Science and Technology Reinvention Laboratory (STRL) Personnel Management Demonstration Project, Department of the Navy (DON), Naval Air System Command (NAVAIR), Naval Air Warfare Center, Weapons Division (NAWCWD) and Naval Air Warfare Center, Aircraft Division (NAWCAD), 55160-55198 [2010-22172]

Agencies

• Office of the Secretary
• DEPARTMENT OF DEFENSE

[Federal Register Volume 75, Number 174 (Thursday, September 9, 2010)]
[Notices]
[Pages 55160-55198]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22172]



[[Page 55159]]

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Part V





Department of Defense





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Science and Technology Reinvention Laboratory (STRL) Personnel 
Management Demonstration Project, Department of the Navy (DON), Naval 
Air System Command (NAVAIR), Naval Air Warfare Center, Weapons Division 
(NAWCWD) and Naval Air Warfare Center, Aircraft Division (NAWCAD); 
Notice

Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / 
Notices

[[Page 55160]]


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DEPARTMENT OF DEFENSE

Office of the Secretary


Science and Technology Reinvention Laboratory (STRL) Personnel 
Management Demonstration Project, Department of the Navy (DON), Naval 
Air System Command (NAVAIR), Naval Air Warfare Center, Weapons Division 
(NAWCWD) and Naval Air Warfare Center, Aircraft Division (NAWCAD)

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

ACTION: Notice of proposal to design and implement a personnel 
management demonstration project.

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SUMMARY: Section 342(b) of the National Defense Authorization Act 
(NDAA) for Fiscal Year (FY) 1995, Public Law (Pub. L.) 103-337 (10 
U.S.C. 2358 note), as amended by section 1109 of NDAA for FY 2000, 
Public Law 106-65, and section 1114 of NDAA for FY 2001, Public Law 
106-398, authorizes the Secretary of Defense to conduct personnel 
demonstration projects at DoD laboratories designated as Science and 
Technology Reinvention Laboratories (STRLs). The above-cited 
legislation authorizes DoD to conduct demonstration projects to 
determine whether a specified change in personnel management policies 
or procedures would result in improved Federal personnel management. 
Section 1105 of the NDAA for FY 2010, Public Law 111-84, 123 Stat. 
2486, October 28, 2009, designates additional DoD laboratories as STRLs 
for the purpose of designing and implementing personnel management 
demonstration projects for conversion of employees from the personnel 
system which applied on October 28, 2009. The NAWCWD and the NAWCAD are 
listed in subsection 1105(a) of NDAA for FY 2010 as two of the newly 
designated STRLs. These two STRLs will be the participants in the 
demonstration project proposal described in this Federal Register 
Notice (FRN).

DATES: The NAWCWD and NAWCAD demonstration project 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 October 12, 
2010. Implementation of this demonstration project, once approved, will 
begin no earlier than February 1, 2011 and no later than April 28, 
2011.

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:
    NAVAIR: Mr. Richard Cracraft, Naval Air Warfare Center, Weapons 
Division (NAWCWD), Code 730000D, 1 Administration Circle, Building 
00464, China Lake, CA 93555-6100.
    DoD: Ms. Betty A. Duffield, CPMS-PSSC, Suite B-200, 1400 Key 
Boulevard, Arlington, VA 22209-5144

SUPPLEMENTARY INFORMATION: 

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 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 commanders and/or directors. The STRL 
Personnel Management Demonstration Projects involve broad-banded pay 
systems and simplified classification; compensation linked to 
performance, including contribution-based pay; recruitment and staffing 
changes; and enhanced training and development including critical 
skills training, Voluntary Emeritus Corps, and sabbaticals.
    This demonstration project involves: (1) Two appointment 
authorities (permanent and modified term); (2) extended probationary 
period for newly hired employees; (3) pay banding; (4) streamlined 
delegated examining; (5) modified reduction-in-force (RIF) procedures; 
(6) simplified job classification; (7) a mission aligned objectives and 
compensation based appraisal system; (8) market based starting 
salaries; (9) academic degree and certificate training; (10) 
sabbaticals; and (11) a Voluntary Emeritus Corps.

2. Overview

    The covered organizations transitioned to the National Security 
Personnel System (NSPS) late in 2008. Subsequently, section 1113 of 
NDAA for FY 2010, Public Law 111-84,123 Stat. 2486, required all 
employees to exit NSPS by no later than January 1, 2012. Another 
section of NDAA for FY 2010, section 1105, identifies NAWCAD and NAWCWD 
as STRLs and requires them to convert to an STRL demonstration project 
within 18 months of enactment of NDAA for FY 2010. This FRN provides 
notice of the proposal to design and implement an STRL demonstration 
project plan for the covered organizations.

3. Access to Flexibilities of Other STRLs

    Flexibilities published in this Federal Register shall be available 
for use by the STRLs previously enumerated in section 9902(c)(2) of 
title 5, United States Code, which are now designated in section 1105 
of the NDAA for FY 2010, Public Law 111-84, 123 Stat. 2486, October 28, 
2009, if they wish to adopt them in accordance with DoD Instruction 
1400.37; pages 73248 to 73252 of volume 73, Federal Register; and the 
fulfilling of any collective bargaining obligations.

    Dated: September 1, 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 Present System
    C. Changes Required/Expected Benefits
    D. Participating Organizations
    E. Participating Employees and Union Representation
    F. Project Design
    G. Personnel Management Board
III. Personnel System Changes
    A. Pay Banding
    1. Occupational Families
    2. Pay Band Design
    3. Above GS-15 Positions
    B. Classification
    1. Occupational Series
    2. Classification Standards and Position Descriptions
    3. Fair Labor Standards Act
    4. Classification Authority
    5. Classification Appeals
    C. Mission Aligned Objectives and Compensation
    1. Overview
    2. Individual Mission Objectives (IMO)
    3. Rating Benchmarks
    4. Performance Feedback and Formal Ratings
    5. Pay Pools
    6. Performance Payout Determination
    7. Base Pay Increases and Bonuses

[[Page 55161]]

    8. Extraordinary Achievement Allowance (EAA)
    9. Pay Growth Within a Pay Band
    10. Awards
    11. General Pay Increase
    12. Requests for Reconsideration
    13. Adverse Actions
    D. Hiring Authority
    1. Qualifications
    2. Delegated Examining
    3. Distinguished Scholastic Achievement Appointment Authority 
(DSAA) for Scientific and Engineering Positions
    4. Legal Authority
    5. Expanded Term Appointments
    6. Extended Probationary Period
    7. Termination of Probationary Employees
    8. Supervisory Probationary Periods
    9. Volunteer Emeritus Corps
    10. Direct Hire Authority for Scientists and Engineers With 
Advanced Degrees for Scientific and Engineering Positions
    11. Non-Citizen Hiring
    E. Internal Placement
    1. Employees Hired From Outside the NAWC STRL
    2. Promotion
    3. Reassignment
    4. Demotion or Placement in a Lower Pay Band
    5. Simplified Assignment Process
    6. Details and Temporary Promotions
    7. Exceptions to Competitive Procedures
    F. Pay Administration
    1. General
    2. Locality Pay
    3. Pay and Compensation Ceilings
    4. Pay Setting for Appointment
    5. Pay Setting for Promotion
    6. Pay Setting for Reassignment
    7. Pay Setting for Demotion or Placement in a Lower Pay Band
    8. Staffing Supplements
    9. Educational Pay Adjustment
    10. Developmental Promotions
    11. Pay Retention
    G. Employee Development
    1. Expanded Developmental Opportunity Program
    H. Reduction-in-Force (RIF) Procedures
    1. Competitive Areas
    2. Assignment Rights
    3. Crediting Performance in RIF
IV. Implementation Training
V. Movement Into and Out of the Demonstration Project
    A. Conversion From NSPS to the Demonstration Project
    1. Placement Into Demonstration Project Pay Plans and Pay Bands
    2. Pay Upon Conversion
    3. Fair Labor Standards Act (FLSA) Status
    4. Transition Equity
    5. Converting Employees on NSPS Term and Temporary Appointments
    6. Probationary Periods
    B. Conversion From Other Personnel Systems
    C. Movement Out of the NAVAIR STRL Demonstration Project
    1. Termination of Coverage Under the NAVAIR STRL Demonstration 
Project Pay Plans
    2. Determining a GS-Equivalent Grade and GS-Equivalent Rate of 
Pay for Pay Setting Purposes When a NAVAIR Employee's Coverage by a 
Demonstration Project Pay Plan Terminates or the Employee 
Voluntarily Exits the NAVAIR STRL Demonstration Project
    3. Supervision and Management Pay Band VI Employees
    4. Employees With Pay Retention
    5. Within-Grade Increase--Equivalent Increase Determinations
    D. Personnel Administration
    E. Automation Support
    1. General
    2. Defense Civilian Personnel Data System (DCPDS)
    F. Experimentation and Revision
VI. Project Duration
VII. Evaluation Plan
    A. Overview
    B. Evaluation Model
    C. Evaluation
    D. Method of Data Collection
VIII. Demonstration Project Costs
    A. Cost Discipline
    B. Developmental Costs
IX. Required Waivers to Law and Regulation
    A. Waivers to Title 5, U.S.C.
    B. Waivers to Title 5, CFR
Appendix A: NAWCAD and NAWCWD Duty Locations
Appendix B: Occupational Series by Occupational Family
Appendix C: Intervention Model
Appendix D: Individual Pay Band Level Rating Benchmarks Examples
Appendix E: Career Stage Rating Benchmarks Examples

I. Executive Summary

    NAWCAD is an organization within NAVAIR dedicated to maintaining a 
center of excellence for fixed- and rotary-wing aircraft and their 
propulsion systems, avionics systems, training systems, take-off and 
landing systems, and associated support and equipment including air 
traffic control and communications and ship/shore/air operations. 
NAWCAD has three primary locations: Patuxent River, MD; Lakehurst, NJ; 
and Orlando, FL. These facilities support research, development, test, 
evaluation, engineering, and fleet support of Navy and Marine Corps air 
vehicle systems and trainers. NAWCAD is a world leader in Naval 
aviation whose products and services include: Aircraft, avionics, air-
launched weapons, electronic warfare systems, cruise missiles, unmanned 
aerial vehicles, launch and arresting gear, training equipment and 
facilities, and all other equipment related to Navy and Marine Corps 
air power. The mission of the NAWCAD is to be the Navy's principal 
research, development/test, evaluation, engineering, and fleet support 
activity for naval aircraft, engines, avionics, aircraft support 
systems, and ship/shore/air operations. NAWCAD is the steward of the 
ranges, test facilities, laboratories, and aircraft necessary to 
support the Fleet's acquisition requirements.
    NAWCWD is an organization within NAVAIR dedicated to maintaining a 
center of excellence in weapons development for the DON. NAWCWD has two 
locations: China Lake, CA hosting the land test range and Point Mugu, 
CA hosting the sea test range. NAWCWD is a world leader in Research, 
Development, Acquisition, Test, and Evaluation (RDA, T&E) of guided 
missiles, advanced weapons and systems, complex software integration on 
tactical aircraft, energetic materials, and subsystems. It is also a 
Center of Excellence for weapons and armaments and live-fire 
survivability testing. The mission of the NAWCWD is to provide Navy and 
Marine Corps warriors with effective, affordable, integrated warfare 
systems, and lifecycle support to ensure battlespace dominance. The 
NAWCWD is the steward of the ranges, test facilities, and laboratories 
necessary to support the Fleet's acquisition requirements.
    The goal of this demonstration project is to enhance and sustain 
the quality and professionalism of the covered organizations' 
workforces through improvements in the efficiency and effectiveness of 
the human resource system. The project interventions will strive to 
achieve the best workforce for the mission, adjust the workforce for 
change, and improve workforce satisfaction. This demonstration project 
is built on the concepts, and uses much of the same language, as the 
other STRL demonstration projects already in place in DoD and is guided 
by 25 years of experience in operating the Navy's ``China Lake,'' 
demonstration project. 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

[[Page 55162]]

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 Present System

    The current Civil Service General Schedule (GS) system has existed 
in essentially the same form since 1949. 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 and changes in the work itself.
    The performance management model that has existed since the passage 
of the Civil Service Reform Act in 1980 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 present reduction-in-force (RIF) process is unresponsive to 
requirements for work force restructuring and requires enhancement to 
provide better retention of the highest performing employees with 
mission appropriate skills.
    The need to change the current hiring system is essential as the 
covered organizations must be able to recruit and retain scientific, 
engineering, acquisition, skilled technical, and other professional, 
administrative, and support employees. The covered organizations 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.
    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. Changes Required/Expected Benefits

    1. The primary benefit expected from this demonstration project is 
greater organizational effectiveness through increased employee 
satisfaction. The Department of the Navy ``China Lake'' and NIST 
demonstration projects 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 covered 
organizations' workforce will facilitate increased:
    a. Quality in the workforce and resultant products,
    b. Timeliness of key personnel processes,
    c. Retention of ``excellent performers,''
    d. Success in recruitment of personnel with critical skills,
    e. Management authority and accountability,
    f. Satisfaction of customers, and
    g. Workforce satisfaction with the personnel management system.
    2. An evaluation model was developed for the Director of Defense, 
Research and Engineering (DDR&E) in conjunction with STRLs, service 
representatives, and the Office of Personnel Management (OPM). The 
model, as modified in this plan, will measure the effectiveness of this 
demonstration project and will be used to measure the results of 
specific personnel system changes.

D. Participating Organizations

    NAWCAD and NAWCWD are organizations within the NAVAIR and are 
composed of five business units located at five diverse major 
geographic locations. The locations are: Lakehurst, NJ, Patuxent River, 
MD; Orlando, FL; China Lake, CA; and Pt. Mugu, CA. Additionally there 
are employees in a variety of other geographic locations shown in 
Appendix A. It should be noted that sites with fewer than 10 people may 
change. Successor organizations will continue coverage in the 
demonstration project.

E. Participating Employees and Union Representation

    This demonstration project will cover approximately 8,400 NAWCAD 
and NAWCWD civilian employees under title 5 U.S.C. in the occupations 
listed in Appendix B. The project plan does not cover members of the 
Senior Executive Service (SES), Scientific and Professional (ST) 
employees, Federal Wage System (FWS) employees, employees presently 
covered by the Defense Civilian Intelligence Personnel System (DCIPS), 
or DON centrally funded interns.
    The details and provisions covered under this Personnel Management 
Demonstration Project do not apply to any bargaining unit within NAWCAD 
or NAWCWD until a mutual agreement is reached between the STRL 
organization and the applicable exclusive representative. This 
demonstration project will not cover any bargaining unit members at 
implementation. If there is interest on the part of any of NAWCAD's or 
NAWCWD's bargaining units at any of their sites in participating in the 
NAWCAD or NAWCWD STRL demonstration project, negotiations would begin 
after publication of this Federal Register notice. The covered STRL 
organizations will fulfill their obligation to consult and/or negotiate 
with all labor organizations in accordance with 5 U.S.C. 4703(f) and 
7117, as applicable.

F. Project Design

    An overarching objective in the project design has been the 
development of a personnel system that provides a maximum opportunity 
for adaptability to meet the variety of requirements of organizations 
engaged in missions ranging from RDA, T&E of guided missiles, advanced 
weapons and systems, complex software integration on tactical aircraft, 
energetic materials and subsystems to fixed- and rotary-wing aircraft 
and their propulsion systems, avionics systems, training systems, take-
off and landing systems, associated support and equipment including air 
traffic control and communications, and ship/shore/air operations. This 
demonstration project is built upon the successes of the many 
demonstration projects that have preceded it and adapts many of the 
provisions and features that have been shown to be successful in these 
other STRL demonstration projects to the NAWCAD and NAWCWD 
organizations.

G. Personnel Management Board

    1. The covered organizations will create a Personnel Management 
Board to oversee and monitor the fair, equitable, and consistent 
implementation of the provisions of the demonstration project to 
include establishment of internal controls and accountability. Members 
of the board are senior leaders appointed by the Executive Directors of 
the covered organizations. As needed, ad

[[Page 55163]]

hoc members will serve in an advisory capacity to the Board.
    2. The board will execute the following:
    a. Establish policies and issue guidance on the composition of pay 
pools in accordance with the guidelines of this proposal and internal 
procedures;
    b. Review operation of pay pools and provide guidance to Pay Pool 
Managers;
    c. Oversee disputes in pay pool issues;
    d. Establish policies and issue guidance on the formulation and 
execution of the civilian pay budget;
    e. Establish policies and issue guidance on the awards pools;
    f. Establish policies and issue guidance on hiring and promotion 
base pay as well as exceptions to pay-for-performance base pay 
increases;
    g. Establish policies and issue guidance on classification review 
and oversight, monitoring and adjusting classification practices and 
deciding board classification issues;
    h. Approve major changes in position structure;
    i. Address issues associated with multiple pay systems during the 
demonstration project;
    j. Establish policies and issue guidance on and approve Standard 
Performance Elements and Benchmarks;
    k. Assess the need for changes to demonstration project procedures 
and policies;
    l. Ensure in-house budget discipline;
    m. Establish policies and issue guidance for workforce staffing and 
budget plans;
    n. Develop policies and procedures for administering Developmental 
Opportunity Programs;
    o. Ensure that all employees are treated in a fair and equitable 
manner in accordance with the policies, regulations and guidelines 
covering this demonstration project; and,
    p. Monitor the evaluation of the project.

III. Personnel System Changes

A. Pay Banding

    The design of the pay banding system has the benefit of being 
preceded by exhaustive studies of pay banding systems currently 
practiced in the Federal sector. The pay banding system will replace 
both the current NSPS and GS structure. The flexibilities in this pay 
banding section are similar in nature to the authority granted to: The 
Naval Ocean Systems Center, San Diego, California 92152 and the Naval 
Weapons Center, China Lake, California 93555, 45 FR 26504, April 18, 
1980.
1. Occupational Families
    Occupations with similar characteristics will be grouped together 
into one of five occupational families with pay band levels designed to 
facilitate pay progression. Progression through the band depends on 
individual achievement, contribution to the mission goals, and 
accomplishment of higher level, broader scope, more difficult work 
assignments. Each occupational family will be composed of pay bands 
corresponding to recognized advancement and career progression expected 
within the occupations. These pay bands will replace individual grades 
and will not be the same for each occupational family. Each 
occupational family will be divided into three to six pay bands with 
each pay band covering the same base pay range that would be covered by 
one or more GS grades. Employees track into an occupational family 
based on their current series as provided in Appendix B. Note that 
where the current series does not exist outside of NSPS the employee 
will be placed in the appropriate OPM series before being placed into 
an STRL occupational family. Upon conversion into the demonstration 
project each employee is assured an initial placement in the STRL 
demonstration project without a loss in pay. The upper and lower pay 
rate for base pay of each band is defined by the GS rate for the grade 
and step as indicated in Figure 1 except for Pay Band V of the 
Engineering and Science occupational family. Comparison to the GS 
grades and NSPS pay bands was used in setting the upper and lower base 
pay dollar limits of the pay band levels. However, once employees are 
moved into the demonstration project, GS grades and NSPS pay bands will 
no longer apply. The current occupations have been examined, and their 
characteristics and distribution have served as guidelines in the 
development of the following five occupational families:
    a. Scientific and Engineering (S&E) (Pay Plan DP): This 
occupational family includes technical professional positions, such as 
engineers, physicists, chemists, mathematicians, operations research 
analysts, and computer scientists. Specific course work or educational 
degrees are required for these occupations. Four bands have been 
established for the S&E occupational family:
    (1) Band I is a student trainee developmental track covering GS-1, 
step 1, through GS-4, step 10.
    (2) Band II is a developmental track covering GS-5, step 1, through 
GS-11, step 10.
    (3) Band III is a full-performance technical track covering GS-12, 
step 1, through GS-13, step 10.
    (4) Band IV includes senior technical positions covering GS-14, 
step 1, through GS-15, step 10.
    b. S&E Technician (Pay Plan DT): This occupational family includes 
technician positions, such as engineering technicians, electronics 
technicians, physical science technicians, mathematic technicians, and 
geodetic technicians. These occupations require practical technical 
expertise in scientific or engineering support but specific course work 
or educational degrees are not required for these occupations. Four 
bands have been established for the S&E Technician occupational family:
    (1) Band I is an entry level trainee developmental track covering 
GS-1, step 1, through GS-4, step 10.
    (2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-9, step 10.
    (3) Band III is a full-performance technical track covering GS-10, 
step 1 through GS-11, step 10.
    (4) Band IV includes senior technical covering GS-12, step 1, 
through GS-13, step 10.
    c. Technical Specialist (Pay Plan DS): This occupational family 
includes such positions as logistics management specialists, equipment 
specialists, computer specialists, and telecommunications specialists. 
Employees in these positions may or may not require specific course 
work or educational degrees. Five bands have been established for this 
occupational family:
    (1) Band I is a student trainee developmental track covering GS-1, 
step 1, through GS-4, step 10.
    (2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-9, step 10.
    (3) Band III is a full performance track covering GS-10, step 1, 
through GS-11, step 10.
    (4) Band IV is a senior specialist track covering GS-12, step 1, 
through GS-13, step 10.
    (5) Band V is an expert specialist track covering GS-14, step 1, 
through GS-15, step 10.
    d. Business Professional & Program Management (Pay Plan DA): This 
occupational family includes such positions as program managers, 
program acquisition specialists, budget officers, financial managers, 
accountants, administrative officers, human resources specialists, and 
management analysts. Employees in these positions

[[Page 55164]]

may or may not require specific course work or educational degrees. 
Five bands have been established for this occupational family:
    (1) Band I is a student trainee developmental track covering GS-1, 
step 1, through GS-4, step 10.
    (2) Band II is a developmental/full performance track covering GS-
5, step 1, through GS-9, step 10.
    (3) Band III is a full performance track covering GS-10, step 1, 
through GS-11, step 10.
    (4) Band IV is a senior specialist track covering GS-12, step 1, 
through GS-13, step 10.
    (5) Band V is an expert specialist track covering GS-14, step 1, 
through GS-15, step 10.
    e. Administrative Support (Pay Plan DG): This occupational family 
is composed of positions for which specific course work or an 
educational degree is not required. Clerical work usually involves the 
processing and maintenance of records. Assistant work requires 
knowledge of methods and procedures within a specific administrative 
area. This family includes such positions as secretaries, office 
managers, office automation clerks, security technician, safety 
technician, library technician and budget/program/computer assistants. 
Six bands have been established for this occupational family:
    (1) Band I includes entry-level/developmental positions covering 
GS-1, step 1, through GS-3, step 10.
    (2) Band II* includes developmental and low-range full-performance 
positions covering GS-4, step 1, through GS-5, step 10.
    (3) Band III* includes mid-range full-performance technicians/
assistants/secretaries covering GS-5, step 1, through GS-6, step 10.
    (4) Band IV* includes high-range full-performance technicians/
assistants/secretaries covering GS-6, step 1, through GS-7, step 10.
    (5) Band V includes senior technicians/assistants/secretaries 
covering GS-8, step 1, through GS-9, step 10.
    (6) Band VI includes expert technicians/assistants/secretaries 
covering GS-10, step 1, through GS-11, step 10.
    * Band III overlaps with band II and IV. These bands replicate a 
feature used by the Navy's ``China Lake'' project.
    f. The Supervision and Management pay band includes all employees 
performing supervisory functions. This pay band is not applicable to 
team leaders. To be classified to these pay bands the supervisor must 
perform the full range of supervisory duties. To meet the full range of 
supervisory duties the supervisor must perform 3 of the first 4, and a 
total of 6 or more of the following:
    (1) Plan work and prepare performance plans covering work to be 
accomplished by subordinates, set and adjust short-term priorities, and 
prepare schedules for completion of work;
    (2) Assign work to subordinates based on priorities, selective 
consideration of the difficulty and requirements of assignments, and 
the capabilities of employees;
    (3) Evaluate work performance of subordinates and recommend 
official performance ratings;
    (4) Give advice, counsel, or instruction to employees on both work 
and administrative matters;
    (5) Interview candidates for positions in the unit; recommend 
appointment, promotion, or reassignment to such positions;
    (6) Hear and resolve complaints from employees, referring group 
grievances and more serious unresolved complaints to a higher level 
supervisor or manager;
    (7) Effect minor disciplinary measures, such as warnings and 
reprimands, recommending other action in more serious cases;
    (8) Identify developmental and training needs of employees, 
providing or arranging for needed development and training;
    (9) Find ways to improve production or increase the quality of the 
work directed;
    (10) Make appropriate distinctions in levels of performance while 
equitably applying performance standards.
    A supervisory position cannot be established on the basis of only 
one subordinate position. These pay bands can include any series.
    (1) Band II is a supervision and management track covering GS-6, 
step 1, through GS-8, step 10.
    (2) Band III is a supervision and management track covering GS-9, 
step 1, through GS-11, step 10.
    (3) Band IV is a supervision and management track covering GS-12, 
step 1, through GS-14, step 10.
    (4) Band V is a supervision and management track covering GS-14, 
step 1, through GS-15, step 10.
    (5) Band VI is reserved for those S&E professional positions 
classified above GS-15.
    * Band IV overlaps with band V. These bands replicate a feature 
used by the NAVSEA Warfare Centers' STRL demonstration project.
2. Pay Band Design
    The demonstration project pay bands for the occupational families 
and how they relate to the current GS and NSPS framework are shown in 
Figure 1.
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3. Above GS-15 Positions
    The pay banding plan for the Supervision and Management 
occupational family includes a pay band VI to provide the ability to 
accommodate positions having duties and responsibilities that exceed 
the 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 the laboratory 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. Additional guidance will be 
included in NAWCAD/NAWCWD internal issuances.

B. Classification

    The flexibilities in this Classification section are similar in 
nature to the authority granted to the Naval Ocean Systems Center, San 
Diego, California 92152 and the Naval Weapons Center, China Lake, 
California 93555, 45 FR 26504, April 18, 1980.
1. Occupational Series
    The present GS classification system has over 400 occupational 
series, which are divided into 23 occupational groupings. The covered 
organizations currently have positions in approximately 132 
occupational series that fall into 21 occupational groupings. All 
positions listed in Appendix B will be in the classification structure. 
Provisions will be made for including other occupations in response to 
changing missions.
2. Classification Standards and Position Descriptions
    The present system of OPM classification standards will be used for 
the identification of proper series and occupational titles of 
positions within the demonstration project. Current OPM position 
classification standards will not be used to grade positions in this 
project. However, the grading criteria in those standards will be used 
as a framework to develop new and simplified standards for the purpose 
of pay band determinations. The objective is to record the essential 
criteria for each pay band within each occupational family by stating 
the characteristics of the work, the responsibilities of the position, 
and the competencies required. New position descriptions will replace 
the current job descriptions. The classification standard for each pay 
band will serve as an important component in the new position 
description, which will also include position-specific information, and 
provide selective placement factors and other data element information 
pertinent to the job.
    Specialty area codes (SAC) written as narrative descriptions and 
assigned a specific identification code may be used to further 
differentiate types of work and the competencies required for 
particular positions within an occupational family and pay band. Each

[[Page 55166]]

code represents a specialization or type of work within the occupation.
3. Fair Labor Standards Act
    Fair Labor Standards Act (FLSA) exemption and non-exemption 
determinations will be consistent with criteria found in 5 CFR part 
551. All employees are covered by the FLSA unless they meet the 
criteria for exemption. The duties and responsibilities outlined in the 
classification standards for each pay band will be compared to the FLSA 
criteria. As a general rule, the FLSA status can be matched to 
occupational family and pay band as indicated in Figure 2. For example, 
positions classified in Pay Band I of the S&E occupational family are 
typically nonexempt, meaning they are covered by the overtime 
entitlements prescribed by the FLSA. An exception to this guideline 
includes supervisors/managers whose primary duty meets the definitions 
outlined in the OPM GS Supervisory Guide. Therefore, supervisors/
managers in any of the pay bands who meet the foregoing criteria are 
exempt from the FLSA. Supervisors with classification authority will 
make the determinations on a case-by-case basis by comparing assigned 
duties and responsibilities to the classification standards for each 
pay band and the 5 CFR part 551 FLSA criteria. Additionally, the advice 
and assistance of the servicing Human Resources Office (HRO) and the 
servicing Human Resources Service Center (HRSC) can be obtained in 
making determinations. The benchmark position descriptions will not be 
the sole basis for the determination; the actual duties performed are 
the controlling criteria. Exemption criteria will be narrowly construed 
and applied only to those employees who clearly meet the spirit of the 
exemption.
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    N--Non-Exempt from FLSA; E--Exempt from FLSA; N/E--Exemption 
status determined on a case-by-case basis.

    Note: Although typical exemption status under the various pay 
bands is shown in the above table, actual FLSA exemption 
determinations are made on a case-by-case basis.

4. Classification Authority
    The covered organizations' Executive Directors will have delegated 
classification authority for all pay bands with the exception of 
Supervision and Management band VI and may, in turn, re-delegate this 
authority to appropriate levels. Classification authority for Science 
and Engineering band V will be consistent with DoD guidance. Position 
descriptions will be developed to assist managers in exercising 
delegated position classification authority. Managers will identify the 
occupational family, job series, functional code, specialty work code, 
pay band level, and the appropriate acquisition codes. Human resources 
specialists will provide ongoing consultation and guidance to managers 
and supervisors throughout the classification process. These decisions 
will be documented on the position description.
5. Classification Appeals
    Classification appeals under this demonstration project will be 
processed using the following procedures: An employee may appeal the 
determination of occupational family, occupational series, position 
title, and pay band of his/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 the employee is not 
satisfied with the supervisory response, he/she may then appeal to the 
Executive Director of his/her organization. If the employee is not 
satisfied with the Executive Director's response, he/she may then 
appeal to the DoD appellate level. Appeal decisions rendered by DoD 
will be final and binding on all administrative, certifying, payroll, 
disbursing, and accounting officials of the government. Classification 
appeals are not accepted on positions which exceed the equivalent of a 
GS-15 level. Additional guidance will be included in the NAWCAD/NAWCWD 
internal issuances.
    An employee may not appeal the accuracy of the position 
description, the demonstration project classification criteria, or the 
pay-setting criteria; the assignment of occupational series to the 
occupational family; the propriety of a pay schedule; or matters 
covered by an administrative or negotiated grievance procedure, or an 
alternative dispute resolution procedure.
    The evaluations of classification appeals under this demonstration 
project are based upon the demonstration project classification 
criteria. Case files will be forwarded for adjudication through the 
HRO/HRSC providing personnel service and will include copies of 
appropriate demonstration project criteria.

C. Mission Aligned Objectives and Compensation

1. Overview
    The purpose of mission aligned objectives and compensation is to 
directly link the work of the employee to the mission of the 
organization and provide a mechanism for recognizing

[[Page 55167]]

the impact of the employee's accomplishments and contributions to help 
achieve that mission. It also provides an effective, efficient, and 
flexible method for assessing, compensating, and managing the covered 
organization's workforce. It is essential for the development of a 
highly productive workforce and to provide management at the lowest 
practical level, the authority, control, and flexibility needed to 
achieve a quality organization and meet mission requirements. Mission 
aligned objectives and compensation allows for more employee 
involvement in the assessment process, strives to increase 
communication between supervisor and employee, promotes a clear 
accountability of performance, facilitates employee career progression, 
and provides an understandable and rational basis for pay changes by 
linking mission directly to both annual evaluations and compensation 
outcomes.
    The mission aligned objectives and compensation system uses annual 
payouts that are based on the employee's accomplishments and 
contributions to mission accomplishment rather than within-grade 
increases, quality step increases, promotions from one grade to another 
where both grades are now in the same pay band (i.e., there are no 
within-band promotions), and performance awards. In addition to 
objectives, other factors that can be considered in determining overall 
payout include organizational performance, team performance, or a 
combination of individual performance, contribution, and/or 
compensation. If elements other than the employee's individual 
accomplishments and contributions against their objectives and their 
compensation will be taken into consideration, this must be a part of 
the written performance plan. The employee must be advised of the 
applicability of these factors within the same time requirements as the 
individual mission objectives. The normal rating period will be one 
year. Objectives, representing joint efforts of employees and their 
supervisors, must be in place within 30 days from the beginning of each 
rating period and the minimum rating period will be 90 days. First-time 
hires into demonstration project positions must have plans in place 
within 30 days of the effective date of their entry into the 
demonstration project and current demonstration project employees who 
change positions during the performance year should have their plans 
updated with new objectives no later than 30 days after assignment to 
the new position. Mission aligned compensation and rewards payouts can 
be in the form of increases to base pay and/or in the form of bonuses 
that are not added to base pay but rather are given as a lump sum cash 
bonus. Other awards such as special acts, time-off awards, etc., will 
be retained separately from the pay-for-performance payouts.
    Employees who do not meet the 90 day minimum requirement will be 
ineligible for a normal rating and will be given a presumptive rating. 
They may receive only the general pay increase and they may also 
receive title 5 cash awards if appropriate.
    The system will have the flexibility to be modified, if necessary, 
as more experience is gained under the project. The flexibilities in 
this Mission Aligned Objectives and Compensation section are similar in 
nature to the authority granted to: (1) The Naval Ocean Systems Center, 
San Diego, California 92152 and the Naval Weapons Center, China Lake, 
California 93555, 45 FR 26504, April 18, 1980, and (2) the Army 
Research Laboratory (ARL), 65 FR 3500, January 21, 2000.
2. Individual Mission Objectives (IMO)
    Individual mission objectives will be directly related to achieving 
the mission of the employee's organization. They define a target level 
of activity, expressed as a tangible, measurable objective, against 
which actual achievement can be compared. These objectives will 
specifically identify what is expected of the employee during the 
rating period and will typically consist of three to ten results-
oriented statements. It is expected that these objectives will also 
incorporate important behavioral practices such as teamwork and 
cooperation where they are key to successful accomplishment of the 
assignment. A Supervision/EEO objective is mandatory for all managers/
supervisors. The employee and his/her supervisor will jointly develop 
the employee's individual mission objectives at the beginning of the 
rating period. These are to be reflective of the employee's duties/
responsibilities, pay band and pay level in the band as well as the 
mission/organizational goals and priorities. Objectives will be 
reviewed annually and revised upon changes in pay reflecting increased 
responsibilities commensurate with pay increases. Use of generic one-
size-fits-all objectives will be avoided, as individual mission 
objectives are to define an individual's specific responsibilities and 
expected accomplishments for the performance year. In contrast, rating 
benchmarks as described in the next paragraph will identify 
characteristics, against which the accomplishment of objectives will be 
measured. As a part of this demonstration project, training focused on 
overall organizational objectives and the development of individual 
mission objectives will be held for both supervisors and employees.
    Individual mission objectives may be jointly modified, changed or 
deleted as appropriate during the rating cycle. As a general rule, 
objectives should only be changed when circumstances outside the 
employee's control prevent or hamper the accomplishment of the original 
objectives. It is also appropriate to change objectives when mission or 
workload shifts occur.
    All objectives are critical. A critical mission objective is 
defined as an attribute of job performance that is of sufficient 
importance that achievement below the minimally acceptable level 
requires remedial action and may be the basis for removing an employee 
from his/her position. Non-critical objectives will not be used. Each 
of the objectives may be assigned a weight, which reflects its 
importance in accomplishing an individual's mission objectives. The 
minimum weight assigned may not be less than 10%. The sum of the 
weights for all of the elements must equal 100. At the beginning of the 
rating period, higher level managers will review the objectives and 
weights assigned to employees within the pay pool, to verify 
consistency and appropriateness.
3. Rating Benchmarks
    Rating benchmarks define characteristics that will be used to 
evaluate the employee's success in accomplishing his/her individual 
mission objectives. The use of characteristics for scoring purposes 
helps to ensure comparable scores are assigned while accommodating 
diverse individual objectives. A single set of rating benchmarks for 
each band or rating benchmarks by career stage may be used for 
evaluating the annual performance of all NAWCAD and NAWCWD personnel 
covered by this plan. An example of each type of benchmark is shown at 
Appendices D and E. The set of benchmarks used may evolve over time, 
based on experience gained during each rating cycle. This evolution is 
essential to capture the critical characteristics the organization 
encourages in its workforce toward meeting individual and 
organizational objectives. This is particularly true in an environment 
where technology and work processes are changing at an increasingly 
rapid pace. The Personnel Management Board will annually review the set 
of benchmarks and set

[[Page 55168]]

them for the entire organization before the beginning of the rating 
period.
4. Performance Feedback and Formal Ratings
    The most effective means of communication is person-to-person 
discussion between supervisors and employees of requirements, 
performance goals, and desired results. Employees and supervisors alike 
are expected to actively participate in these discussions for optimum 
clarity regarding expectations and identify potential obstacles to 
meeting goals. In addition, employees should explain (to the extent 
possible) what they need from their supervisor to support goal 
accomplishment. The timing of these discussions will vary based on the 
nature of work performed, but will occur at least at the mid-point and 
end of the rating period. The supervisor and employee will discuss job 
performance and accomplishments in relation to the expectations in the 
mission aligned objectives. At least one review, normally the mid-point 
review, will be documented as a formal progress review. More frequent, 
task specific discussions may be appropriate in some organizations. In 
cases where work is accomplished by a team, team discussions regarding 
goals and expectations will be appropriate. The employee will provide a 
statement of his/her accomplishments to the supervisor at both the mid-
point and end of the rating period.
    At the end of the rating period, following a review of the 
employee's accomplishments, the supervisor will rate each of the 
individual mission objectives. Benchmark performance standards will be 
developed that describe the level of performance associated with a 
score. Using these benchmarks, the supervisor decides where the 
achievements and contributions of the employee most closely match the 
benchmarks and assigns an appropriate score. It should be noted that 
these scores are not discussed with the employee or considered final 
until all scores are reconciled and approved by the Pay Pool Manager. 
The rating scores will then be multiplied by the objective-weighting 
factor to determine the weighted score expressed to two decimal points. 
The weighted scores for each objective will then be totaled to 
determine the employee's overall appraisal score and rounded to a whole 
number as follows: If the first two digits to the right of the decimal 
are .51 or higher, it will be rounded to the next higher whole number; 
if the first two digits to the right of the decimal are .50 or lower, 
then the decimal value is truncated.
    The covered STRL organizations will use a five-level rating 
methodology with associated payout point ranges in which level five 
signifies the highest level of performance. The rater will prepare and 
recommend the rating, number of payout points, and the distribution of 
the payout between base pay increase and bonus, as applicable, for each 
employee. These recommendations will then be reviewed by the pay pool 
panel to ensure equitable rating criteria and methodologies have been 
applied to all pay pool employees. The final determination of the 
rating, number of payout points, and payout distribution will be a 
function of the pay pool panel process and will be approved by the Pay 
Pool Manager. The criteria used to determine the number and 
distribution of payout points to assign an employee may include 
assessment of the employee's contribution towards achieving the 
mission, the employee's type and level of work, the employee's current 
compensation and the criticality of their contribution to mission 
success, consideration of specific achievements, or other job-related 
significant accomplishments or contributions. The proposed rating and 
payout point schema is:

------------------------------------------------------------------------
  Rating              Description                   Payout points
------------------------------------------------------------------------
        5  Exceptional.....................  5, 6
        4  Exceeds Mission Expectations....  3, 4
        3  Mission Success.................  0, 1, 2
        2  Partial Mission Success.........  0
        1  Unacceptable....................  0
------------------------------------------------------------------------

     Employees with a total score of two or above will receive the 
equivalent of the GS January general pay increase (GPI). Employees with 
a total score of one will not receive the January GPI. A rating of one 
or below will result in a rating of Unacceptable, and the employee will 
not receive the January GPI and will require administrative action to 
address the performance deficiency. A score of one or below on a single 
objective will also result in a rating of Unacceptable.
    Employees in receipt of a Letter of Warning of Unacceptable 
Performance at the end of the performance year will have their rating 
deferred until the end of the improvement period. At the end of the 
improvement period, the supervisor will assign a final rating and 
submit it to the pay pool panel for consideration.
5. Pay Pools
    Following the initial scoring of each employee by the rater, the 
rating officials in an organizational unit, along with their next level 
of supervision, will review and compare recommended ratings to ensure 
consistency and equity of the ratings. In this step, each employee's 
individual mission objectives, accomplishments, preliminary scores and 
pay are compared. Through discussion and consensus building, consistent 
and equitable ratings are reached. Managers will not prescribe a 
distribution of ratings. The Pay Pool Manager will then chair a final 
review with the rating officials who report directly to him or her to 
validate these ratings and resolve any scoring issues. If consensus 
cannot be reached in this process, the Pay Pool Manager makes all final 
decisions. After this reconciliation process is complete, ratings are 
finalized. Payouts proceed according to each employee's final rating 
and payout distribution. Upon approval of this plan, implementing 
procedures and regulations will provide details on this process to 
employees and supervisors.
    The covered organizations' employees will be placed into pay pools. 
Neither the Pay Pool Manager, supervisors, or pay pool panel members 
within a pay pool will in any way recommend or participate in setting 
their own rating or individual payout except for the normal employee 
self-assessment process. Pay pools are combinations of organizational 
units (e.g., level 3 competencies (divisions), level 4 competencies 
(branches), and level 5 competencies (sections)), functional categories 
or other groupings of employees that are defined for the purpose of 
determining payouts under the mission aligned objectives and 
compensation system. The guidelines in the next paragraph are provided 
for determining pay pools. These guidelines will normally be followed. 
However, the Executive Directors of the covered organizations may 
deviate from the guidelines if there is a compelling need to do so.
    The Executive Directors of the covered organizations will establish 
pay pools. Typically, pay pools will have between 35 and 300 employees. 
A pay pool should be large enough to encompass a reasonable 
distribution of ratings but not so large as to compromise rating 
consistency. Large pay pools may use sub pay pools subordinate to the 
pay pool due to the size of the pay pool population, the complexity of 
the mission, or other similar criteria. Pay pool panel members will not 
serve on pay pools where their

[[Page 55169]]

own ratings and payouts are determined. Supervisors and non-supervisors 
may be placed in separate pay pools. Decisions regarding the amount and 
distribution of the payouts are based on the employee's most recent 
rating of record for the performance year, the criteria listed in 
section III.C.4 above, the type and nature of the funding available to 
the pay pool, and the number of payout points assigned by the pay pool. 
Additional guidance on pay pool design and composition will be included 
in NAWCAD/NAWCWD internal issuances.
    Funds within a pay pool available for performance payouts are 
calculated from anticipated pay increases under the existing system and 
divided into two components, base pay and bonus. The funds within a pay 
pool used for base pay increases are those that would have been 
available from within-grade increases, quality step increases and 
promotions under the GS system (excluding the costs of promotions still 
provided under the pay banding system). This amount will initially be 
defined based on historical data and will initially be set at no less 
than 2.4% of total base pay annually. The funds available to be used 
for bonus payouts are funded separately within the constraints of the 
organization's overall award budget. This amount will initially be 
defined based on historical data and will initially be set at no less 
than one percent of total base pay annually. As changes in the 
demographics of the workforce or other exigencies occur, adjustments 
may be made to these two factors. The sum of these two factors is 
referred to as the pay pool percentage factor. The Personnel Management 
Board will annually review the pay pool funding and recommend 
adjustments to the Executive Directors to ensure cost discipline over 
the life of the demonstration project. Cost discipline is assured 
within each pay pool by limiting the total base pay increase to the 
funds allocated by the Personnel Management Board.
6. Performance Payout Determination
    The payout an employee will receive is based on the total 
performance rating from the mission aligned objectives and compensation 
assessment process. An employee will receive a payout as a percentage 
of base pay. This percentage is based on the number of payout points 
that equates to their final appraisal score.
    The value of a payout point cannot be exactly determined until the 
rating and reconciliation process is completed and all scores are 
finalized. The payout point value is expressed as a percentage. The 
formula that computes the value of each payout point uses base pay 
rates and is based on:
    a. The sum of the base pay of all the employees in the pay pool 
times the pay pool percentage factor;
    b. The employee's base pay;
    c. The number of payout points awarded to each employee in the pay 
pool; and
    d. The total number of payout points awarded in the pay pool.
    This formula assures that each employee within the pool receives a 
payout point amount equal to all others in the same pool who are at the 
same rate of base pay and receiving the same score. The formula is 
shown in Figure 3.
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    An individual payout is calculated by first multiplying the payout 
points earned by the payout point value and multiplying that product by 
base pay. An adjustment is then made to account for locality pay or 
staffing supplement. A Pay Pool Manager is accountable for staying 
within pay pool limits and final decisions on base pay increases and/or 
bonuses to individuals based on rater recommendations, the final score, 
the pay pool funds available, and the employee's base pay.
7. Base Pay Increases and Bonuses
    The amount of money available for the performance payouts is 
divided into two components, base pay increases and bonuses. The base 
pay and bonus funds are based on the pay pool funding formula 
established annually. Once the individual performance amounts have been 
determined, the next step is to determine what portion of each payout 
will be in the form of a base pay increase as opposed to a bonus 
payment. The payouts made to employees from the pay pool may be a mix 
of base pay and bonus, such that all of the allocated funds are 
disbursed. To continue to provide performance incentives while also 
ensuring cost discipline, base pay increases may be limited or capped. 
Certain employees will not be able to receive the projected base pay 
increase due to base pay caps. Base pay is capped when an employee 
reaches the maximum rate of base pay in an assigned pay band or when a 
control point applies (see below). Also, for employees receiving 
retained rates above the applicable pay band maximum, the entire 
performance payout will be in the form of a bonus payment.
    When capped, the total payout an employee receives will be in the 
form of a bonus versus the combination of base pay and bonus. Bonuses 
are cash payments and are not part of the base pay for any purpose 
(e.g., lump sum payments of annual leave on separation, life insurance, 
and retirement). The maximum base pay rate under this demonstration 
project will be the unadjusted base pay rate of GS-15, Step 10, except 
for employees in Pay Band VI of the Supervision and Management career 
path.
8. Extraordinary Achievement Allowance (EAA)
    a. NAWCAD and NAWCWD will employ an Extraordinary Achievement 
Allowance designed to optimize organizational effectiveness. An EAA is 
defined as a temporary monetary allowance up to 25 percent of base pay, 
which, when added to an employee's rate of base pay, may not exceed the 
rate of basic pay for Executive Level IV. It is paid on either a bi-
weekly basis concurrent with normal pay days or as a lump sum following 
completion of a designated contribution period, or combination of 
these, at the discretion of the Executive Director/Commanding Officer 
of the appropriate Naval Air Warfare Center. It is not base pay for any 
purpose, e.g., retirement, life insurance, severance pay, promotion, or 
any other payment or benefit calculated as a percentage of base pay. 
The EAA will be available to certain employees whose present 
contributions are worthy of a higher career level and whose level of

[[Page 55170]]

achievement is expected to continue at the higher career level for at 
least one year.
    b. Award of the EAA will generally be appropriate under the 
following circumstances: (1) Employees have reached the top of their 
target career levels, (2) when it is not certain that the higher level 
contributions will continue indefinitely (e.g., a special project 
expected to be of one to five-year duration), (3) when no further 
promotion or base pay opportunities are available, or externally 
imposed limits make changes to higher career levels unavailable, and 
(4) when the approval time required to effect the action will 
unreasonably delay appropriate compensation for the employee's 
achievements but in all situations, when current market conditions 
compensate similar contributions at a greater rate in private industry 
and academia than the organization is able to do under normal 
compensation conditions.
    c. To be eligible for EAA, employees must meet the criteria below:
    (1) Employees in the S&E, Technical, Business Professional and 
Program Management career tracks are eligible for the EAA if their 
contribution to the organization is deemed worthy, as determined by the 
appropriate NAWC Executive Director/Commander.
    (2) Employees may recei