of the DCA rather than a change to a higher pay band 
will generally be appropriate for such employees under the following 
circumstances: Employees have reached the top of their target pay bands 
and (1) when it is not certain that the higher level contributions will 
continue indefinitely (e.g., a special project expected to be of one- 
up to five-year

[[Page 30208]]

duration); (2) when no further promotion or compensation opportunities 
are available; (3) in either situation (1) or (2), current market 
conditions compensate similar contributions at a greater rate in like 
positions in private industry and academia; and (4) there is a history 
of significant recruitment and retention difficulties associated with 
such positions.
    a. Eligibility.
    (1) Employees in Levels III and IV of the S&E Professional Career 
Track and those in Levels III, IV, and V of the Administrative 
Specialist and Professional Career Track are eligible for the DCA if 
they have reached the top CCS score for their target pay band with 
recommendations for a higher Overall Contribution Score (OCS) for their 
contributions; they have reached the maximum rate of basic pay 
available for their target pay band; there are externally imposed 
limits to higher pay bands or the higher level contributions are not 
expected to last indefinitely; and market conditions require greater 
compensation for these contributions.
    (2) Employees may receive a DCA for up to three years. The DCA 
authorization will be reviewed and reauthorized as necessary, but at 
least annually at the time of the CCS appraisal through nomination by 
the pay pool manager and approval by the CNR. Employees in the S&E 
Professional Career Track may receive an extension of up to two 
additional years (for a total of five years). The DCA extension 
authorization will be reviewed and reauthorized as necessary, but at 
least on an annual basis at the time of the CCS appraisal through 
nomination by the pay pool manager and approval by the CNR.
    (3) Monetary payment may be up to 25 percent of basic pay.
    (4) Nominees would be required to sign a memorandum of 
understanding or a statement indicating they understand that the DCA is 
a temporary allowance; it is not a part of basic pay for any purpose; 
it would be subject to review at any time, but at least on an annual 
basis; and the reduction or termination of the DCA is not appealable or 
grievable.
    b. Nomination.
    In connection with the annual CCS appraisal process, pay pool 
managers may nominate eligible employees who meet the criteria for the 
DCA. Packages containing the recommended amount and method of payment 
of the DCA and a justification for the allowance will be forwarded 
through the supervisory chain to the CNR. Details regarding this 
process will be addressed in standard operating procedures. These 
details will include time frames for nomination and consideration, 
payout scheme, justification content and format, budget authority, 
guidelines for selecting employees for the allowance and for 
determining the appropriate amount, and documentation required by the 
employee acknowledging he or she understands the criteria and temporary 
nature of the DCA.
    c. Reduction or Termination of a DCA.
    (1) A DCA may be reduced or terminated at any time the ONR deems 
appropriate (e.g., when the special project upon which the DCA was 
based ends; if performance or contributions decrease significantly; or 
if labor market conditions change, etc.). The reduction or termination 
of a DCA is not appealable or grievable.
    (2) If an employee voluntarily separates from ONR before the 
expiration of the DCA, an employee may be denied DCA payment. Authority 
to establish conditions and/or penalties will be spelled out in the 
written authorization of an individual's DCA.
    d. Lump-Sum DCA Payments.
    (1) When ONR chooses to pay part or all of an employee's DCA as a 
lump sum payable at the end of a designated period, the employee will 
accrue entitlement to a growing lump-sum balance each pay period. The 
percentage rate established for the lump-sum DCA will be multiplied by 
the employee's biweekly amount of basic pay to determine the lump sum 
accrual for any pay period. This lump-sum percentage rate is included 
in applying the 25 percent limitation.
    (2) If an employee covered under a lump-sum DCA authorization 
separates, or the DCA is terminated (see paragraph c), before the end 
of that designated period, the employee may be entitled to payment of 
the accrued and unpaid balance under the conditions established by ONR. 
ONR may establish conditions governing lump-sum payments (including 
penalties in cases such as voluntary separation or separation for 
personal cause) in general plan policies or in the individual 
employee's DCA authorization.
    e. DCA Budget Allocation.
    The CNR may establish a total DCA budget allocation that is never 
greater than 10 percent of the basic salaries of the